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How Facebook’s Changing Algorithm Impacts Your Business…

Sherri Huleatt
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How Facebook’s Changing Algorithm Impacts Your Business…

… And What to Do About It

 

In January 2018, Facebook released its new “meaningful interactions” algorithm to highlight more content from family and friends and less content from brands. While this might be a welcome change for the everyday social-media consumer, it’s anything but welcome for businesses scrambling to break through the social media clutter.

According to a 2018 study by Buffer and Buzzsumo, which analyzed 43 million Facebook posts, overall Facebook page engagement dropped 50% in 18 months during 2017 to 2018; the average engagement per post also was down by a whopping 65%.

Shawn Kemp offers insights into this trend as CEO of ActionSprout, a Bellingham-based social-media software company (with locations also in Seattle and Portland) that Facebook refers to for nonprofit insights and data. Kemp said that most Facebook users have the possibility of seeing as many as 1,500 News Feed stories a day, but the average user spends only enough time on the site to actually see about 250. Because of this, he said, Facebook constantly updates its algorithm so users are more likely to see the content they want.

So what can your business do to remain relevant in the face of Facebook’s constantly evolving algorithm? Before addressing that, a quick refresher on how the algorithm works:

Facebook ranks your content in the News Feed based on average time spent interacting with a post, when it’s posted, the story type, the completeness of your page’s profile, and how informative the post is. In other words, the more engaging and relevant your post is, the more likely people will see it.

Facebook also now prioritizes “active interactions”—such as commenting and sharing—rather than “passive interactions,” such as liking and clicking a post. Even something as small as someone “loving” your post rather than “liking” it can earn you bonus points.

According to Kemp, posting more engaging stories frequently can make a major impact on reaching your audience. “You need to post at least once a day in order to send enough signals to Facebook, so they know who to show your posts to,” Kemp said.

If you’re struggling with content creation, he suggested sharing existing articles, images, and videos. Content-curation tools, like Feedly, Scoop.It, and Buzzsumo can save you a considerable amount of time, Kemp said.

Facebook Groups also rank high in the News Feed and can be managed by Pages. Kemp recommended that you post at least twice a week to your Group and always reply to members’ comments to gain increased engagement.

Going forward, Facebook will continue to prioritize content from family and friends. “Focus on giving people a reason to share your stories,” Kemp said. “Make it about your supporters so they look good when they share it.”

More than anything, he said, post relevant, quality content that your audience wants to engage with—not just what you want to share. For example, treating Facebook as only a repository for your latest products, sales, and events most likely won’t garner the quality engagement you’re looking for. Instead, ask questions, share behind-the-scenes videos, and post entertaining quotes, photos, and/or GIFs that elicit an emotional response (i.e., mix up your content so it’s not just about you, it’s about your customer).

Five Tips to Improve Your Facebook Strategy:

  1. Ask questions: The modern-day consumer isn’t shy with opinions (surprise, surprise). That’s why asking questions not only engages your customers, questions rack up comments, which is highly favored by Facebook’s algorithm. Ask what people are reading (relevant to your industry), do a product mashup and ask your followers to vote for their favorite, or post a photo and ask people to caption it. The bottom line: Don’t be afraid to have fun.
  2. Make it visual: Kissmetrics, a marketing automation company, says Facebook posts with photos get 53% more likes, 104% more comments, and 84% more click-throughs than text-based posts. Don’t have a graphic designer or photographer? No problem. Use free tools like Canva—which comes with hundreds of free design templates, icons, and stock photos—to create professional-looking graphics, without the price tag.
  3. Share videos: Facebook says that live videos get six times as many interactions as regular videos and lead to more discussions among followers. Use Facebook Live to show behind-the-scenes clips, team interviews, new-product reveals, and more.
  4. Advertise: Shawn Kemp at Action Sprout said, “Five dollars on a highly engaging story goes a long way.” Advertising extends reach to your audience. Get the most bang for your buck by testing ads to discover what’s most effective. He recommended AdEspresso as one of the best tools, which easily tests up to 100 ad variations at a time so you can see which combination of copy, visuals, audience, and platform get the most conversions.
  5. Reply to comments: This is good customer service, and it also signals to Facebook that your content is creating real discourse—winning you bonus points with the new algorithm. What if someone leaves a rude comment? Put your most friendly foot forward and respond with patience and empathy—apologize, offer a solution, and ask if you can take the conversation offline (or in a more private forum, like a direct message).

Free Market Environmentalism

WBA
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Free Market Environmentalism

The Key to Saving Energy and Money? Consumers–Not Politicians…

With the 2018 ballots tallied, Washington’s environmental activist community wants to call it a tie. Despite spending more than $15 million in support of Initiative 1631, which would have imposed a carbon tax, that initiative failed badly; it received about 43 percent of the votes, failing in 36 of 39 counties.

On the other hand, Democrats increased their margin in the legislature, giving environmental activists hope that what failed at the ballot box might pass when lobbyists have their say in Olympia.

