Small Business News
Local and national business news for Wichita, Kansas.The average price for a gallon of regular gasoline in Wichita has risen 19 cents since last month, according to the American Automobile Association’s March Fuel Gauge Report.
Wichita unemployment rate jumps to 8.6%
The unemployment rate in the Wichita area rose 0.8 percent in January, to 8.6 percent, from 7.8 percent in December 2009, according to numbers released Wednesday by the Kansas Department of Labor.
Bob Martz golf tourney scheduled for May
The 3rd Annual Bob Martz Golf Tournament will be held May 21 at Auburn Hills Golf Course, 443 S. 135th St. West.
Kansas Department of Health and Environment to sponsor conference on recycling, energy
The Kansas Department of Health and Environment’s 16th annual Works! conference will emphasize composting, recycling and renewable energy.
Profits fall, but Kroger beats 4Q estimates
Kroger Co.'s fourth quarter 2009 profit slipped 27 percent, but the grocer still finished above Wall Street’s outlook for both quarterly sales and net income. (KR)
Wichita chamber criticizes state spending growth
The Wichita Metro Chamber of Commerce says the major cause of the state’s financial trouble is “out-of-control state spending” — and not the tax cuts that have been enacted during the past decade.
Jos. A. Bank brings back suit promotion for laid-off customers
Jos. A. Bank Clothiers Inc., which has a Wichita store at Bradley Fair, is bringing back a “risk free” promotion piggybacking off the nation’s tough job market. (JOSB)
Northrock Business Park secures lease from Universal Ensco
Houston-based Universal Ensco Inc. will lease 4,000 square feet at Northrock Business Park.
Northrop officially bows out of 'tanker war'
Northrop Grumman Corp. will not submit a bid for the controversial KC-X U.S. Air Force refueling tanker contract, the company said Monday while still maintaining that its would-be entry was "the best value for the military and taxpayer." (BA)
Kansas Regents board names Tompkins its top executive
The Kansas Board of Regents has appointed Andy Tompkins its new president and CEO, effective June 1.
Post-Christmas layoffs and a renewed search for work by the unemployed pushed the Wichita-area unemployment rate in January to 8.6 percent, from a revised 7.8 percent in December, the Kansas Department of Labor said Tuesday.
Every January sees a surge in the unemployment rate, say economists — the state and all of its metro areas saw similar bumps in January.
Unemployment rates in other Kansas metro areas were: Kansas City area, 7.5 percent; Topeka, 7.3 percent; Manhattan, 6.1 percent; and Lawrence, 5.8 percent. Kansas had a rate of 7.1 percent in January, up from 6.2 percent in December.
Tanker 'soap opera' may not be over
SEATTLE — Northrop Grumman's decision to forgo bidding on the Air Force's $35 billion refueling tanker program, leaving Boeing without a competitor, might not mark the end of a nearly decade-long quest to replace the military's existing fleet, a Boeing executive said Tuesday.
"I've been working this program for nine years," Jim Albaugh, head of Boeing's commercial aircraft and former chief of its defense unit, said in a presentation at a JPMorgan Chase conference broadcast on the Web. "It's the longest-running soap opera since 'Days of Our Lives,' and I'm not sure we've seen the last episode."
Northrop, which had partnered with European Aeronautic Defence & Space in a winning bid for the tanker that was overturned in 2008, announced its decision Monday. The move made good on Northrop's December threat to withdraw unless the government altered some of its requirements.
Yuca Latin Bistro is in the works on Tyler
Jason-Paul Febres once again has left Sabor Latin Bar & Grille . Last year at about this time, he left to start his own restaurant amid differences with owner Melad Stephan , but another restaurateur nabbed the space he wanted.
Febres and Stephan reconciled, and Febres returned to Sabor last summer.
Now, he's teaming with Roni Attari , another employee of Stephan's Empire Restaurant Management , to open Yuca Latin Bistro .
City reduces its loan to developers
The Wichita City Council on Tuesday cut the amount of a loan it gave to prominent downtown developers Real Development, partly as an acknowledgment that one of the projects has stalled.
The developer and the city cut the original $3 million loan that the developer expected to spend to change the outside of Sutton Place, a large white office building at 209 E. William.
Real Development spent $241,000 in loan money on exterior work at Sutton Place, largely to accommodate a new ground-floor coffee shop in 2008.
'Victoria's Secret for men' at Blvd. Plaza
Marquis Henley has lived in New York and California and now is bringing a bit of each to Wichita with East & West Menswear .
He'll open the store April 1 in Boulevard Plaza at Lincoln and George Washington Boulevard.
"Our main focus is underwear and swimwear," Henley says.
Market seems to mystify
NEW YORK — If you're confused about the outlook for the economy and stocks one year after the market hit bottom, then you've got good company — the Wall Street economists and strategists who are supposed to have this all figured out.
Rarely have the experts seemed so divided about the future.
We're either beginning the type of robust recovery that typically follows a deep recession, or we're on the cusp of another contraction, the dreaded double dip. Prices could climb fast as they did in the U.S. during the 1970s, or fall to devastating effect as they did in Japan during the 1990s.
Northrop won't offer tanker bid
Northrop Grumman said Monday that it won't submit a bid in the U.S. Air Force's refueling tanker competition, saying the proposal clearly favors Boeing's smaller tanker.
That should make it easier for Boeing to win a $35 billion contract for 179 refuelers.
A Boeing win would benefit Wichita, where workers at the company's defense facility would do the finishing work on the tanker. How many jobs the program would create is uncertain.
Local dealer to keep Cadillac
Kevin Crook's dealership sold the last new Cadillac on its lot a week ago.
He said he thought it would be the final time he'd see a new Cadillac in the John K. Fisher showroom.
But Crook, president of the General Motors dealership in El Dorado, learned Monday that he would get his Cadillac franchise back. His is one of the 661 dealers that GM said Friday it would reinstate.
AIG to sell insurance division Alico to MetLife
CHARLOTTE, N.C. —American International Group said Monday that it will sell its American Life Insurance Co. division for $15.5 billion to MetLife Inc.
The government-approved deal, AIG's second big asset sale in two weeks, will give the insurer more cash to repay the billions of bailout dollars it still owes the government.
The purchase expands MetLife's presence in Japan and high-growth markets in Europe, the Middle East and Latin America. American Life Insurance, known as Alico, operates in more than 50 countries. MetLife currently offers services in 17 countries.
Growth at Fort Riley helps area recover
Development continues at and near Fort Riley, despite the debacle of overbuilding, misjudgment and corruption in the area over the past five years.
Although some Wichita firms were burned by the Junction City housing bust, a few Wichita companies remain in the area and are doing quite well.
On the base, the U.S. Army is partway through $1.9 billion in new construction and renovation to accommodate the return of the First Infantry Division from Germany.
Training centers draw from around the world
Flags from around the world line a long hallway at the FlightSafety International Hawker Beechcraft Pilot Learning Center in east Wichita.
They represent the countries of the pilots who come to the center for training.
Wichita is FlightSafety's largest location, and the number of international customers who come to its five pilot and maintenance training facilities here — which provide training for Hawker Beechcraft, Cessna and Learjet aircraft — is growing.
Via Christi focuses on transformation
Having gotten out of the insurance business, Via Christi Health is focusing on transforming health care delivery to meet the demands of tomorrow, says Kevin Conlin, president and CEO.
In an interview, Conlin talked about the decision to sell Preferred Health Systems and Via Christi's plans going forward. The sale of PHS, a Via Christi subsidiary, to Coventry Health Care was finalized in February.
Conlin said the decision to sell was 15 months in the making. "How difficult was it? Very," he said.
Disney spending billions on makeover
LOS ANGELES — When Walt Disney Co. asked publisher Dan Vado to make a series of comic books based on its Haunted Mansion theme-park ride, he worried that the empire built on the likes of Snow White and Tinker Bell would reject his brand of creepy humor.
Vado gave Disney skeletons dangling from nooses, scattered corpses and a ghostly poodle that says "crap." To his surprise, Disney signed off on his vision.
"Everything we did was really strange," says Vado, founder of SLG Publishing. "The interesting thing about Disney is, for a company perceived as being stodgy, they do a good job of reinventing themselves."
Vickers known for his humor, dealmaking
Thomas "Tommy" M. Vickers was the youngest of five brothers in the Wichita family that founded Vickers Petroleum.
But more than that, he was somebody who made fast friends and thrived on business deals.
Mr. Vickers, formerly of Wichita, died Wednesday in a Denver hospital. He was 72.
February jobless rate steady
WASHINGTON — The nation's unemployment rate held steady at 9.7 percent in February and employers shed another 36,000 jobs, new government data showed Friday, signs that the U.S. economy is recovering slowly from the deep recession.
The Obama administration had hoped that job numbers from the Labor Department would show net gains for February, but the record snows in the Northeast and bad winter weather in much of the rest of the country may have affected the picture, especially in construction, which lost 64,000 jobs in February.
While the headline number remained slightly negative, the report had some positive signs. Manufacturers added jobs for the second straight month, albeit not that many, around 1,000. More comforting was the services sector, which added 42,000, and professional and business services employment, which increased by 51,000 jobs.
Hopeful signs for housing market
The photo on the screen Friday at the Wichita Area Builders Association represented Wichita's housing market in 2010: one small blade of grass poking through a thick layer of ice.
That blade represents the first sign that the Wichita housing market is emerging from the recession, Stan Longhofer said Friday morning as he presented the 2010 Kansas housing forecast to about 75 people at WABA.
After the presentation, several of the players in the market agreed: Signs of a recovery are at hand, but it will be about 60 days before the 2010 picture clears.
Bars at the airport are temporarily dried out
Sometimes people who are traveling by plane want a quick drink before takeoff or immediately upon landing.
But they can't have one at Wichita Mid-Continent Airport right now.
HMSHost, which handles food and beverage service at the airport, inadvertently let its liquor license expire.
GM to reinstate 600-plus dealers
SOUTHFIELD, Mich. —General Motors plans to reinstate 661 dealers and may enter arbitration with as many as 400 outlets as the automaker attempts to stem declines in U.S. market share.
GM offered franchise agreement letters to the dealers, North America president Mark Reuss said Friday in a conference call. The company has about 5,500 outlets.
"We are eager to restore relationships with our dealers," said Reuss. "The arbitration process creates uncertainty in the market. Issuing these Letters of Intent is good for our customers, our dealers and GM."
Wichita State economist forecasts area housing up in 2010
Housing markets in the Wichita area and Kansas will recover in 2010, a Wichita State economist says in his annual forecast. Stan Longhofer, director of Wichita State's Center for Real Estate, will present his 2010 Kansas housing market forecast at 9 a.m. today at the Wichita Area Builders Association office, 730 N. Main.
Longhofer's annual Wichita study, expanded to include the state and Lawrence this year, says the "market's thaw should be complete" by the end of the year.
Wichita-area home sales should rise by 5.1 percent to 9,059 units in 2010, Longhofer said.
Spartech Plastics in Wichita to expand and add jobs
Spartech Plastics announced Thursday that it is expanding its Wichita plant and plans to add workers over the next two years.
It's a win for local economic developers who have spent more than a year focused on holding onto local manufacturing plants whose owners are trying to cut capacity.
Spartech will expand its 60,000-square-foot plant at 1444 S. Tyler Road by 10,000 square feet. It will retain 75 employees in Wichita and promised to hire 18 new employees over the next two years.
Hey internet entrepreneurs, celebrities are encroaching on your market. Thanks to flexible technology and an abundance of developers, web start-ups are practically the new must-have accessory for Hollywood types, reports Business Insider. Check out their list of the 10 companies to watch. There are the A-listers like Ashton Kutcher's Katalyst Media and Will Ferrell's FunnyOrDie. But did you know that Ludacris and Will.i.am have social networks? Or that Peter Gabriel came up with a Pandora-killer and Kim Kardashian launched the Netflix of footwear?