Many Washington residents are willing to consider policies that reduce carbon dioxide (CO2) emissions, but are wary of increased taxes and don’t trust politicians to spend money wisely. The environmental community already has indicated it did not learn that lesson. By way of contrast, there’s an opportunity to engage voters who rejected 1631 by offering practical tools that reduce CO2 emissions inexpensively and effectively.

The key feature of the environmental community’s legislative agenda is to require that 100 percent of Washington’s electricity becomes renewable energy by 2040. More than 80 percent of Washington’s energy generation now emits little or no CO2. Wind turbines are a relatively small portion of that amount, accounting for about seven percent of Washington’s low-CO2-emitting energy. Nuclear power is next at about eight percent. Hydro is the major power source, accounting for about 70 percent of our energy.

Despite praise for solar power from environmental activists, solar accounts for less than one-tenth of one percent of our electricity generation (Source: State of Washington Department of Commerce), because it is expensive and Washington is one of the worst places in the United States for collecting solar energy (Source: National Renewable Energy Laboratory).

Rather than simply replacing the small amount of Washington’s natural gas and coal energy with renewables, the environmental community likely will try to replace some of the reliable hydro and nuclear power with intermittent renewables like wind. If the goal is to reduce CO2 emissions quickly and effectively, this approach is nonsensical.

Wind and solar are still expensive, and replacing predictable low-CO2 energy with intermittent low-CO2 energy would be paying more to get less.

Instead of political mandates, all utilities and energy consumers should be given more control over their own electric bills. Existing electricity-rate structures are based on the decades-old assumption that residential consumers have no ability to react to daily fluctuations in electricity costs. Residential users don’t see the high costs in the middle of the day when electricity use increases and prices climb.

Utilities companies end up passing on those higher costs in the form of higher rates for all parts of the day. If public utilities could provide a way to conserve in the middle of the day, residential customers could save money.

The technology now exists to do exactly that. Nest thermostats created a voluntary system called “Rush Hour Rewards” that allows local utilities to provide rebates to consumers who allow Nest to automatically adjust home temperature when midday rates climb. Consumers save money and utilities increase energy conservation.

This consumer-driven approach is more likely to be successful and at lower cost than politically dictated mandates which, like Initiative 1631, too often are focused on appeasing special interests. It can also appeal to people across the political spectrum, rewarding users with both environmental and financial benefits.

Governor Jay Inslee was elected six years ago and promised to take action on climate change. During that time, his record is extremely poor, even failing to meet the CO2-reduction goals he set for himself. If the governor, legislative leaders, and the environmental community continue to choose dogmatism over environmental effectiveness, that string of failures will continue, increasing costs on Washington residents while failing to help the environment.

The better approach is to engage consumers with positive incentives to save and technology that empowers conservation. Trying to impose pain on Washington residents has failed. It is time to engage and empower them with technology and incentives.

Guest columnist Todd Myers at the Washington Policy Center took a controversial look at the environmental subject solar power, stating that Washington lags in it. He cited the following sources, with an afterthought:

“Washington is one of the worst places in the US for collecting solar energy” – National Renewable Energy Laboratory, https://www.nrel.gov/gis/images/eere_pv/national_photovoltaic_2012-01.jpg

“Solar accounts for less than one-tenth of one percent of our electricity generation” – https://www.commerce.wa.gov/growing-the-economy/energy/fuel-mix-disclosure/

Myers said: “Solar actually accounts for 3/1000ths of a percent of aggregate fuel mix, but functionally there is no difference between 1/10th and 3/1000ths. People think solar is meaningful. It isn’t.”

Todd Myers serves as Director of the Center for the Environment at Washington Policy Center in Olympia. He is recognized as one of the nation’s leading experts on free-market environmental policy, and author of “Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment.”

Pollution-Control Ruling On Dairy Farm Permits a Big Deal?

Rich Appel • Appel Farms Cheese/Vice-President Whatcom Family Farmers
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Pollution-Control Ruling On Dairy Farm Permits a Big Deal?

Farmers Say a Resounding, ‘Yes!’

“Vindication” is the word local farmers typically use to describe the Pollution Control Hearings Board ruling last October on the Department of Ecology permit that affects dairy farms. Dairy operators say that the ruling gives credibility to their claims of strong environmental performance.

In Whatcom County, and extending now to Seattle, a debate has been taking place between farm advocates and environmental activists about dairy farms and their effects on the environment.

Dairy critics claim dairy farms are some of the largest sources of pollution, fouling the water, harming fish, causing shellfish bed closures, and making people sick, or even causing the death of infants. Their solution to these serious problems has been to file lawsuits and pressure the Department of Ecology into imposing massive new regulations on dairy farms.

Dairy farmers, for their part, recognize that dairies have the potential to cause water-quality problems and, indeed, in the past they have been a significant cause of harm to fish and shellfish. But many laws and regulations have changed that over the last couple of decades, particularly since passage of the 1998 Dairy Nutrient Management Act.

Moreover, farmer stewardship has contributed to protecting the environment better, and even improving it. One strong indication is the reduced nitrate levels in wells nearest dairy farms. Other recent studies also provide proof of improvements.

When you have a he-said, she-said situation, who is to be believed?

Farmers have a lot at stake. Many would say their very existence is on the line. Environmental activists also have much at stake because of their credibility and their ability to secure donations essential to their future is affected by these claims.

For two weeks during late Spring of last year, the Pollution Control Hearings Board heard arguments from both sides on the hotly contested Concentrated Animal Feeding Operation (CAFO). The Hearings Board consists of three lawyers, including one who specializes in environmental law, all appointed by Governor Jay Inslee. One of those specializes in environmental law.

Their job was to hear appeals filed by the environmental groups and the dairy community (working through the state Dairy Federation).

This CAFO permit is the tool the state uses to enforce water-quality laws and specifies what animal-farming operations must do and not do to protect water. The environmental groups said the permit issued by Ecology in 2017 didn’t go nearly far enough to protect water and therefore violated the law. The dairy community said Ecology went too far, particularly on how it changed the way manure lagoons were measured.

After more than four months of deliberation, the Board supported the dairy community’s position on the error Ecology made in how lagoons are measured. Ecology was “remanded” by law to change the permit to comply with national lagoon standards.

The big news for farmers was that each and every one of the arguments made by the environmental groups was fully and completely rejected. This applies to lagoons, to surface water monitoring, to groundwater monitoring, and a number of other claims.

How have the environmental groups responded? One—Jean Mendoza from Friends of Toppenish Creek in Yakima—commented that the Board was “uninformed.” Puget Soundkeeper Alliance said the board “made errors.”

But we farmers ask simply this: If their top advocate, an environmental attorney from Oregon known for suing dairy farms, couldn’t convince three lawyers on the board appointed by Governor Inslee—and one of those a fellow Oregon-educated environmental lawyer—why do they think they can convince anyone else? Whatcom farmers note with deep appreciation the decision of Bellingham-based RE Sources to withdraw from continuing this appeal.

The claims of pollution caused by dairy farms probably won’t go away, which means the work of setting the record straight also must go on. But we farmers do feel vindicated by this important but little-known ruling. And we believe our job of convincing the unconvinced will be much easier as a result.

NOV | DEC 2018

Cheryl Stritzel McCarthy
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NOV | DEC 2018

Co-Working Spaces

Dave Brumbaugh
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Co-Working Spaces

Headphones are a common sight at Invent.

Once considered a fad, shared working space has established a solid foothold in Bellingham. Enticing clients with benefits that range from ‘Waffle Wednesdays’ to extensive graphic design libraries­—the local competition for the wayward worker is heating up.

Bellingham and co-working spaces appeared to have a nice fling going earlier in this decade. Co-working spaces became trendy nationwide, drawing multitudes of clients who declared they didn’t need their own office space, let alone their own building. And Bellingham embraces those who go their own direction.

But far from becoming a one-night stand or a fad, Bellingham and co-working spaces have developed a long-term relationship. The “City of Subdued Excitement” has at least six co-working spaces, and the list of reasons people use them is growing. “They’re popping up everywhere,” said Tyler Byrd, owner of Invent Co-working, the largest of the six at about 4,000 square feet on the top floor of the historic Crown Plaza building downtown.

Originally driven by high leasing rates in large metropolitan areas, the co-working concept basically provided convenient access and cost savings. Over time, clientele (still pinching pennies) found the spaces filled with cost-efficient services and value-added amenities, like conference rooms, audio-visual media access, sound-proof phone rooms, break rooms, and more. Even semi-private or private offices.

Jeremy Hendren said, “Every co-working space has a different personality,” He is the Business Manager at The Office: Co-working at Gateway, located inside the Gateway Centre Executive Suites building.

Waffles at The Office: Co-working at Gateway, located inside the Gateway Centre Executive Suites Building.

Co-working spaces universally consist of a type of serviced office, usually occupied by independent or otherwise unconnected workers or businesses, according to Statista.com. The spaces generally support a shared working environment, and the majority of co-working members work in an open-office environment. The concept is believed to have started in San Francisco in 2005, when high-tech entrepreneurs shared a space.

The Pond, located inside 2020 Engineering’s Wellspring Building, helped jump-start the trend as one of Bellingham’s first co-working companies in 2012. Founded by Renata Kowalcyzk and 2020 Engineering Owners Mark and Jessie Buehrer, the building is divided among 2020 Engineering, tenant companies, and a co-working space.

They opened the same year that Invent Co-working converted to co-working operations under that name; previously their space was home to an incubator for tech innovators and inventors called the Idea Lab. Byrd bought out the other partners and rebranded the space, which includes a photography studio and multimedia-wired conference room among its offerings.