Big numbers from Tumblr. We've periodically sung the praises of blogging start-up Tumblr, which boasts slick technology and an entrepreneurial prodigy of a founder. Today, via Mashable, Tumblr announced some serious traffic growth: 1 billion pageviews and 15,000 new users joining everyday. Meanwhile, Mashable reports that Tumblr, which has operated thus far without a business model, "plans to launch a two revenue generating features next month."
Advice for first time CEOs. Bijan Sabet deals with a lot of neophytes but he doesn't mind (via peHUB). "In consumer Internet companies, first time CEOs are the norm - perhaps even encouraged and preferred," says the general partner at Spark Capital. He has two nuggets of advice for greenhorn CEOs: 1) Share bad news with your board and investors early and 2) always be planning for contingencies. "The 'what if' exercise is incredibly valuable and tells me that a CEO is thinking extremely strategically and not afraid to admit that things sometimes do take longer."
Another acquisition for giant vacation rental company. When HomeAway raised an astounding $250 million in a single venture funding round back in 2008, CEO Brian Sharples told Inc.: "There are going to be some great opportunities [for acquisitions] the next couple of years." Now, TechCrunch reports that HomeAway has bought the publisher of AlugueTemporada.com.br, Brazil's best known vacation rental site. This is at least the third acquisition the company has made since its last funding round and the first outside of North America and Europe.
How not to kill your start-up. ReadWriteWeb has put together a list of core principles entrepreneurs should internalize in order to keep their start-ups from biting the big one. One thing the post says to dodge is the tendency to become caught up in the allure of modern technology. "Consider other sources of competitive power than just technological sophistication, such as superior customer experience or service, exclusive distribution partnerships, or other market-based advantages." The most provocative, and perhaps, pertinent piece of advice? "Remember that sometimes start-ups need to be killed, for their own good -- or yours, at least."
Apps for TV have yet to catch on It is estimated that by the end of 2010, Americans will own more than two million Web-connected TVs. And in 2009, Yahoo! announced that Samsung, Sony, LG, and Vizio televisions would come with its Connected TV software, which is open to all developers. However, unlike the Apple App store, which had more than 3,000 programs just two months after its debut and more than 140,000 by 2010, apps for TV haven't taken off. Only 35 full-featured apps are available on the Yahoo! service. BusinessWeek reports one reason apps for TV have yet to take off is that the approval process for television apps is more difficult than for their online counterparts. After Yahoo! approves the App, each individual TV maker must also approve the app. Some TVs cannot run certain types of code, and TV makers are reluctant to take on the risk of being blamed for an app that disappoints.
Selling your business? A lawyer can help. Over at the New York Times' You're the Boss blog, lawyer Harry Styron offers pointers on selling a business and when to get a lawyer involved (hint: not until the decision has been made to sell, ideally not out of necessity). Especially for family run businesses, Styron says, "if the decision to sell is a result of a key family member having died or become ill or if the prospect of selling the business means some family member is going to lose a good job or a good income, the decision to sell was made too late." Now all you need to know is whether your lawyer should specialize in entrepreneurship.
How to cope with changes at the workplace. From budget cuts, to massive layoffs, to new management techniques, there are plenty of reasons why changes at the office can stress out employees. A recent survey conducted by Right Management, a career management consulting firm, shows that 31 percent of employees have trouble adapting to changes in the workplace, Boston.com reports. The Boston.com team has also come up with five tips on how to deal with change in the workplace, which include taking time to get to know a new boss in order to develop a good working relationship, staying on top of the latest skills that employers expect when seeking out job candidates in your field, and having an open flow of communication with your manager if you feel too bogged down by your workload.
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New Flat-Fee PR Service for Tech Start-Ups
This week, Olmstead Williams Communications, a public relations agency in Los Angeles, launched a new division that charges a flat monthly fee for a full range of PR services.
PRTechConnect is geared toward tech start-ups with limited marketing and PR budgets. The News Release Package, which costs $999 a month, includes services such as the creation and maintenance of a master list of media contacts, customized news release templates with tips for making announcements stand-out, targeted media pitching for 20 news release per year, and basic wire service distribution to Google News, Internet search engines, and RSS feeds. Companies must commit to at least three months; a $1,500 set-up fee will be waived if you commit to six months.
A pricier Industry Expert Package, which costs $1,999 a month, includes extras such as filtered email delivery of journalist queries, custom pitches, and follow ups with reporters. There is a minimum three-month commitment; a $500 set-up fee is waived if you commit to six months. If you decide you need additional services, the firm will bill at regular hourly rates.
Celebrity Endorsements and Publicity Secrets
Last week I had the honor of interviewing International Media Specialist, Sally Shields. Sally was incredibly generous with her “insider publicity secrets” to becoming a bestselling author and I have her permission to share them here. This is only a small portion of what Sally shared on the Million $ Mindset shows so if you missed it this week, make sure to download the podcast. Sally’s advice is great for any kind of publicity – even if you’re not an author!
Q: Sally, what is the #1 secret for authors to gain PR on television, newspapers, on-line publications and magazines?
A: Be timely, and have a great Hook! Here are two examples of how I got booked by being timely: First I was quoted in MomLogic.com, which is an offshoot of AOL Living, with this pitch during the presidential primaries:
Joe Biden's Mother-in-Law Dies How to Make Peace with Your Mother-in-Law, Before it's Too Late!
I also got booked on nationally syndicated, The Daily Buzz with this one: October 26th is Mother-in-Law Day How To Turn Your Mother-in-Law From Your Biggest Critic into Your #1 Fan in 3 Simple Steps!
And, (Marla’s personal favorite) I got booked on Fox & Friends with this tweaked pitch: Barack Obama's Mother-in-Law to Move into White House How to Create a Lifetime of Peace With Your In-Laws!
Q: Many people would benefit from having a celebrity endorse their book. How does one go about doing that?
A: The key is to make it as easy as possible for them to reply. Your request should include the following:
- Cover letter - Copy of your book - Self-addressed-stamped envelope - Sample testimonials that they can use as a template - Table of Contents, chapter titles and a sample chapter
Getting a good endorsement or testimonial can take time, but if you do not hear back from them in two or three weeks send a follow-up letter or email.
To find contact information for many celebrities' representatives, visit www.whorepresents.com or www.contactanycelebrity.com . www.CelebrityBlurbs.com will tell you the key agents or PR people you need to get in touch with to contact any celebrity. It's just $1 for a seven day trial.
Also, do not discount the value of endorsements from your fellow authors! The endorser does not have to be known in order to make a tremendous impact. The fact that they are an author in and of itself carries great weight.
Q: How about Bloggers? Can you give us an example of how you can get others to build a buzz about your book? What‘s in it for them, and why would they do this?
A: Bloggers need material all the time. Offer to provide them with a prepared Q&A, or a short article about your topic or area of expertise. Offer your book as a giveaway, either a real book or an eBook version. During holiday time, I got about 40-50 bloggers posting my book on their site. How do you find these bloggers? Simple - pick a keyword that applies to your topic. For example, I googled, "Wedding Blogs" and got a list of over 50 million blogs. GASP! Of course, you might want to stick with the top ones with the highest traffic count. You can check a blog's popularity by going to Alexa.com and checking its ratings.
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Why Women Secretly Enjoy Business Travel
George Clooney's character in Up in the Air didn't want his days on the road to end, and despite complaining about the hassles of business travel, most women secretly feel the same way. (And not because they might meet Clooney.)
Nearly three-quarters of female business travellers said they enjoyed having someone else clean up after them, in a Hilton Garden Inn telephone survey of 1,020 travellers; just 58 percent of men responded the same way. Sixty-two percent of women said they also appreciated having someone else make breakfast for them, and just over half said a perk of travel was having the bed to themselves.
The women may enjoy the travel more because they do it less: Men average 10 trips a year while women went on three trips on average. One in three Americans travelled for business at least once in the past year, and Monday is the most frequent night business travelers spent away from home.
On the road, men were more likely to miss a home-cooked meal (36 percent of men compared to 16 percent of women), while women were more likely to miss their own beds (43 percent versus 29 percent).
It's doubtful Clooney's co-star Vera Farmiga walked away with the Hilton bathrobe she wears in one scene, but more than two-thirds of travellers admitted to helping themselves to a lot more than an extra piece of fruit from the breakfast buffet. Among the not-exactly-complimentary items swiped: 8 percent admitted to tucking towels or bathrobes in their suitcases, 3 percent took pillows, comforters, blankets or sheets, and 2 percent took the iron, alarm clock, lamps, or artwork. One percent of travellers owned up to breaking one of the 10 commandments to walk off with -- wait for it -- the Bible.
The survey also culled advice from experienced business travellers for first-timers on the road.
The top tip: Nearly three-quarters of respondents suggested travelling the day before a morning meeting instead of trying to get up at the crack of dawn (or in the middle of the night).
Sixty-one percent suggested confirming the hotel has Wi-Fi/Internet access, and more than half (53 percent) advised setting two alarms the day of an important meeting. About half recommended making sure the hotel has a meeting space, and 35 percent said to stay at hotels that offer rewards points.
What -- if anything -- do you like the best about business travel? What tips would you offer first-timers? (And have you ever swiped a "souvenir" from a hotel stay?)
4 New Speakers for Your Computer
Thanks to iTunes, Web radio, and sites like Pandora, more computers are doing double duty as stereos. Can these speakers do your music justice?
Bell chimes and cymbal crashes on a U2 song were loud and clear on these speakers, which have 112 watts of combined power for lots of volume. Touch-sensitive volume buttons were easy to adjust, and the casing, made from the same material as bulletproof glass, makes a bold statement. COST: $1,000
Our second choice, these speakers had less-distinct bass than the Harman Kardons, even with a separate subwoofer, but they reached a higher volume, thanks to 88 extra watts of power. On the downside, the dial on the volume controller was hard to turn. COST: $199
These speakers sync with your computer wirelessly using a USB dongle, though they connect with wires to a subwoofer that plugs into an outlet. The speakers have a peak power of 200 watts, but the sound was a bit fuzzy, perhaps because of wireless interference. COST: $199
These small speakers, which are just 2 inches tall, produce surprisingly distinct sound and feature handy touch-sensitive volume controls. But with a combined peak power of just 10 watts, they have the least oomph of the test group, and they look a bit flimsy. COST: $130
Starting Up While an Employee
The "real" story on Facebook's founding. On Friday, Silicon Alley Insider published the results of its two-year investigation into the controversial founding of Facebook. Among the new details to emerge is this purported IM from Mark Zuckerberg to a friend right before Facebook's launch, in which Zuckerberg suggests that he is intentionally delaying the launch of a similar site, HarvardConnections, which he had previously agreed to work on. "I feel like the right thing to do is finish the facebook and wait until the last day before I'm supposed to have their thing ready and then be like 'look yours isn't as good as this so if you want to join mine you can…otherwise I can help you with yours later.'"
How to start a company when you still have a job. Over at a Smart Bear, Jason Cohen tackles the subject of bootstrapping a start-up using your salary. He recommends picking a slow growth business--you can afford this because you already have a salary--that doesn't require you to answer emails or phone calls during normal business hours. "Remember, your immediate goal isn't to make millions of dollars, it's to build a business just solid enough to quit your day job," he writes. You also have to make sure you don't get sued by your employer. To avoid this, Cohen suggests being upfront about what you're doing and getting a signed letter from a company representative that gives you the go-ahead to work on your business on your own time. "When it comes to company property, be paranoid," he writes. "Assume everything you do on the Internet is recorded, cataloged, tagged, and monitored continuously by a methamphetamine-powered slave-army." (Via Hacker News.)
How to get a better night's sleep. Having trouble keeping your eyes open? Couldn't wind down after all that Oscar excitement last night? You're not alone. Seventy-five percent of Americans report having problems sleeping a few nights a week, which can lead to missed workdays, errors on the job, and even diminished job satisfaction. Web Worker Daily has some tips for better sleep in honor of National Sleep Awareness Week and we . 1. Go to sleep at the same time every night. 2. Keep your room in total darkness. 3. Don't drink tea, coffee, or soda late in the day. 4. Avoid sugary foods later in the evening, and opt for snacks with tryptophan in them instead, like bananas, sunflower seeds, or low-fat yogurt. Lastly, experiment with a little white noise.
A plea to abandon ad blocking. As more businesses grow increasingly dependent on a solid Web presence for survival, tech-related news site Ars Technica writes that there's one menace threatening to snatch away the crutch: ad blocking. After observing over a period of time that a substantial amount of users were using software to block the site's advertisements, founder Ken Fisher decided to explain to readers exactly how and why ad blocking can hurt your favorite websites. "If you have an ad blocker running, and you load 10 pages on the site, you consume resources from us -- bandwidth being only one of them -- but provide us with no revenue," the post says. Fisher, who goes on to compare ad blocking to "running a restaurant where 40 percent of the people who came and ate didn't pay," also detailed a 12-hour experiment to make content disappear for visitors using a specific ad blocking program, which was met with mixed results. While it was a technical success, Fisher says he found out that most ad blockers were not doing so with ill intent, which raises an important question for business owners and developers alike: Is it ethical to block content for users who block your ads?
Apple nixes "cookie cutter" apps. In its latest crackdown on the appsphere, Apple is reaching out to companies that build apps from a single template, writes TechCrunch. Apple isn't opposed to these app generators categorically, but just wants to weed out apps that are little more than RSS feeds. Still reaching out to companies individually and suggesting that they add more features seems like unproductive micromanagement to us. See these 15 CEOs on their ways to be more productive and check out the best iPhone apps for business.
Pandora's potential IPO. In the past we've written about Pandora's near-death experience, and how it was saved by it's loyal user base. Now the Internet radio start-up that got 347 no's before it landed it's second round of funding is being wooed by a slew of investors, writes The New York Times. The company's success in the mobile sphere has piqued VC interest and though it says it is focusing on growth rather than going public, it hired a new CFO Steve Cakebread who held the same position at Salesforce.com when it went public.
Wi-Fi phones for China. China Unicom, one of three Chinese state-owned telecommunications carriers, is working with Apple to introduce iPhones with Wi-Fi capability to China, the Wall Street Journal reports. Up to now, government regulations have forced the companies to disable Wi-Fi capability in the iPhone, which makes the phone less attractive than fully functional iPhones that are resold in China from other markets.
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Online Retail: Getting the Right Product in Front of Your Customers
After surviving the bust at the end of the '90s, online retail has done quite well in the first decade of the new millennium. From being just 0.6 percent of all retail in early 2000,online commerce has now grown to account for nearly 4 percent of all retail in the United States. In this article, we review some technology trends that are likely to further accelerate this trend. Our focus will be around looking at technologies that help consumers find the right product easily as well as help retailers put the right merchandise in front of customers.
While most of these technologies trends apply to a wide spectrum of applications, their impact on online commerce deserves a special mention. Many of these technologies have been around for a while, but it's only now that they are gaining wide adoption.
Semantic Web and structured data
The semantic Web and structured data will make product search dramatically better. Last year, Google made two subtle announcements that have the potential of completely transforming how users search for products. The first affected Google's organic (or unpaid) results, when the company launched what it called rich snippets, using microformats and Resource Description Frameworka (RDFa) standards. Google was late to the game, as Yahoo had already announced similar support a year ago. The second change applied to Adwords, Google's paid search program, when the search engine started listing richer product listing ads from retail advertisers, displaying an image of the product, the price, and many other attributes. These ads will be priced on a "cost per action" basis, as opposed to the standard "cost per click" model that's offered for all other Adwords advertisers.
It is interesting that Google's rich snippets were first rolled out only for 2 applications, one of which is closely related to online commerce:
• Providing a summary of reviews, when searching for products or services.• Distinguishing between people with similar names, when searching for a person. Similarly, Google's CPA program was also rolled out only for product searches.
Search-engines are already a very important tool for online shoppers, and a Nielsen study had found that more than one third of shoppers use search engines. Richer snippets and richer ads will make search engines even more important to shoppers, and consequently to retailers. According to Yahoo, "enhanced search results" drive 15 percent more clickthroughs for many websites. With results like that, it's no wonder that adoption is picking up among websites. In the same blog post, Yahoo reported an increase of more than 400% in the RDFs structured data driven by Search Monkey. Best Buy recently released their entire product catalog in RDFa, perhaps becoming the first Fortune-500 company to join this trend, and has reportedly seen strong results.
Recommendations and personalization engines
Recommendations and personalization engines are now available as plug and play components. Outside of search, one of the most important ways for shoppers to discover products has been through recommendation engines. Personalization and recommendation engines have been around for a while and have been a strong driver of sales. For example, Amazon's recommendation system was said to account for up to 35 percent of sales in 2006. Recently, the adoption of recommendation engines has increased substantially because of the emergence of third party services that are easy to plug into your ecommerce store. For instance Urban Outfitters has seen a triple digit percentage increase in sale by using a solution offered by Baynote. Other companies like Mybuys and Certona also deliver hosted solutions for personalization.
Creating application programming interfaces (APIs)
Creating APIs that distribute products across the Web is easier. Over the last few years, the Web is increasingly becoming a collection of Web services that can be accessed through APIs. Retailers like Ebay and Amazon have for a long time used APIs to expose their data to the external world, primarily to affiliates and partners who then sell these products at other places on the Web. Now many traditional retailers are jumping into the fray, utilizing services that make it easier to create and manage APIs. For instance, Best Buy recently launched Best Buy Remix powered by API management infrastructure from Mashery.
In addition to these, in one of my previous columns I had written about how the real time Web is becoming an increasingly important tool, and how companies like Dell are using it to increase their online retail sales.
The increasing adoption of these technologies sets up online commerce for an exciting new decade, for shoppers as well as for retailers.
Vijay Chittoor is a co-founder of Six Times Seven. He was previously director of product management at Kosmix. A former McKinsey consultant, Chittoor is a graduate of Harvard Business School and the Indian Institute of Technology, Bombay. He shares his thoughts on technology at his blog.
Inc. 5000 Applicant of the Week: Twenty20
As applications for the 2010 Inc. 500 | 5000 arrive, we thought it would be worthwhile to shine a spotlight on some of the companies that are vying to appear on our ranking of the fastest-growing private companies in the U.S. (For more information and to apply, go to http://www.inc.com/inc5000apply/2010/.) One that caught our eye was Seattle-based Twenty20.The front tire of the motorcycle tilts at an impossible angle on the ice as it pulls through a turn and toward an opponent who is blowing a stream of snow powder behind him. You watch in horror as the man ahead suddenly swerves to the ice and out of the video frame, only to appear smiling and waving from a stretcher in the next shot. This is just one of many moments in Motorcycle Ice Racing that was made recordable by co-founders Marc Barros and Jason Green's wearable camcorder business, Twenty20. The company makes two versions of a tube-shaped, high-definition camcorder called the ContourHD that can be attached to helmets, goggles, handle bars, or cars to capture adventure sports from the perspective of the participants. "There's been everything from paintballing to cooking," Barros says. "Anything where you have your hands on the wheel, on the pole, or on the gun, and you want to record video."
Almost 50,000 cameras were sold in more than 50 countries last year, and more than 25,000 videos have been uploaded to the Twenty20 site. But Barros and Green didn't imagine they would have such success when they began Twenty20 as students at the University of Washington. At the time, they simply liked to ski and wanted to show their friends what they were doing. They won their start-up capital in a business plan competition. "We got third place, and the prize was 20 grand, so it was either a keg party or a company, and we decided company," Barros says. From there, they cold-called a designer who they eventually convinced to create a hands-free camera. The original version could be worn on a helmet, but needed to be attached with a wire to a video recorder in a backpack. Sales weren't exactly taking off, the pair was working from a garage with no heat, and Barros's mother asked him when he was going to get a real job.Things turned around when Twenty20 launched the first wireless wearable camcorder in January 2008, which made it possible for adventurers to film hands-free with the flip of one button and to easily share their video on the company's website. In 2009, the company released two HD versions of the product and received a tremendous response that facilitated the growth of the company to 25 employees. Revenue tripled within a single year, and the days of working in a cold garage and living off of PBJ seemed further away than ever."The company took off like a rocket ship," Barros says.
Windows 7 Tips n' Tricks for Business
So you've purchased Windows 7, Microsoft's latest and greatest operating system, and found it to be fast, stable and full of features to support your small to mid-sized business.
Critics agree the Redmond, Wash. software giant have their mojo back, after delivering the much-maligned Windows Vista a few years back.
To get even more out of the leaner and meaner Windows 7 for your growing business, here we provide a handful of productivity-enhancing tips and tricks -- with some help from the experts.
One-click access
Windows 7 lets you "pin" large icons to the taskbar for a one-click launch of your favorite applications or files. To do this, simply right mouse-click on a file or program icon and one of your options will be to "Pin to Taskbar." Run your mouse over these taskbar icons and you'll see a live preview of what's inside as a thumbnail image -- and even multiple websites open as "tabs" in your browser.
"A lot of people rave about this feature as it's a fast and easy way to manage and access documents and other files you need," says Microsoft's Sandrine Skinner, a director within the Windows 7 small business group. "I know a manager of a personal staffing company, for example, and she uses pinning to prepare the desktop for temp workers."
It's a snap
You've got a widescreen laptop or computer monitor, so why aren't you taking advantage of this added real estate?
Windows 7 makes it easy to do just that by letting you view multiple files or applications at the same time. Called "Snap," simply open a couple of programs -- such as Microsoft Office and Internet Explorer 8 -- and then hold down the Windows key (beside Alt) before using the right or left arrow keys to snap them beside each other. You can also drag and drop content from one to the other (such as a website photo into Paint or highlighted text into Word).
Lock it up
Your employees likely carry around a laptop, netbook, or USB thumbdrive with company data on it, but what happens if the computer or drive is lost or stolen? The Enterprise and Ultimate versions of Windows 7 include "BitLocker" protection that can encrypt files or folders -- preventing anyone from accessing them unless they know the password. Simply right-click on a drive letter (such as F:) in Windows Explorer to enable BitLocker protection.
"This reduces the risk in case the device goes missing, and makes up for the fact that employees, consciously or not, don't always put data security at the top of their to do list," says Carmi Levy, an independent technology analyst based in London, Ontario. "With the BitLocker To Go feature activated, however, nothing gets copied unless the target device is encrypted."
Kick it old school
It's not secret Windows Vista was plagued with software and hardware compatibility issues, therefore Microsoft made this one of the top priorities in Windows 7 -- including an optional "Windows XP mode" for those businesses who need it.
"We've heard companies tell us 'this software here is my bread and butter and if it's not compatible with Windows 7 I won't upgrade," explains Skinner. "We listened."
To serve and protect
No computer should ever be powered on unless it has at least some protection against malware -- such as viruses, spyware, rootkits and the like -- especially for computers used for business.
"While full-blown security suites from market leaders like McAfee and Symantec do a better job, the free Microsoft Security Essentials tools, along with Windows Defender and Windows Firewall, are more than adequate, and should be activated no matter what other solutions you have in place," advises Levy.
Get outta my way
If things get too cluttered because of multiple programs open at the same time -- such as a Web browser, word document, calculator, e-mail, and sticky notes -- simply grab hold of the program you want to see clearly, by clicking and holding on the top bar of the window, and give your mouse a shake left and right. This will automatically minimize everything else. Do it again and it brings back all the apps that were minimized.