Invent lists more than 50 members, including “a mix of entrepreneurs, startups, professionals, freelancers, and remote employees,” said Patty Reed at the front desk of Invent.

Hendren said The Office: Co-working at Gateway’s 30 co-working tenants come from as far away as Whidbey Island and British Columbia, and often they need an office space just several days a month. “We have a landscaper who needs a place to do his bookkeeping,” Hendren said. “We have Canadian-based companies whose employees cross the border to pick up mail (another major cost and time saver) and then do some work while they’re here. A woman who lives on Lummi Island comes here to get a reliable high-speed Internet connection.”

Alan McConchie, owner, Localgroup Studio.

Other spaces specialize. Owner Alan McConchie at Localgroup Studio in Bellingham caters to a niche market. Its website states: “…dedicated to the practice, presentation, and discussion of design in its many forms.” McConchie said they attract writers, coders, students, telecommuters, and owners of small startup businesses.

Growth in co-working puts Bellingham in the U.S. mainstream of a young and burgeoning industry. Statista.com reports there were 4,043 co-working spaces in the United States in 2017 and that number is forecasted to increase more than 50% to 6,219 in 2022.

People who can work remotely as employees or independent contractors have the freedom to live where they want, but still need to be more productive than telecommuting from home.

Co-working spaces often provide the structure and discipline that many independent workers need for effectiveness. They don’t have distractions like pets, daytime television, or a neighboring conversation about someone’s social life. A co-working space is a place where an individual can go daily, sit down at a desk, and work among like-minded people in a structured atmosphere.

“People are realizing how important the environment they work in is and how difficult it is to work in a coffee shop,” McConchie said. Or, in the case of one co-working tenant who spoke to us anonymously, sit in the car outside a coffee shop to gain Internet access.

Interaction with like-minded people can be positive—peas in a pod, so to speak. According to a study featured on Office Vibe, a co-working office environment made 64% of entrepreneurs more productive, 68% more focused, and 90% more confident.

Reed said, “We have one client who said they get more done in three hours at Invent than in 10 hours at home.”

Lowering office leasing costs still ranks as the most major of draws to renting co-working spaces. Rates in Bellingham range from approximately $100–$300 monthly in modern, attractive buildings with preferred locations, while standard office rentals typically start around $400 a month and go up as high as $1,000, depending on size, location, services, and amenities.

Jeremy Raughton, Office Manager alongside Hendren at The Office: Co-working at Gateway, pointed out that many tenants utilize access to a shared conference room that enables them to meet with clients in a professional and private setting.

Co-working space rates vary, based on factors of access, privacy, and use of a shared conference room. For example, Invent Co-working lists packages ranging, per person, from a Virtual use only at $50 monthly up through $150 for first-come-first-served open desk, and $200 to throw in some conference room time. A dedicated desk and five hours of conference room come with packages ranging from the minimum $300 package to $450 for a cube, and from $600-$1,000 for an office.

Monthly rates are similar at the Bellingham co-working spaces. At the Gateway Centre, for example, they show two floors of a multitude of executive offices going between $600-$975. Another common denominator is hourly fees for needs like a meeting room, photo/video studio, virtual access, etc.

While some value-added tools like high-speed Internet access are fairly standard, Bellingham co-working spaces also offer distinctive features and characteristics. Community Manager Patty Reed at Invent said, “We foster community with networking events and guest speakers.” She cited examples of lunch outings for members at downtown eateries and in-house happy hours after work.

Similarly, Localgroup Studio promotes “…platforms for dialogue, collaboration, networking, education, and research. After regular business hours (M–F, 9–6.) the Studio is available for meetings, workshops, classes, events, pop-up shops, and other gatherings.”

Because Localgroup Studio targets graphic designers, illustrators, and interior designers, McConchie said they created an elegant, artistic space containing an extensive library of art and design books.

The Cooler in Bellingham includes a modern, eat-in kitchen.

The Pond emphasizes healthy amenities that include natural ventilation, full-spectrum daylighting, large windows, and solar tubes, plus a pet-friendly environment.

Co-working enthusiasts also enjoy the networking that occurs with people both in related and unrelated fields. Common areas in shared office spaces often are ideal for networking, sharing information and knowledge with fellow co-workers.

Unlike working at home, co-workers have an opportunity to interact with people from varying professional backgrounds, who would likely become a useful connection, and this—in turn—can be converted into generating leads and partnership opportunities. “A lot of happens organically from people working next to each other,” Reed said.

The advantages of this trend and its popularity nationally and locally probably foreshadow more co-working space “popping up” hereabouts. “Bellingham is ideal for co-working spaces,” McConchie said, “because it’s such a desirable place to live.”

Growing a Small Business—and Avoiding the Pitfalls

CJ Seitz | Director of Western Washington University’s Small Business Development Center
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Growing a Small Business—and Avoiding the Pitfalls

Director of Western Washington University’s Small Business Development Center

You often hear entrepreneurs talk about their business like it’s their baby. The challenges of becoming a new parent and a new business owner are profoundly similar. You’ll have sleepless nights. You’ll worry about doing everything right. You won’t, but that’s okay, because businesses, like babies, are resilient.

Things might not always go as planned and you probably will need to adapt to changing circumstances. There will be tears—tears of joy, as well as tears of stress and disappointment. But the good news is this: You can find plenty of support systems and mentors available to help you through the difficult times with “your baby.”

Entrepreneurs often underestimate the time and energy that operating business demands—especially newbies to business and startups. In constructing a Small-Business Survival Guide, ask yourselves some fundamental questions, beginning with:

What do small businesses need that they don’t know they need?

No. 1, know the market for your product or service. What problem will be solved, what pain will be relieved, and how will those change over time? Steve Jobs said, “A successful business knows what the consumer needs before the consumer knows.”

What elements are essential to survival?

A real understanding of the numbers and the financial drivers of your business’s success is mandatory. You must understand how to interpret the story that the profit-and-loss statement, the balance sheet, and cash-flow numbers are telling you. At the Small Business Development Center (SBDC), we love helping business owners grow their financial skills. Imagine how empowering it is to truly understand the financial implications of your decision-making.

Ever read or heard about Wimpy from the comic strip Popeye? He would say, “I’ll gladly pay you Tuesday for a hamburger today.” All too often, Tuesday comes, but the money doesn’t. Business owners fall for this and unwittingly become a bank.

It’s common to see a business that’s profitable, yet at the same time strapped for cash. When a company is making sales aggressively but has extended too much credit, net income is tied up in accounts receivable and can only be found on the balance sheet, not in the bank.

What’s the value of understanding your market?

Here’s a great example. One of our clients entered a market that was growing rapidly in the early 2000s. This company understood its market and, most importantly, saw big changes coming. The client kept its products the same as it began engaging smaller, creative new markets. When the predicted decline began in its original market, the company not only survived and avoided getting left behind, but grew exponentially.

What are best practices specifically for startups during the first 18 months in business?

Pursue the minimum viable form. Know your market and enter your market in full-on learning mode. Avoid taking on significant debt and making decisions that lock you into a specific course of action. Stay as agile and fungible as practical. Start small and learn as you go—like Apple did.

When it comes time to take on debt, make sure you’re well capitalized from the outset. Banks don’t like do-overs. Just as important as bootstrapping your way into the market, you must understand how much cash your growing business will consume in the form of fixed expenses and cost of goods sold. If sales are falling short of breakeven, you must have enough in cash reserves or the borrowing capacity to cover the shortfall.

The successful startup always will be hustling for business and looking to close sales. Too often, we see entrepreneurs who wait for everything to be perfect before they begin asking for the order. As author and ultra-successful dotcom business exec Seth Godin says, “Ship it!”

What are the pitfalls to avoid during the growing stage (18 months to 7 years)?

Something we routinely see overlooked is the need for well-defined systems and documentation of key processes. Often we find mission-critical information stored in silos. An example: when the owner or a key employee are the only ones who know how to perform a certain task or where to find critical information.

If something, heaven forbid, happens to that key person, the business can come to a grinding halt. This often occurs when a company grows from a one-person operation or adds an employee or two, and then many more, and knowledge gets transferred only through on-the-job training or simply making it up as they go along.

You don’t have to stop everything you’re doing and sit down and write a 40-page employee manual to solve this problem. You begin simply by writing up standard operating procedures for the most critical functions of running your business.

What works well for mature small businesses (7-8 years and older)?

In addition to becoming a master of market intelligence, let personal goals drive business decisions:

  • Do you want to see the business run more autonomously and require less of your time?
  • Do you want to pull more income out of the business?
  • Do you want your business to better reflect your values?
  • Do you want to groom the business for eventual sale?
  • Whatever the goals, success is more likely when you have a solid, specific plan. The planning is not exciting, but it’s where the magic happens.

The SBDC provides a resource for entrepreneurs. We can be your “success sherpa,” guiding you along steep and perilous trails to the pinnacle. And we like to have fun in the process.

CJ Seitz director of Western Washington University’s Small Business Development Center in downtown Bellingham. A seasoned and certified business development consultant, she joined SBDC in 2005.

Breeding Hope

Sherri Huleatt
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Breeding Hope

Brigadoon Service Dogs Give People In Need a Second Chance

Playing fetch is one thing. But Brigadoon Service Dogs, a local nonprofit, trains their dogs to another level.

Brigadoon’s dogs—which take about two years to train far beyond fetch, bring it, sit, and stay—alert their owners when their blood sugar drops too low, alleviate anxiety and PTSD for prison inmates and veterans (going so far as to wake them from nightmares and nudge them if they sense anxiety), help build confidence and self-worth with at-risk youth, and help mentally and physically disabled people live independently.