U.S. Entrepreneurship Education Lags
The state of entrepreneurship education and training in U.S. schools has declined sharply, with a 2008 survey of experts rating it barely half as good as it was in 2005. The findings are part of the Global Entrepreneurship Monitor (GEM) Special Report: A Global Perspective on Entrepreneurship Education and Training, released today at Babson College, the project's lead sponsor and co-founder. GEM teams conduct surveys in 31 countries, polling a sample of people who are considered experts in some 10 areas including financial support for entrepreneurs, bureaucracy, and taxes, and, of course, education itself. The experts rate conditions such as whether the education system "encourages creativity, self-sufficiency and personal initiative," and whether it provides "adequate instruction in market economic principles." Although training has received low ratings every year since the surveys began in 2000, the ratings in most countries have been consistent even though the pool of experts has changed – with the U.S. and Spain being the exception. "Clearly, this issue is of concern to experts," write the report's five authors, including Babson professor Donna Kelley. Ratings of non-school entrepreneurship education – such as self-study or Internet courses – also have declined in the U.S., although nowhere near as sharply as that of the formal programs. The report also showed that instruction for innovators worldwide is inadequate, especially in primary and secondary schools – which also happens to be where most of the formal training occurs, and where it has greater impact. A 2009 World Economic Forum report found that the earlier people are exposed to entrepreneurship, the more likely they'll become entrepreneurs in some format during their lives. "Training at a young age cultivates an entrepreneurial spirit early on, but college-level training is important too, because it validates entrepreneurship as a potential career path," says Kelley. "Besides skill-building, training increases an individual's awareness of entrepreneurship and their intent to start a business, and improves perceptions about their ability to do so." (According to the report, college dropouts Bill Gates and Steve Jobs may make for "interesting news stories" but they don't represent the typical entrepreneur, "particularly for businesses with knowledge-based products and services.") One problem with beefing up entrepreneurial education: University doctorate programs aren't producing enough faculty to meet demand – and the faculty available may be too narrowly specialized. "The development of effective programs for entrepreneurship likely requires more than adding new courses," concludes the report. Educators and policy makers may need to move beyond on-site university programs and consider Internet-based learning or creative computer applications, the latter of which "may attract and hold the interest of some people, influencing their attitudes toward – and their understanding of – entrepreneurship." Other study findings: Across 38 countries (not including the U.S.), Finland and Chile – both countries with government policies designed to spur entrepreneurship – had the highest levels of training. Men were more likely than women to pursue training, and the young were more likely to have been trained in start-up techniques, thanks to their being included in many countries' educational systems in recent years.
Rework: A Live Chat With 37signals Founder Jason Fried
Read My Lips Technology
Don't expect this as an iPhone app anytime soon. But...
Imagine this; a mobile phone that reads your lips.
The prototype of such technology called "electromyography" (in English that translates to "silent communication") was on display at CeBit in Germany last week. Cebit is Europe's biggest electronics tradeshow.
Electromyography is already in use by NASA (remember; they were the early adopters of Tang, too!).
Electromyography is able to read the most subtle facial movements and twitches to interpret what is being said, so that you don't even have to say it out loud.
The hope is that this would cut down on obnoxious people who overshare their phone calls in a loud voice in public. Having someone mouthe their conversations silently in public may be less obnoxious. But, I think it would be pretty disturbing and lead to a lot of unnecessary stroke scares.
The Intel Hacking
According to Intel's annual report, the company was the victim of a hackin back in January of this year. TechNewsWorld reports that the company does not believe any intellectual property was stolen as a result, and they seem to be making little fuss.
Nevertheless when these hackings do occur, it reminds us all of the potential damage that can be done to corporations or even the government. We continually hear that the United States is extremely vulnerable to cyberattacks, something that has led the House of Representatives to pass the Cybersecurity Amendment.
Curt works for Journyx, which has solutions for project management and execution.
15 Ways to Be More Productive
"Meetings are a waste of time unless you are closing a deal. There are so many ways to communicate in real time or asynchronously that any meeting you actually sit for should have a duration and set outcome before you agree to go." Mark Cuban owns the Dallas Mavericks and is the CEO of HDNet. He has been launching, buying and selling companies for a quarter of a century.
"Interaction should be constant, not crammed into meetings once a week. You just turn around in your chair and bounce an idea off one of the other 10 people in your office. Keep the floor plan open so people can talk to each other. As the company gets bigger, keep dividing it into smaller and smaller groups. Follow Jeff Bezos’s two-pizza rule: Project teams should be small enough to feed with two pizzas. At Hunch, we don't have meetings unless absolutely necessary. When I used to have meetings, though, this is how I would do it: There would be an agenda distributed before the meeting. Everybody would stand. At the beginning of the meeting, everyone would drink 16 ounces of water. We would discuss everything on the agenda, make all the decisions that needed to be made, and the meeting would be over when the first person had to go to the bathroom." Caterina Fake is the co-founder of the photo-sharing site Flickr. Her new start-up is Hunch, a website in New York City that takes user input to make recommendations on thousands of subjects.
"Communication is key. I call the CEO or chairperson of every one of my major clients every day. I like the directness of phone conversations; you don’t miss things the way you do with e-mail. I also carry my cell phone around the building, and my employees do as well. We have a rule: I answer their calls and they answer my calls. Also, cut down on sleep. Why would you sleep when it’s time to live? Sleeping isn’t living. You sleep when you die. I get up at 3:30 every morning and I’m at the gym by 4. Then I ride 25 miles on my bike before breakfast. Being in shape is what gives me energy." Jordan Zimmerman is the founder of Zimmerman Advertising, which has 22 offices and billings in excess of $2.6 billion.
"My executive assistant, Haley Carroll, e-mails me a daily memo, which I read after I go home every night. It's in four parts, and the first part is my next day's schedule. Then comes a list of questions that cropped up during the day -- maybe someone wants to know whether I have feedback on the new Hudson Yards Catering logo. She aggregates them so she doesn't have to interrupt me repeatedly during office hours. I'll respond to those right away. The third part of the e-mail is FYIs: information I don't have to act on but might like to know. Maybe my mother called to make a reservation for her neighbor next week at Blue Smoke. Or there might be a change in my schedule. Finally, there is a section of longer-term reminders. I promised to write a blurb for a friend's book. I want to plan a vacation, so I need to check on my kids' school schedules. We started the memos only last year, and I don't know how we managed without them. I care about the details. This way, I don't worry that I'm missing anything." Danny Meyer is the CEO of Union Square Hospitality Group, which owns 13 New York city restaurants, including Gramercy Tavern and Eleven Madison Park.
"I used to think business was 50 percent having the right people. Now I think it’s 80 percent. The best way to be productive is to have a great team. So I spend more time than most CEOs on human resources. I carry a little notebook with the names of 35 or 40 people in the company, and every week I look at it to make sure I’m in touch with everyone. The top eight or 10 people I’m going to see automatically. But there are always 20 or 30 people who are up-and-comers or one or two levels down, and I wan them to know I’m paying attention. Once a quarter, I go through my list of contacts—a couple of thousand of them—to see if there’s anyone I should be reaching out to about a job. Intensive as all of this is, I ultimately save time, because I can delegate with confidence." Kevin P. Ryan’s encore to DoubleClick—the ad-serving behemoth he sold for $1.1 billion to private equity firm Hellman&Friedman in 2005—is AlleyCorp, a variety pack of Internet start-ups he founded in New York City.
"Zipcar challenged us to think about how we could use a car on an hourly basis instead of a daily basis. I’d like to challenge business people to think about what they would do if they could have talent on demand. Hiring contractors is more cost-efficient than hiring people full-time and less time-consuming than doing it yourself because you can hire an expert for whatever task you need to accomplish." Julie Ruvolo is co-founder and COO of Solvate, a New York City-based provider of offsite office assistants.
"Make the next day’s “to do” list before you leave the office. Rate each item A, B, or C based on its importance, and work on A items first. The productiveness of any meeting depends on the advance thought given the agenda, and you should never leave a meeting without writing a follow-up list with each item assigned to one person. And go outside. All the big ideas are on the outside. You’ll never have a creative idea at your desk." Barbara Corcoran made her mark building one of New York’s largest real estate companies. Today, she is a panelist on the ABC program Shark Tank and runs a much smaller firm that works with the start-ups she chooses to invest in on that show.
"When scheduling travel and social activities, I like to communicate plans through e-mail to both family and colleagues to keep an easy record of correspondence rather than relying on a possibly hurried conversation." Karl Hoagland is the founder of Larkspur Hotels and Restaurants, in Larkspur, California. It recorded $20 million in sales in 2009.
"A lot of productivity is capturing ideas. I use a wiki—it’s more valuable than e-mail for running a company—and I have a page for every person with whom I interact frequently." Garrett Camp is the founder of StumbleUpon, a Web service in San Francisco that helps users find relevant content based on others’ recommendations.
"I get almost as much done outside normal office hours as during them. I’ll interview people on Saturdays, late at night, early in the morning. If I’m trying to solve a particularly difficult problem, I’ll come in on the weekend, when there’s less going on, and spend a day focusing on it. I read technology manuals and watch video tutorials late at night. During start-up, I think you have the choice of being productive or having a social life, and I’ve choosen being productive." Seth Priebatsch (center) is CEO of SCVNGR, a Boston-based start-up that helps organizations engage people through location-based smartphone games.
"If I think something is going to take me an hour, I give myself 40 minutes. By shrinking your mental deadlines, you work faster and with greater focus. I also schedule time every week on my calendar for quiet, concentrated PowerTime where I only work on my most important activities. A “Stop Doing” list is as important as a “To Do” list. A “To Do” list is easy, you just keep adding to it and the more you have on it, the more important you may feel. But “Stop Doing” is more difficult because you have to give up some things." Krissi Barr is the founder of Barr Corporate Success, a business consulting firm in Cincinnati. She is also the author of Plugged – How To Dig Out and Get The Right Things Done.
"With the exception of one or two days a year, I work out every single day. Fitting a workout into the work day reduces stress, keeps you healthy, and is great for getting “alone time” to work out business and personal problems. When someone asks for a non work-related meeting, see if they are up for doing the meeting while running or biking together. Work out at lunchtime and then eat at your desk." Mike Cassidy is the CEO of travel and tour site Ruba. He has also been the co-founder and CEO of Xfire (a company that helps gamers play online with their friends), Direct Hit (an internet search engine), and Sylus Innovation (which produced a computer telephony software).
"For me, a big part of productivity is being agile. I like to leave a lot of blocks in my day open. On an average day, I'm only 50 percent scheduled, though occasionally it gets as high as 80 percent. That's imperative, because often something comes up out of nowhere. Recently, for example, an important new partner came to the office and unexpectedly brought the CEO. The team came to me and said, "Oh, my God; their CEO came. Do you have a window this afternoon?" I had a window. And at the end of the hour the CEO and I spent together, we'd identified new markets and positioned the company to be a global as well as domestic partner. If I have a free block and nothing presents itself, I catch up on industry reports, self-education, and big-picture thinking. In a packed schedule, those things can get neglected. They shouldn't be." Scott Lang is CEO of Silver Spring Networks, a developer of smart energy grids, based in Redwood City, California.
"Don't multitask. Multitasking is something we all do these days. The problem is our brains just aren’t cut out for it. When you multitask, you’re interfering with your brain’s ability to perform at max-capacity. Yes, you can walk and chew gum at the same time. You can fold laundry while talking to a friend on the phone. Clowns can ride a unicycle while juggling brightly colored balls. These are role tasks that don’t demand a lot of brain power. But in most cases, multitasking=lesstasking. When you make those shifts from one context to another, you risk dropping things from your short-term memory. Do one thing at a time, minimize context shifts, maximize brain power!" Douglas Merrill is the author of “Getting Organized in the Google Era” and former CIO of Google.
"The most difficult aspect of being a CEO is you driving your day, and not letting the day drive you. By looking through tasks each morning and resolving to allocate the time to concentrate on the CEO priorities, the actions only the CEO can take to move the company forward, you can keep your eye on moving the company forward. At the end of the day, I always checked whether I had taken action on my top three priorities. If the answer was "no," I stayed in the office until I made progress on them." Bob Compton is the CEO of Vontoo, a voice broadcasting technology company, and the Chairman of ExactTarget, an on-demand e-mail marketing and one-to-one digital communication platform.