“I had no idea the impact my dogs would make,” said Denise Costanten, Executive Director of Brigadoon Service Dogs. Costanten, who founded Brigadoon in 2004, when she realized her Collie-training hobby could help people in need.

Once her website went live, she discovered how much the demand exceeded supply and she made Brigadoon a full-time career. She’s provided training and placed about 100 dogs in the last 14 years.

Brigadoon has three employees, about 40 volunteers, and programs that reach veterans, inmates, at-risk youth, and children and adults with mental and physical disabilities. The Brigadoon Prison Program, which operates in four Washington correctional facilities, teaches inmates to train service dogs for veterans; a few of the programs are specifically designed for incarcerated veterans.

That program teaches inmates positive communication skills and discipline, and helps them give back to the community. According to one Prison Program member, who served four years as a U.S.Army medic, “[The program] has brought a lot of light into my life. I’ve been able to identify some weaknesses in my teamwork skills and some personal weaknesses I’ll have to work on before my release. It has allowed me to put something before myself.”

Costanten said training dogs gives inmates and veterans someone to talk to. “One of the biggest problems for people with mental-health issues is they don’t want to be judged, and dogs don’t judge,” she said. “Their dogs love them 24/7—this gives people the confidence to go back out into the world.”

Each dog costs about $30,000 to train—including medical bills, food, staff time, etc. Civilians pay $10,000 for a dog and veterans get them for free. If a dog doesn’t pass the training requirements, Brigadoon adopts it out to a forever home for $500.

Costanten spends so much of her time training dogs that she has very little time to promote her organization and build relationships. “It’s the business community that helps spread the word about Brigadoon,” she said.

Brigadoon’s business partnerships with Superfeet and Northshore Veterinary Clinic have made a major impact on the nonprofit’s success, particularly since Brigadoon is reliant on private and corporate donations to stay afloat. Northshore helps promote fund-raising events and tours, and it gives Brigadoon a 20% discount on all veterinary costs.

Superfeet, which has supported Brigadoon financially since 2015, invited them to Superfeet’s annual Employee Giving Fair last year. At the Fair, Superfeet employees receive $500 each to donate to a nonprofit of their choice, and some Brigadoon’s service dogs “stole our hearts,” said Jolene McEachran, Superfeet’s Operations Coordination Manager and head of their Local Giving Committee.

“We chose to partner with Brigadoon because its mission and work positively impact those who come in contact with them,” McEachran said. “Since 2015 we’ve been a part of five matches (of dogs to owners in need).”

Costanten didn’t take a salary from this venture for 13 years, but she felt forced to when her late husband (an Army veteran with two Purple Hearts) was diagnosed with cancer and she no longer had an income source. Aside from a salary, Costanten has been recognized in other ways.

She received the Golden Tennis Shoe Award presented by U.S. Senator Patty Murray, Volunteer of the Year Award from the Washington State Department of Corrections presented by Gov. Jay Inslee, and Volunteer of the Year Award from The Whatcom County Peace Builders.  

“It’s a labor of love,” Costanten said.

Angel Investors

Mike McKenzie
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Angel Investors

Providing an Investment Boost to a Select Few Who Need Funding

In business, to state the obvious, money talks. And it talks the most and the loudest in any conversation about how to keep a business going. It drowns out talk of a quality product, the customer experience, and the Big Dream. No business survives in a vacuum of no dough to begin with, or an in-the-red bottom line or a no-way-to-meet-expenses mode.

Lack of money crushes dreams and schemes.

One of the biggest questions facing any business, at any stage of its operation—and especially at startup—is how will it get financed? Bootstrap, life savings, bank loan, SBA loan, and a highly popular source these days, crowdfunding? All of these means of financing and sustaining a business are common today.

And there’s another important one: an investor. Enter the guardian angels, stage center.

Many companies in Whatcom County have started or been boosted by means of a group that formed about 15 years ago, the Bellingham Angel Investors (BAI). With 40 participants and several heavyweight corporate sponsors, BAI accepts and screens applications for investment funds, listens to pitches, and selects promising businesses to back financially.

There’s more, as revealed in a conversation with Mark Knittle, President of BAI and a longtime businessman in the field of information technology. “We’re there to support people beyond just funding them,” he said. “We’ll coach them on how to make effective presentations and help them find other resources available in the community that offer services. And individually, we provide hands-on help with how to identify the market and make a company successful. With 40 members, we have a lot of experience to share.”

Knittle spends most of his semi-retirement activity consulting with companies and dabbling in a few entrepreneurial adventures of his own, traveling widely overseas, and advising a nonprofit he started to assist education in Africa. He’s a Midwest transplant—Kansas City, Minnesota, University of Chicago graduate—who’s lived in this area and owned businesses over the last 12 years. (“We moved here for three reasons—weather, hiking, and skiing.”)

Now, largely through the BAI, he exercises his strong interest in the health and welfare of businesses in Whatcom County. The BAI provides a strong vehicle for that. “Everybody in the group is a local resident of the county—some with dual residences—and we look primarily for local companies that are attractive to us to see if we can make them work.”