Would You Suspend an Employee Over a Status Update?
If you're thinking hateful thoughts about your colleagues or clients, don't post them on your Facebook news feed – no matter how secure you think your privacy settings are.
Gloria Gadsden, an associate professor of sociology at Pennsylvania's East Stroudsburg University, has been put on indefinite paid leave for what she thought was a funny Facebook update about hiring a hit man. "Does anyone know where I can find a very discrete hitman? Yes, it's been that kind of day," Gadsden, 42, wrote in January. Another status update in February: "Had a good day today. DIDN'T want to kill even one student. Now Friday was a different story." She removed the second comment, but was nonetheless suspended after a student tipped off university higher-ups. (East Stroudsburg doesn't have a policy of monitoring faculty social media, but a university spokesman said: "Given the climate of security concerns in academia, the university has an obligation to take all threats seriously and act accordingly.") Gadsden, who's worked at the university for five years, says school superiors cited the Amy Bishop case – where a biology lecturer allegedly opened fire at the University of Alabama after being told she would not be granted tenure – in suspending her. "They found two posts, linked them together and are suggesting I was a threat," says Gadsden, a recent convert to Facebook (she has just 32 friends), told Pennsylvania's WNEP TV. "I told them I was venting. They're family friends and it's a private page." Gadsden specifically chose not to friend students, but thinks an update to Facebook's software altered her privacy settings and allowed friends of friends to read her musings. Type "Facebook" and "fired" into any search engine and you'll get an ever-growing list of people who've stuck a foot into the wide-open mouth that is Facebook – and it's cost them dearly. A 2009 study by Proofpoint, an Internet security firm, found that 17 percent of companies report having issues with employees' use of social media, and 8 percent have actually dismissed someone for their behavior on those sites. In the previous year's study, just 4 percent were fired for their social media sins.
All a good reason to check and re-check your Facebook privacy settings – or better yet, to confine any nasty work-related thoughts to offscreen conversations (preferably not within earshot of their subjects.) After all, Gadsden thought she had an iron curtain between her professional life and her Facebook life. "I actually did see that page as something that was not a part of ESU, not a part of my professional life," she told USA Today. "I don't invite students into that part of my life."
What was she thinking posting about wanting to kill a student? She was joking – she had a smiley face after the comment – and followup comments from friends suggest they understood the comment as humorous. (One said she was ROFL, or rolling on the floor laughing.) Gadsden said: "I had had a really bad day on Friday and then Monday went well and I was excited that it went really well. It was not intended to threaten a particular person, not directed to any student. Sometimes teaching is hard and exhausting work. Sometimes we don't get support for that so we vent with family and friends and that's all it was." (For some other Facebook faux pas, click here.) The university is conducting an investigation, and Gadsden says she plans to file a grievance contesting her administrative leave. In the meantime, Gadsden has been receiving letters of support "from around the nation, from faculty, from others who also had been target because of Facebook comments," she said. "I don't think there's a definitive policy I violated so it would be nice if administration was clear about these things."
What do you think? Were Gadsden's bosses justified in putting her on leave? Or are employees' Facebook comments purely private?
Lessons Learned From a Bad Haircut
The education of Mark Zuckerberg. The Wall Street Journal has a must-read profile of Facebook founder and CEO Mark Zuckerberg, who has kept a firm hold on his company, even as he's raised hundreds of millions of dollars and plotted an eventual initial public offering. The Journal reveals that Zuckerberg has grown up a lot over the last few years, for instance giving up the practice of ending meetings by leading his employees in a chant of "domination." Meanwhile, the article reports that he still owns 25% of the company's stock, controlling most of the voting shares, and three of the five board seats. He's also fond of quoting from--of all things--the movie "Troy."
The business lesson of a bad haircut. Think back to the last time you got a really bad haircut. Did you complain to the hairstylist directly? Probably not. If you're like most people, you simply paid your money, sulked away, and then proceeded to complain to anyone who would listen. On her blog, Kicking Niche, marketing guru Mary Dean points out the business lesson to be learned from a bad haircut experience. Namely, that "lack of complaints does not indicate a job well done." As Dean explains, just because your customers aren't actively voicing their displeasure to you, that doesn't mean they aren't doing so to their family and friends. Austin-area residents can catch Dean speak today at the RISE Austin conference about the business opportunities of marketing towards the female demographic.
Why you should give yourself a "Do Over." Do you keep yourself awake at night torturing yourself about an unsuccessful email? Do you ever replay a bad interaction with someone while you're still in the middle of a meeting with them? Former venture capitalist and professional coach Jerry Colonna figured out a way to help entrepreneurs break through the "obsessive rumination, self-recrimination, re-writing of the script." And he figured it out by coming to terms with his relationship with Oreos. In short: give yourself a Do Over and try again. (Hat tip, peHUB)
More venture capitalists expected to back start-ups in 2010. According to a recent survey conducted by tax and advisory firm KPMG, venture capitalists are optimistic that a rebound will occur this year, after flagging opportunities in 2009, the Boston Globe reports. The survey polled 200 venture capitalists, including investors, bankers and entrepreneurs, and found that 67 percent of respondents expected investments in start-up and growth companies to increase in 2010--compared to a mere 23 percent predicting growth in investments in 2009. Companies that supply green technologies were singled out to receive more attention from venture capitalists, with 38 percent of respondents expecting the energy storage and efficiency sector to see the most investment.
Get ready for the electronic medical-records boom. According to CNNMoney, the next goldmine tech start-up industry will be medical records,. There are currently about 300 to 400 companies in the United States fighting for the relatively new market, but small start-ups are poised to hold their own against branches of large corporations. One reason is that of the doctors' offices that have yet to adopt electronic records, the majority are small businesses themselves. Until recently, the bigger players ignored them, focusing on larger hospitals and clinics. Small start-ups were able to fill the niche by offering lower cost products and creative solutions to smaller clinics.
Expect long lines at Apple stores on April 3. It's coming. Apple announced this morning that the first iPads will be available in the U.S. on April 3, TechCrunch reports. Those will be Wi-Fi models. The versions that have both Wi-Fi and 3G will be coming later in the month. Pre-ordering for U.S. customers starts on March 12, both online and at Apple retail locations. For more on the much-hyped tablet, take a look at Inc.com's iPad coverage.
Winery prices hit the bottom of the barrel. If you're interested in buying a business to flip it, wine is probably not the place to look right now. But as a long term investment, current prices may be too good to pass up, writes WalletPop (via Huffington Post). John Bergman, of Bergman Euro-National, a firm that sells estates in the Napa, Sonoma, and Mendocino regions, says that while prices for wineries have bottomed out, better times are on the way. Foreign investors are already looking to take advantage of the situation. For comparison, see this Arizona winery we profiled a few months back as our business for sale, and check out this gadget guide for wine lovers.
A jeans start-up designed with your iPhone in mind. Ever wish you had a pair of jeans with a pocket that was meant for your iPhone or iPod touch? Thanks to WTFJeans, a denim startup based in France, your wardrobe wishes are about to come true, Mashable reports. With a pocket designed specifically for your iPhone with micro-fiber interior protection, not to mention a secret USB stick pocket, these jeans aim to fit both your style and gadget-protecting needs. Look for them in early May, and expect them to set you about 59 euro (about $80).
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How to Run a Family Business
You've heard the statistics: Fewer than 30 percent of family businesses survive to the second generation, and just 10 percent hold on through the third. Sound bleak? It's not. Those are far better survival odds than for small businesses not run by a team of family members.A tight-knit managerial circle, and the flexibility of related – and deeply invested – employees, has been proven to make a business resilient. It also can confer a significant competitive advantage and impress customers, who appreciate knowing they're dealing with someone who cares deeply, and who has the same surname that's on the letterhead. But family management presents unique and intense challenges, including day-to-day emotional dynamics and big-picture issues such as succession planning.Inc.com spoke with experts who have firsthand family business experience as well as coaches and consultants who specialize in the psychology and the logistics of running a family business. They shared their research, pointers, and life experience.Dig Deeper: Resources for Running a Family BusinessRunning a Family Business: Planning is EverythingIt's easy to say any start-up needs a business plan, mission statement, and revenue projections. In a family business, it's not that simple. Nor might those standard documents apply – or even be necessary at first, experts say. In their place, however, a family business must focus instead on drafting agreements, clear expectations, and assigning clean-cut roles to family members. "What I recommend families to do is to get as many agreements done in advance as possible," says Fernando Lopez, a Toronto-based relationship systems coach who specializes in family business at Bridgespace Consulting. "What are they hoping to achieve? What do they not want it to become? They should have their high dreams and their low dreams, and from there they can see how they want to work together."Taken together, the expectations set by individuals within a family can form a powerful vision for the future, which will guide a business forward. Ideally, formal documents will codify family members' expectations. At a bare minimum, they must be discussed at the outset in some depth, according to Cheryl Stein, president of Stein Consulting and Coaching in Chicago. "The families that are really smart about it, that set up rules, are typically the families who do not fall apart and end up never talking to each other again," Stein says. "Setting up rules when you are getting along can save years of heartache - even if you just set up a rough framework."And she knows from experience. Stein served as a vice president of her family’s multi-generation real estate company, working alongside her siblings, parents and grandparents to sustain their 80-year-old company. But a lack of clear expectations – and unerasable family dynamics – caused her to leave the business."While my father was alive, he always treated me like his little girl," Stein says. "I really couldn't work hard in that situation because my brain wasn't in it. So I went back to school."Stein went on to study the traits of successful and unsuccessful family businesses. What's most important, she says, is taking time to design and discuss a system for long-term planning. It should be done at formal meetings, not piecemeal or around the dinner table."Making room for strategic planning is the most essential piece," she says. "Ask everyone: Where do we want to be in five years, as a family? As a business? And as an individual? The answers to those questions will change the whole landscape, because then when opportunities come up, you know they are opportunities."When drafting a business plan – or even just laying the groundwork by brainstorming collective dreams for your company's future – its important to reflect on what makes you and your family unique, advises Kathy Marshack, a Vancouver and Portland-based psychologist and family business coach who is the author of Entrepreneurial Couples: Making it Work at Work and at Home."It's about knowing who you are and what your family style is, and designing your family firm around that," says Marshak. "Maybe you're all super go-getters and want to take your business online and international – good, go for it. Or, if you're content running the business out of your house, and you don't care much about earning millions, that's great – just make sure you're all on the same page."
If you're working only with one partner, and you are in a relationship, whether casual or spousal, it is advisable to document your business relationship in a formal business-partnership agreement. The document should, at a minimum, include duration of the agreement, partners' capital contribution expectations, and divisions of profits and losses. You can also include salaries, job expectations and terms upon which the partnership may be dissolved. If this sounds like a business prenuptual agreement, that's exactly what it should be, says Marchack. But the agreement shouldn't reflect or foment hard feelings: It's designed to protect both partners in the business.
"When you love somebody, when you trust a sweetheart or a spouse, you think you don't need a business partnership agreement – you're afraid the other person will think they're not loved," she says. "But I've seen a lot more heartache come from not having a legal agreement laid out beforehand as to who owns what should partners need to part."