The BAI provides an application format on its website and invites a few in bi monthly to make a presentation. If promising applications dwindle, the organization works in concert with the Seattle Alliance of Angels and others along the I-5 corridor from Portland to Vancouver, B.C., to find investment opportunities.

Making the cut with BAI requires much preparedness from a prospect. “When you come to present, you have 10 minutes to articulate what you’re doing and why we should back you,” Knittle said. “It takes more than just promise and energy. That’s why we offer to coach before a presentation. We can tap a lot of resources and hands-on help, not just networking.”

The BAI invests in a wide variety of businesses, which shows in their extensive portfolio, rather than specializing in a sector like technology. “In this region, we’ve leaned toward technology, but we’ve also invested in food, marine, energy, biomedical, and other sectors.”

He said that the group “sees a lot of fascinating, amazing, creative, and ingenious ideas” and they hear from a large number of individuals. The BAI funds its chosen few either from a pool it has formed through membership (“all in,” Knittle said), or angels can take on an investment with one or two others, or individually.

Knittle’s best advice to a person or group in approaching the angel investors is to know when you’re ready. “We get too many who are way too early in their startup process,” he said. “We also get too many where the model doesn’t work. Great idea, maybe, but not investable.”

To avoid those situations, the investors look for proof of concept. “We look at whether a company has tested the market for validation,” he said. “Not necessarily that they’ve turned a profit yet, but that they have demonstrated they can get customers. They might be three or four years away from a good revenue stream, but they’ve shown that their product is buyable, and that’s worth a lot.”

The BAI deals mostly in startups, but doesn’t exclude existing companies. “We’ll look at any great idea in the Pacific Northwest with a solid market and growth potential,” Knittle said.

An important distinction for an applicant to understand about the angel investors is that they only look to help a business get started. Knittle emphasized, “These are not long-term loans. We’re actually looking mostly for an exit plan, such as acquisition of the business. We’re not in it forever.”  

The Speed Bumps of Accounting and Taxes

Mike McKenzie
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The Speed Bumps of Accounting and Taxes

The team from Andrews Accounting: Top (L-R): Les Campbell, Jeri Andrews, Debra Schindler, seated (L-R): Taryn Loveland, Emily, Janna Southworth

The business version of the proverbial oil-and-water idiom is personal checks-and-business accounts.

Here’s a small sample of why: Let’s say you take a potential business client to lunch, or treat one to a happy-hour outing, and you pay with the charge or debit card from your personal bank account. You then can’t claim it as a business expense when filing your taxes.

Who knew? Many don’t, according to one expert in the field, tax and accounting advisor Jeri Andrews. It ranks as her No. 1 tip for small-business owners—avoid co-mingling business and personal funds. “Never pay personal bills from your business account, or vice versa,” she said. “That’s called ‘breaking the corporate veil,’ and you’ll have no protection at all if you do it.”

Andrews, the owner since 2006 of Andrews Tax Accounting & Bookkeeping on the Bellingham waterfront, has specialized in small-business clients for almost two decades since earning a master’s in Accounting and Finance.

The Andrews team of five manages taxes and bookkeeping for more than 200 small companies and about 400 individuals, many of them sole proprietors or who contract their services. The staff advises and helps manage all facets of recommended small-business needs, ranging from financial statements, projections, payroll, and tax filings to whatever degree a client designates, either partially or entirely.

During a wide-ranging interview in her office at Squalicum Harbor, she addressed another commonplace pitfall she’s encountered in almost two decades of her work since obtaining her master’s degree in accounting: “I’ve had so many clients come in with no idea about how their business should be structured,” she said. “I usually have them form an LLC (limited liability company) for several reasons, mostly taxation.”

She said what’s usually unknown is that the LLC is a state designation for doing business, not for the IRS. “For federal tax purposes, it’s called a ‘disregarded entity’ —it doesn’t exist,” Jeri said, explaining, “With two really short pieces of paper, you simply file with the state of Washington for a business license number (UBI, or unified business identifier).”

The other important benefit of an LLC is what the LL stands for—limited liability; it can protect your personal assets, separate from business debts and liabilities.

Jeri offered numerous other points of consideration for surviving the curves and speed bumps of tax burdens and accounting in order to stay in business and make a profit.

One is forming an S or a C Corporation, at an appropriate time, depending on circumstances of the business’s growth. “You can do that without changing anything in your estate,” she said. “Otherwise, you could wind up having to close down and start all over again.”

Andrews Tax Accounting recommends to the majority of its clients forming an S Corporation, a “flow-through” entity in which revenues flow through the business to the owner, and taxes are filed on personal returns. An S-Corp provides room for business growth, such as adding payroll or forming a partnership, without having a total do-over.

Another option is a C Corporation, where the business pays its taxes. “We advise most small businesses to avoid a C Corp,” Jeri said. “It’s often foreign owners, who are not eligible for an S-Corp. Or, if a company is large enough for shareholders and dividends, it can help.”