Dig Deeper: Why Some Family Businesses Thrive Generation after GenerationRunning a Family Business: Defining the RelationshipsPart of setting clear expectations is also in the present. Making sure every employee – er, sibling or child – is content requires not only outlining, but also maintaining every individual's responsibilities in the business. That can be accomplished through implementing some simple human resource tools, such as classic job descriptions. But if you're just starting out, you can let the process begin organically due to the unique and sometimes sensitive nature of family relationships, experts say. After all, everyone involved has a big stake in how the business succeeds.Stein suggests as a starter, plan family business meetings. Don't rely on discussions around the dinner table to run a business. "What typically happens is you're running the business and you're mired in the business, so you rarely sit down to make a point of discussing what's going on," she says. Another rule to determine – either collectively as a business or as a CEO making policy – is who, in the present and future, is part of the family business. Decide what qualifications are necessary. "Do you want them to have outside experience? Do they need to have education? Does everyone in the family get a job here? Or are there boundaries?" she says.Making an employment policy includes deciding on compensation standards as well as expectations for employees. And before you think about the future, set guidelines for the present."One idea that I've often asked people to do is for them all to talk about what they feel they bring to the table, and what they feel the rest of their family members bring to the table," Lopez says. "It helps to decide what roles its best for each member to take on." If you're a small business without many formal HR policies, it can still help to give everyone a job title, description, and performance standards. Rewards are key – whether it be a certain title that a family member desires (and lives up to) or a certain salary they need.Marshack says men at the reins of a family business need to especially be aware of the significance of their children, mother or wife's contribution to the business. "People have in their mind a certain amount they believe they are worth. It doesn't matter what that number is, but if you're not paid a certain amount, you have grumpy people," she says. "Even in this day and age, I see businesses where the women are not paid, or are not paid as much, because they are just seen as helping out." There's a difference between casual advice or a friendly coffee run and full-time receptionist duties. If a partner, spouse or child is providing more than occasional task work, they should be fully compensated for their time.In his book, The Survival Guide for Business Families, Gerald Le Van stresses the importance of fair compensation. Reasonable benefits should come "along with an understanding of money, it's meaning, its potential, its limits, what is involved in making, spending and saving money…" There is a relationship between money and self-esteem, he notes, and as the manager of a family business, that's something you need to be cognizant of nurturing.Dig Deeper: When an Entrepreneurial Streak Runs in the FamilyRunning a Family Business: A Focus on Healthy, Productive CommunicationIt's one thing to say you'll try to communicate better with family members, but it's another thing to actually do it. Experts say this is one of the most difficult parts of running a family business. If you're willing to set up strict guidelines from the start, the ideal situation is to draw a clear line between family and business discussions. Just as you shouldn't discuss Cousin Terry's wedding shower plans at work, you should not let business intrude upon a family dinner. Doing so would not be fair to work productivity – and it's not conducive to a happy home life either.
That said, your family is still your family. You have a set of existing relationship tropes that, whether productive or counterproductive, are difficult – and sometimes impossible – to break. "At the end of the day you are still family members, and you are typically going to revert to certain patterns of behavior," Stein says. "If your brother used to take your toys and break them, there is going to be something that triggers that anger in the office. The best thing to do is realize that is just a fact. Recognize that."Lopez, whose work tends to focus on family conflicts within small businesses, observes that individuals tend to look at relationships in very personal terms, as in "John is like this, Peter is like this, and I am very frustrated with what they are doing." Instead, he suggests it is healthy for individuals looking at dynamics within their family business as part of a system. If an individual is frustrated, consider that there is frustration within the system. "What I ask families to bring on is a systems perspectives," he says. "Every voice you have about the stystem becomes not personal, but a critique of the system. And then you can constructively work on mending it." Dig Deeper: Managing Relationships in BusinessRunning a Family Business: The Bottom Line"Free of pressure from public shareholders, family companies can take a longer view of profitability – and go for growth over a decade or a generation," Le Van writes. That long-view mentality takes the pressure off focusing on quarterly earnings – or of needing to cope with lackluster numbers by, say, downsizing. Even so, a family business is still a business, and financial trouble in a family business can be cause for serious alarm. Here are some tips for maintaining a family focus on a company's economic well-being.• Keep solid books. By incorporating basic fianancial tools used by other businesses, including balance sheets and income statements that are prepared regularly for distribution among family members. By sharing and analyzing financial data, you can make your business more predictable, and thus more stable. If no one in the family has a knack for financial analysis, establish a relationship with an outside accountant. Over the long term, strong financials will be an absolutely essential tool.
• Build consensus. Don't be overly casual when it comes to planning and strategy. Act like you are running a proper business and schedule regular meetings. At those meetings, you should start by noting that, while everyone might be coming from a different perspective, you should strive to focus at once on a single issue and resolve it. Draft an agenda before any meeting, and be sure to remember to bring a group perspective to big issues, such as improving your P&L or coming up with a vision for the future.
• Don't always let family come first. "The interesting thing about family businesses is that they have a tendency to sometimes make decisions that are better for the family than for the business," Stein observes. Let's say some of your relatives are taking a vacation and they want the rest of the family to join them. Who will run the business in the absence of the family members? If you don't have a good answer to that question, than somebody should sacrifice the trip.
• Focus on the present, as well as the future. Succession planning tends to dominate the management conversation at intergenerational businesses. But you should also spend time looking for ways to get the generations working productively in the here and now. "Who wants to train somebody so that they become obsolete? We need to learn to put more of a focus on working together and leveraging the best," Stein says. "Using each others abilities to propel business forward, not on propelling people out."Dig Deeper: Relative Success in Any EconomyRunning a Family Business: Dealing with Succession-Planning StressA big part of making sure your business succeeds into the future involves handling leadership transitions with finesse. For businesses that appear likely to pass through several generations, succession can become an all-consuming issue. It's absolutely tricky for many reasons, and thus must be managed with a gentile-but-steady hand. The process must also be open to everyone. Although succession planning is an entrenched part of the basic thinking about family businesses, owners need to take a step back during the process, Marshack says. "You have to be careful and you have to make sure your business can accommodate taking on the next generation. Everyone thinks 'I want my child to work for me,' but can the business really afford that?"If you believe your business is sound enough to last through the generations, let the grooming process commence. But be open-minded and equal-handed when working with several offspring in the same age bracket – and allow them to drive the process. Certainly, children can develop at different rates and at different ages. The one who professes to love the business at 18 may discover a new passion while at college, and the one who dislikes finances and bookkeeping might just become management material after high school. Just remember: when any successor is being considered, they must also fit all of the prerequisite conditions you've set for your business's future. Ask yourself: would you hire someone with this child's life experience and education to replace me? "Why would you want someone taking over your business who's never gone out in the world and proven themselves?" Marshack asks. "If they'd never had to take care of themselves, they may not feel any urgency about taking care of certain problems." As part of the grooming process, you'll need to bring your successor into the managerial fold by not only exposing them to important business decisions, but allowing their voice to be heard. Also, expose them to any and all future conditions you've set upon the business, including dreams and goals.The situation can get tricky when you're in an old family business and have a young family. It's natural to think from the start that your children will be part of the business. But how much do you actually want to groom young kids for their future in specific roles in your business? That's an extremely complex question, with sociological and psychological ramifications. Stein advises that this is one area in which you might want to advise outside counselors, especially in the family counseling field. A modern interpretation of family studies might advise to allow your child to pursue any interest they demonstrate. But Stein says that as parents in a family business, "we have this responsibility to in how we raise our children, so that the legacy of the business continues.""It's parenting under the guise of employability in a business, in a sense," she says. "You have to watch, from when they are little, the message you are sending them. And it can be accomplished."For Lopez, when dealing with his family's business – his grandparents owned two hotels – he has found succession planning the most challenging issue. The transition, he says, needs to be eased by not only putting the right people in place to take the reins, but that everyone else in the clan knows what their role will be. Any existing conflicts, whether legal or simply emotional, should be out in the open."The strongest recommendation is to bring all of the things that might be under the surface to the surface before leaving the business," Lopez says. Simultaneous with succession planning should be exit planning for yourself. A necessary part of that is logistical: what will happen to properties, operations and taxes when you are gone? Cliff Ennico, in his book Small Business Survival Guide, calls the impact of estate, death and inheritance taxes when the company founder dies one of the "biggest problems facing a closely held family business in the United States." With a federal estate tax that can be as high as 55 percent of the estate's value, family businesses with successors who are eager to take over future business can be forced to sell the business in order to pay a massive tax bill. In order to avoid such catastrophic taxes, he suggests using a planning technique that involves creating a family limited partnership. The founder would transfer his or her shares to the partnership, of which the founder's spouse and heirs can be partners by making small contributions. However, FLPs are tricky to set up, so Ennico suggests enlisting the help of a lawyer who specializes in trusts and estates.Dig Deeper: Choosing a SuccessorRunning a Family Business: Enlist Outside ExpertiseYes, your business is your family's – but there are times when outside experts are necessary to bring into the fold. • During Growth. If your business is thriving, but members of the family are weighed down by innumerous responsibilities, then it's time to hire outside help. For many family businesses, it seems logical and most cost effective to hire from the bottom-up, by bringing in workers to handle clerical work or packing and shipping. Resist that urge and instead consider hiring a seasoned manager with real expertise in an area where you are currently lacking.Before you hire a big shot, of course, it's important to discuss the decision with everyone involved. It's also important to know basic human resources standards that your family might be skirting. You must establish basic practices, such as fair payroll, a clear job description, and a reasonable work schedule for the new hire. (Just because you and your brother work weekends doesn't mean he or she will have to.) And remember, the standards you hold that person to – and benefits they reap – will need to be established across the board if they are not already.• During Important Decisions. Even if your family is tight-knit and business is thriving, many experts still suggest enlisting an outside board of directors to advise management and help make important decisions concerning the company's future. A board of directors made up of outside of the family who are business-savvy and work in non-competing fields can help with everything from conflict resolution to financial planning."It helps to have an objective review, because you're not going to have an objective voice within your family, no matter how hard you try," Marshack says. "People who run a family firm will often be more clear-minded when they know they have to answer to a board on important decisions."Stein agrees that an outside board can instill a sense of accountability and perspective at even the smallest family business. Members of a board of directors need to be compensated for their time, of course. If your small business is unable to pay boardmembers, you can turn to one of the dozens of local family business centers that have sprung up around the country. Often by donating a bit of your time to help other businesses as part of a peer-advisory group, you'll get the same support from individuals not in business competition with you. "Literally from Rutgers to the University of Vermont, to Toledo, family business centers are popping up all over the United States because of the recent public knowledge of how much of the country's backbone rests on family businesses," Stein says.
• During Conflict. Whether you are part of a husband-and-wife team or an intergenerational family, you know how to push your business partners' buttons like no other. When conflicts of an emotional or family nature arise, and don't resolve themselves quickly, consider bringing in a relationship coach, mediator, or family business counselor. An individual counselor can work on issues too personal to bring to a board of directors. And any advisor hired should be allowed – and encouraged – to meet and speak with all members of the family regarding their goals, concerns, and stresses.
Dig Deeper: In Praise of Competition in Family BusinessesRunning a Family Business: Additional ResourcesNever Quit: The Ups and Downs of Running a Family Business, by Donna M. Gray. Veda Communications, 2004.The Survival Guide for Business Families, by Gerald Le Van. Routledge, 1998.Small Business Survival Guide: Starting, Protecting, And Securing Your Business for Long-Term Success, by Clifford R. Ennico. Adams Media, 2005.
Entrepreneurial Couples - Making it Work at Work and at Home, by Kathy Marshack. Davies-Black Publishing, 1998.
How to Reduce Your Cost of Sales
Why would you bite that hand that feeds you? That's a standard argument against training a cost-cutting eye on your company's sales department. After all, it's the sales team that brings in most of a company's revenue and secures the necessary cash flow to keep you in business. So why take anything away from these important players? When business is sluggish, however, that has a way of changing managers' thinking. If you find you must reduce your sales expenses, you should know that some trims are acceptable, even smart. Other methods of cutting your cost of sales are don't-go-there, last-of-the-last-resorts.
Keep in mind that if you burn the salesperson, and you might burn the customer relationship, Ahearne cautions, citing 2007 research conducted by researchers at the University of Washington, which found that customers do remain loyal to a sales rep.
With that said, here's a list of tips for cutting your cost of sales, ranked from bad to better to best.