Another major point for business survival is to manage quarterly payments, based on taxable income estimates. “Make sure you’re on track, so you don’t end up being hit on April 15 with a $20,000 tax burden you weren’t prepared for. Plus, you could incur penalties for not filing the quarterly estimates.”

In business accounting today, one question pops up frequently: How are the new tax laws going to affect us? Jeri’s answer: “It’s so individual, it’s hard to make general conclusions. But I can say confidently that small businesses, for the most part, will do better on their taxes under the new laws this year. I’d say anything under a $250,000 net is going to see a very good decrease in their tax burden.”

Some other strong suggestions that Jeri offered for a Small-Business Survival Guide:

“Before you begin doing business, consider where you are at the moment and where you want to get to. (examples: Expansion? Franchise? Partnership? Scale and sell the company?)

“If more than one person will be involved, make sure your agreement is ironclad, not informal. Go to an attorney and write a very clear partnership and shareholder agreement that’s in everybody’s best interests. That’s money well spent.”

“Find an accountant you trust and make a plan. Find someone who will answer all your questions, inform you, set up your bookkeeping, and who doesn’t make you feel stupid or guilty for not knowing everything.”

She said she’s contemplating having a sign made to hang on her office wall about “the thing I hear the most” after client consultations. It would read:

“I feel so relieved.”

Alcoa’s Cool Solution

Mike McKenzie
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Alcoa’s Cool Solution

Intalco Smelter Complied Simply with H2O Mandate and Saved a Ton of Money

At our Intalco smelter in the United States, engineers developed a low-cost solution that eliminated water usage from the facility’s anode-cooling operation.”

This statement appeared on page 73 of Alcoa’s 2018 annual report, followed by a case study of the Intalco Works plant on the shores west of Ferndale in Whatcom County. The case arose from a 2015 edict by the State Department. of Ecology: Stop emitting contaminated wastewater into the ocean.

The solution at first appeared complicated, if even possible. Alcoa had two years to get it done. The smelter’s existing system of cooling down hot carbon anodes involved a filtering method that cleaned the water relatively well, but not completely, before it was discharged back to nature.

Last year, after staring at an estimated cost as high as $2 million, an engineering team came up with a simple solution: Stop using water for cooling; instead, use air-cooling fans. The savings: 40,000 gallons of water a day. The cost of the solution: under $10,000.

Clinton Harkey, who, at the time, was the only mechanical engineer at the smelter, led the experimentation. A Texas transplant with his degree from Texas Tech, he explained in a sit-down interview recently how this all came about. “Previously, the equipment pumped water through spray nozzles and filtered the used water. That removed large particles,” he said.

Without wading into too much tech-speak, Harkey explained how research at the Alcoa Technical Center eventually led to using room-air temperature and super-large fans to regulate the internal-anode temperatures. Yes, fans like you might use to cool a room in your house or your office (only giant industrial-sized) maintained the desired structural integrity of the anodes, without having to use the spray hoses to cool them.

Another benefit evolved from the change. Not only does the new process meet environmental requirements, it no longer produces cracked anodes from uneven temperatures.

“I reported how we could turn the water off altogether, and how we could add the forced-air, convective cooling fans and get to zero contamination,” Harkey said. “The deadline was June 30 of 2017. We destroyed that, converting the system by March.”

The Intalco innovation was reported as a case study in its worldwide annual report. Moreover, with the double-win—zero contamination and major cost savings—Alcoa also was recognized with an environmental best-practices award for its anode-forming and baking process.

At one point, Harkey said, the perception was that the task of eliminating wastewater in this uniquely old smelter, which includes a carbon plant, a pot line, and a casting house, was “impossible…we went from thinking it might cost millions, to a bid of $50,000 for a different watering system, and wound up spending less than $10,000 on two fans and some labor to move equipment,” he said.

The Intalco smelter, he said, is a “material-handling facility that happens to make metal in the process.” He explained in layman’s terms: “We move things around and recycle 90% of the materials we work with back into the process of producing aluminum. Most of the aluminum first produced is still in use.

“Producing aluminum, in and of itself, is a clean-production industry, built on recycling.” Harkey said. “We strive constantly to protect the environment. Our sole purpose is to make metal in the most environmentally friendly way possible. It’s hard because we’re a heavily regulated state and country, but because we are, we can do far better than other countries with no regulations.”

Beginning this year, Alcoa’s long-term goal—written in its annual report—is to define and implement a program enhancing water-use efficiency. The specific objectives: “…to reduce fresh-water intensity at least 25% by 2020, and 30% by 2030.” The company is taking a survey in November to assess the progress toward those goals.

Alcoa’s points of emphasis, as outlined in the annual report, are reduction of water consumption and discharge, use of secondary sources of water, and an increase in water recycling.

“Environmentally,” Harkey said, “this is a fun place to work.”

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