Switch to a 100 percent commission plan. This is a Hail Mary play, and possibly the worst sales-compensation sin you can commit. Companies justify this money-saving move by jacking up commission rates, making it possible for persistent reps to rake in more money in the end. But even with generous "kickers," most salespeople will find it hard to get by on commissions alone. "To go from salary plus commission to straight commission, you're asking salespeople to leave," says David Hoffmeister, professor and executive-in-residence at DePaul University Center for Sales Leadership in Chicago. it's worth adding that all-variable pay will hit bottom performers the hardest in terms of pay, even as your top sellers head for the exits.
Dig Deeper: Setting CommissionsMake across-the-board salary cuts. This manuever can seem democratic but could be catastrophic. "The thinking is, I'd rather keep everyone and ask everyone to share the burden," says Michael Ahearne, professor of marketing and executive director of the Sales Excellence Institute at the University of Houston. "But it's better to lose the people not producing for you. Don't punish everyone across the board. Keep the pay up for top performers and turn the dogs loose."
This rule is particularly relevant in industries where salespeople have plenty of opportunities to job hop. DePaul studies show that as of 2008, sales turnover hovered around 22 percent, up from 18 percent in 2004, and 56 percent leave voluntarily. So do the math: The cost savings from reducing salaries is likely to be less than the cost of hiring replacements. Hoffmeister has found that the cost of recruiting a salesperson was, on average, $27,000 (whether respondents used third-party recruiters or simply handled recruiting in-house.) "Too many companies don't know what the cost of hire is, and that's a bad sign," says Hoffmeister. He adds that training expenses and lost profit from an open sales territory can bring the total cost of sales turnover per rep to $70,000 or more. Thus, an across-the-board cut that sends one key salesperson packing can in fact have terrible consequences.
Dig Deeper: Setting Sales Compensation
Share some of the downside. There are times when it's necessary to ask salespeople to share a little more of the risk. You can increase the variable side of the comp equation – by say another 10 to 20 percent – and decrease fixed costs without too much push back. But it's all in the way you broach the topic. The key is to get input and buy-in from your top reps. "You have to be open with salespeople so they understand the financial situation so there can be some kind of ownership of the solution during downturns and they don't feel manipulated," says Ahearne. There's a catch to this strategy, though. "You can ask salespeople to share the downside," he says, "but don't limit the upside when the economy improves." That means no cap on commissions. Establishing only serves to kill the dream.
Dig Deeper: Managing a Sales Force During Tough Times
Expand sales territories. You may decide to layoff one rep out of, say, 10, and ask the other 9 to cover his or her territory. This step is generally received more warmly (by the survivors at least) than changing or reducing everyone's pay. Not everyone will relish the increased workload, of course, "but they should be able to make more money," says Hoffmeister.
Dig Deeper: Managing Sales Territory Collisions
Take a fresh look at independent reps. An independent rep won't pay you much attention unless your product is one of his or her top 3 revenue producers. And you need to carefully consider whether an independent rep is a good fit for the types of accounts you call on. That said, independent reps are often a great choice if you are introducing a new product and can't yet fund a sales force. Some companies find it effective to use a combination of staff salespeople and independent reps. You may also consider creating a hybrid sales track that allows independents to work their way up to salaried staff.Dig Deeper: Managing Part-Time and Independent Sales Reps
Pay attention to sales call economics. You can reduce your sales costs by reducing the average cost of a sales call. Don't know what that is? It's not rocket science if every salesperson logs their calls each week. By calculating the cost of a sales call among different product lines or customer segments, you can pursue the most profitable prospects. A good way to tighten your belt is to redirect your sales force to the accounts where the cost of a sales call is lower and the potential for repeat sales is higher. Is a prospect worth, say, a $350 sales call?
Besides great analysis of sales leads, you can also use technology to make sales calls less expensive or more efficient. Webinars, webcasts, and conference calls have certainly brought down the average cost of a sales call.
Just be careful of taking disciplined sales call economics a step too far: When a face-to-face meeting is needed to clinch the deal, it doesn't pay to be cheap. Five-star salespeople are used to staying in 5-star hotels and it's unwise to deny them that little pleasure. "Not all salespeople love to travel, but when they do travel, they don't want a daily allowance. They want a nice hotel," notes Hoffmeister.
Dig Deeper: How to Use Online Meetings to Serve Clients
Bring on the sales contests. Sales contests are short-term incentives used by managers to motivate salespeople to meet sales targets. A 60-day sales contest can sometimes yield better results, without significant additional costs, than a 6-month bonus plan. Recent studies on sales contests done at the Sales Excellence Institute have found that it's not the size of the prize that matters as much as other factors, such as structuring the competition to reward multiple winners. "You put a chunk of money into the pot and you guarantee the top 25 percent salespeople will win something because they're competing against each other, not the economy," says Ahearne. Meanwhile, a bonus plan spanning six months is hard to predict and budget for. "You could have no winners or a ton of money to pay out," says Ahearne. "We've found shorter contests are generally more effective and financially less risky." Contests are particularly better than bonus plans when motivating salespeople to sell multiple product lines, he asserts. You can't change the sales comp plan every time the stock market moves, but you can do a sales contest any time.
Dig Deeper: How to Set Up a Sales Contest
Cutting Sales Costs: Additional Resources
"Customer Loyalty to Whom? Managing the Benefits and Risks of Salesperson-Owned Loyalty," Journal of Marketing Research, Vol. 44, No. 2, May 2007, pp. 185-199. [Summarized in Marketing News, May 1, 2007, 30; Lead article in AMA Marketing Thought Leaders Newsletter, June 2007, Vol. 4, No. 6.]
The Center for Sales Leadership at DePaul University www.salesleadershipcenter.com
The Sales Excellence Institute at the University of Houston www.salesexcellenceinstitute.org
Reinventing Our Energy Infrastructure
Take a look at 10 companies reinventing America's energy infrastructure. Changing the way we use energy is going to require more than just new ways of generating electricity. At an innovation summit organized by ARPA-E (a research branch of the DOE modeled after DARPA that looks at high-risk, high-reward ideas), most of the finalists for funding had the lofty ambition of reinventing the entire energy system, reports Wired. Check out Wired's list of ten companies leading us to more a sustainable future. Phonic Devices makes thermoelectric materials that converts "waste heat," the byproduct of industrial processes directly into electricity. Graphene Energy figured out a way to get more energy density out of graphene, a one-atom thick configuration of carbon. And Makani Windpower, the brainchild of mad scientist Saul Griffith, uses large kites at high altitudes to get the most out of wind power. Check out our recent feature on the incorrigible inventor, Saul Griffith's House of Cool Ideas.
For first product, the fewer features the better. You know all those product managers obsessed with feature-rich first products? Steve Blank would like to have a word with them. In his most recent post, he explains how the goal should be the exact opposite: "the minimum feature set." "The reality," he writes, "is that the minimum feature set is 1) a tactic to reduce wasted engineering hours (code left on the floor) and 2) to get the product in the hands of early visionary customers as soon as possible." Google, for one, is a believer.
Small business plea for direct lending. AIG, GM, and scores of banks have received bailout money from the federal government. But recovery efforts directed at small businesses have stalled out at the lender level, where large corporations continue to get preferential treatment. Back in October, legislation that would require the SBA to help companies willing to find lenders and, as a last resort, lend the money directly was passed in the House. But it's currently facing a tougher time in the Senate in part due to ongoing skepticism from the current administration, reports the Wall Street Journal. On the campaign trail, Obama proposed expanding the SBA's ability to give direct funds to companies hit by the recession. But then recanted, saying direct lending would create a "massive bureaucracy." On Friday, entrepreneurs testified at a congressional hearing that the $30 billion TARP initiative to help community banks lend to local companies would be better spent by giving it to the SBA to lend out.
Raising money, with a little help from your friends. Interesting video on the RISE Austin site from Maggie Miller, a social entrepreneur and founder of the micro-finance organization, DiscoverHope Fund. When raising start-up capital, Miller says she would talk to everyone she saw and "literally make 100 friends a day." Those friends helped her raise an initial $60,000 for the project, often $100 at a time. Her advice to other entrepreneurs is to, "Surround yourself with people who will cultivate that hope in you. You never really know who is set up to support you in that particular inspirational goal that you have." In other news from the RISE Austin conference, Inc. editor Jane Berentson took some time away from her magazine duties to serve on a panel of judges for a quick-pitch competition. The winner was Steve Barcik, CEO of FireFly LED Lighting, a maker of energy-efficient light bulbs.
The 2-minute opportunity checklist for entrepreneurs. If you have a business concept on the back burner but you want to test it for holes before trying to sell friends, family, and VCs on the idea, the Harvard Business Review has an 18 question checklist that can help. It starts out with the basic and essential question "Does your idea soothe someone's pain, discomfort, frustration, or dissatisfaction?" and grills you on other key particulars such as whether you can sneak by big competitors unnoticed for a while. The post also offers some counterintuitive advice: if everyone loves your idea, you're in trouble. "Unless you have at least one major detractor, then you are probably not onto something big. In fact, if everyone thinks it's a wonderful thing to do, then probably a legion of competitors is on the launch pad."
Apple bans a popular iPhone app ... again. The review process for the App Store has become rather notorious for its strict and seemingly arbitrary guidelines, with Apple quashing thousands of apps within the past few months, citing reasons that puzzle developers. According to TechCrunch, the latest on the chopping block was Tokyo-based Tonchidot, whose augmented reality app Sekai Camera is Japan's most downloaded iPhone app to date. The app, which allows users to tag their surroundings with virtual content like text and video, employs a GPS function that collects nearby Wi-Fi signals, which Apple apparently no likey. Click here for more info on the augmented reality craze, and one investor who was particularly wowed by Tonchidot's TechCrunch conference debut.
Protect your business from corrupt employees It's easy to think of employees as family. But that can be a risky mindset, reports the WSJ. Employee frauds at businesses with fewer than 100 employees--which tend to use fewer internal controls, security cameras, and other defensive tactics--cause a median loss $57,000 higher than the median losses of larger organizations. Business owners can help protect themselves from these losses by installing an anonymous employee hotline, requiring all employees and managers to participate in inspection procedures, and requiring employees who are handling money or inventory work in teams of two or more.
How cities and states develop programs to help small businesses. Rather than wait for the federal government to figure out how to get funding to Main Street, several states and municipalities have initiated programs to help local businesses and save jobs, The New York Times reports. A small business council in the Cleveland area created a program to encourage consumers to buy products from locally-owned stores. Likewise, North Carolina began a pilot program called BizBoost last year, in which the state gave $600,000 to help the Charlotte area rebound from big bank layoffs. Since last fall, the program has been able to provide financial guidance to 158 small businesses.
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Better Times Are In Reach
Now for some good news. A recent survey the Insight Performance team conducted with SBANE (Smaller Business Association of New England) found that an increasing number of small to mid-sized businesses in New England are planning to hire employees this year and offer base-pay increases. This indicates that optimism is beginning to resurface--along with business opportunity--at least in the New England area. What does that mean for small and mid-sized business owners? Now for some tough news. The same game rules apply as before--you have to compete against larger and better-funded organizations to land the best candidates. But, it doesn’t have to be an uphill battle. Here are some ways you can be successful:
Play to your strengths. There are many benefits to working in a smaller environment. Employees have opportunities to take on more and varied responsibilities, and typically have more access to top management, who often work side-by-side with them. Make sure you are offering these opportunities to candidates and current employees, and communicating these benefits to them. Make your workplace the place to be. Any organization can create an exceptional workplace. It entails being respectful to all employees, engaging team spirit, creating a family/friendly atmosphere, and facilitating open communications. Be available and walk around your office. Solicit input from employees and truly listen to what they have to say. Understand what motivates them, what they care about and offer them opportunities to develop and achieve their goals.Now for a challenge and an opportunity. As we all know, when employees aren’t happy, they leave as soon as opportunities emerge. It looks like opportunities are beginning to open up in the job market. Are your employees happy? Are you doing all you can to create a workplace of choice? Now is the time to focus on your number one business asset: your employees.
Read more about what Nancy and her team are doing to develop Exceptional Workplaces at http://www.insightperformance.com/blog/ or on their Facebook Page.
Serious Materials to Green the Empire State Building
If the client will not go to the production site, the production site will go to the client.So declared Kevin Surace, Inc. Magazine's 2009 Entrepreneur of the Year. And with that ingenious bit of problem-solving Surace landed his company's highest-profile job to date: a contract to make energy-efficient all 6,514 windows—roughly 26,000 panes of glass--in the Empire State Building. To do the job, Serious Materials, a manufacturer of sustainable windows and drywall based in Silicon Valley, will establish a production site in 5,000 square feet on the building's fifth floor. There, 30 to 40 employees will work through the nights until the job is finished in December.The Empire State Building contract has been two years in the making. In 2007, Anthony Malkin, whose family owns the structure and whose real-estate investment firm manages it, announced a plan to reduce the skyscraper's energy use 38 percent by 2013, saving $4.4 million in the process. Windows would play a big part. But Malkin, who had had new, dual-pane windows installed as recently as the 1990s, hated the idea of simply throwing all that glass away. Surace argued for reuse: Serious Materials has a process that transforms old glass into super-insulating glass four times more efficient than most energy-efficient windows. However removing the panes, trucking them to one of the company's factories, processing them and bringing them back would be enormously time and labor-consuming. And then, of course, glass breaks. Glass transported around the country can break a lot.Then Robert Clarke, a project manager whose windows company Serious Materials acquired in 2008, came up with the notion of a temporary on-site production line. "We'd just be bringing windows down the elevator and then bringing them back up as a new high-R value product," says Surace, referring to a measurement for insulation. "It was a brilliant idea—completely unconventional."The deal was announced yesterday and Surace is arranging the transportation of several tons of machinery—some of it from Serious Materials' plants, some bought new—to the project site. Necessary equipment includes glass washers, film stretchers and rollers, and ovens. The company plans to hire local workers and train them in its processes."Serious Materials competed with the most prominent manufacturers and service providers for a key component of our program to make our energy savings goals a reality," said Malkin in a statement. "Their expertise and ingenuity at competitive standards won them the job. When the total project is done, we will have happier tenants, a more comfortable environment in all seasons, and long-term energy and cost savings." (The general contractor handling the project has asked subcontractors, including Serious Materials, not to discuss the specifics of their bids. The total cost of the Empire State Building refurbishment is budgeted at $13.2 million.) "We've never reused glass in such a large project or put in a remote work site," says Surace. "But I see no reason you couldn't just pick up [the production site] and put it in another building. The Empire State Building was built in 1931. If we can do it there we can do it anywhere."
How to Harness the Power of Referrals
In an effort to jump start small businesses – and remind them of the power of a single referral – marketing expert John Jantsch is launching Make a Referral Week 2010 March 8 through 12.
The goal of the event – in its second year – is simple: To provide 1,000 referrals to 1,000 deserving small businesses across the country. And yes, the event hit its goal last year.
Here's how it works: Click here and refer whoever you think could use the business. That's it -- one item ticked off your to-do list.) One referral story will be chosen as "best of the day" and both the referred business and its source will win signed books from marketing experts. You can also share and spread the word on your blog or web site by clicking here. For updates, follow #marw10 on Twitter. (Unconvinced about the power of referral? In supporting the event on their blog, marketing experts Randy and Donny Vaughn write that they know of businesses where 100 percent of new customers come from referrals.)
Along with what Jantsch has dubbed the "small business referral stimulus package" there's also a weeklong free web event that will feature daily educational programs to help company owners put referral marketing to work. The featured topics include strategic partnering, face-to-face networking, low-cost referral strategies, using social media, word-of-mouth marketing strategies, creating customer evangelists and more. For a list of guest experts, click here. The big event: a Jantsch-moderated panel on "Creating a Referral Engine," to be held March 10 at noon CST featuring Ivan Misner, founder of BNI and author Masters of Networking, Bob Burg, author of Endless Referrals and the Go-Givers Sell More, and Ben McConnell, author of Creating Customer Evangelists. To register, click here.
Jantsch himself will speak on the seven simple steps for marketing success during a one-hour webinar at 2 pm EST March 17. (Yes, after Make a Referral Week is over.) To register, click here.
"Small business marketing is an event, not a system," Jantsch said. "Too many business owners fall into the chaotic cycle of producing the 'marketing idea of the week' and miss an opportunity to produce significant and sustainable marketing results."
Jantsch, author of Duct Tape Marketing (and an occasional Inc. contributor), hopes to remind businesses to refer throughout the year by tagging Mondays "Make a Referral Monday." And if you haven't gotten around to using Twitter yet, here's your moment: Jantsch calls it an "awesome" accountability tool and is asking followers to Tweet their referrals with #marm as a hashtag each Monday. (Need a Twitter primer? Click here.)
How have referrals helped your business? What strategies do you use to get good ones?
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How to Manage Multiple Business Locations
Thomas Friedman was onto something when he wrote his book, The World is Flat. Companies increasingly feel the need to expand their reach into new markets—both domestically and internationally—from a very early age.
One direct result of this expansion is that you may now be forced to manage multiple locations and oversee employees in distant offices—a fact that can cause quite a few challenges and headaches, says Eric Bloom, president of Manager Mechanics, a management-training firm based in Ashland, Massachusetts.
"No matter how widespread your organization becomes, you need to work hard to retain team cohesion and the philosophy that everyone is on the same team regardless of where they work," he says.
Dig Deeper: Why You Should Expand
Managing Multiple Locations: 6 Challenges1. Out-of-site-out-of-mind syndrome. When things get busy at your primary location, it can be hard to give your employees based at other locations the time they deserve.2. Loss of spontaneous communications. Because you do not see your employees in the hallway or at meetings, there is very little natural or unplanned communication.3. Attenuated logistics. Anything that cannot be sent electronically, must be mailed, which causes time delays and increased effort.4. Complicated work assignments. It is harder to perform certain types of jobs or collaborate on them when employees are based in remote locations5. Lack of team cohesiveness. Your team members will not know each other as well. This can easily lead to an "us-versus-them" mentality.6. Concerns over general supervision. If you have a remote office that clients visit, it's virtually impossible to see if your employees are arriving on time, working appropriate business hours or wearing proper business attire.
To tackle these and other challenges, then, organizational leaders need to focus on three key areas: systems, technology, and communication.
Managing Multiple Locations: Put Systems in PlaceThe old adage is that systems run businesses, and people run systems. "You must have systems in place to be able to standardize the quality of your communications, products and results," says Bert Martinez, founder of Bert Martinez Communications, a business training and communications company with multiple locations. "Systems will allow you to duplicate offices and grow faster with reduce training times and supervision."
The key is to establish clear responsibilities, boundaries, and authority, says Ann Latham, president of Uncommon Clarity, an organizational-behavior consulting firm in Easthampton, Massachusetts. "Vague responsibilities create the proverbial cracks into which everything drops," she says. Muddy boundaries create disasters ranging from personnel problems to legal ones while insufficient authority can become a source of delay and demotivation. "An employee with everything needed to exercise good judgment except either the authority or sense of responsibility to do so is worth little," says Lantham.
The point, then, is to make each employee's responsibilities clear through an organizational structure combined with a system that measures each and every employee, and holds everyone accountable for delivering on their work responsibilities regardless of where they are based.
Dig Deeper: Building Systems to Manage Your Business
Managing Multiple Locations: Adopt New Technology
With the advent of the Internet, and the prolific surge in the number of collaborative tools that have spawned from it, technology has become an integral part of the backbone for any far-flung organization, says Bloom, particularly because it can help your organization cut down on business travel expenses.
While many organizations rely on custom-built software platforms and intranets as collaborative platforms, some of the most commonly-used tools by small businesses in particular are also either free, cheap or available as a software-as-a-service, which means you can access these tools over the web for a monthly fee. Some of the best and cost-effective options include:• Google Documents, Gmail and Calendar for internal training and communication. • Basecamp: An popular project management tool.• Facebook : The now ubiquitous social networking tool is just as useful for business as it is for personal applications.• Skype: The surge in VOIP technology and software means that you can communicate with remote employees cheaply and effectively.• Salesforce.com: One of the most popular tools around, Salesforce.com allows remote sales team to collaborate in real-time on maintaining your company's sales pipeline.
A new wrinkle in terms of technology is that many firms have begun to equip all of their employees with smart phones such as the iPhone as a way to enable them to access any web-based technology regardless of where they are, including many new applications.
Dig Deeper: The Latest Small Business Technology News
Managing Multiple Locations: Focus on Communication
Systems are a must, technology is important tool however, none of these will work with out real communication, says Martinez. "Communication is the key to collaboration with your offices, coworkers, and clients," he says. If you neglect this aspect of running your business, you do so at your own risk, particularly in a business with multiple locations. That's why Martinez also makes having his employees have time face-to-face a priority by having his offices take turns hosting each other once a year to enable communication between people on all levels.
Other tips for fostering communication between your employees based in the office and elsewhere include:1. Establish full team weekly staff meetings via phone or webinar to get your whole group together.2. If possible, have web cams so your team members can see each other.3. Make each physical site responsible for a specific type of work, rather then assign random tasks associated with a central project.4. When doable, have the CEO or management members personally visit each remote site on a scheduled basis, every month, for instance.5. Establish weekly phone-based staff meetings individually with each remote group so that each physical location will get time with top management.6. If possible, get your whole group together once or twice a year for staff meetings, brainstorming and team building.
Dig Deeper: How to Improve Your Communications Skills
Managing Multiple Locations: The Global Workforce Managing multiple locations across the U.S. is hard enough. But when you add a new sales office or manufacturing plant overseas, says Bloom, you can actually run into a host of new challenges associated with cross-cultural communication that include: 1. Time zones. There is limited or no overlap in the standard workday.2. Language. Even if everyone has a common language, English for example, differences in accents, language fluency, and the use of slang expressions can make communication extremely difficult, particularly on conference calls and speakerphones.3. Social norms. Cultural differences from country to country can accidentally cause tension, embarrassment, and miscommunication.3. Holiday schedules. Scheduled meetings, reporting deadlines, cash flows and standard business processes can be derailed or delayed based on local holiday schedules.4. Technical connectivity. Not all countries have high-speed connectivity at all locations.5. Labor laws. Laws regarding hiring, employee termination, hours worked, layoffs, sexual harassment differ from country to country.6. Business-related laws, ethics, and practices. Business is conducted very differently from country to country.7. Personal-privacy laws. In European Union member states, the laws regarding the personal use, storage, and transport of personal information are quite stringent compared with those in the U.S.
Dig Deeper: Building the Best Virtual Workforce
Managing Multiple Locations: Adapting to Different Cultures Bloom suggests tackling these challenges by considering the following tips:1. Find one key contact in each country that is very knowledgeable in local customs, business practices, and laws.2. Learn to pronounce people's names correctly.3. Gain a basic understanding of country politics and current events.4. Know the names of your managers and leaders in those countries and pronounce their names correctly.5. Find ways to take advantage of the time zone differences.6. Be respectful of the differences between people and cultures.
The bottom line in managing multiple locations, says Martinez, is to help make everyone in your company feel motivated and part of the team, regardless of where they do their work. "When your people feel good and that they matter, they will perform better," he says.
Dig Deeper: How to Be a Lead Teams in Emerging Markets
Managing Multiple Locations: Additional ResourcesCorporate Agility: A Revolutionary New Model for Competing in a Flat World, by Charles Grantham, James P. Ware and Cory Williamson (AMACOM, 2007.) This book will show you how to get your company to embrace new technology, understand the ever-changing workforce, and rethink the way you structure work environments to deal with the global economy.Competing in a Flat World: Building Enterprises for a Borderless World, by Victor K. Fung, William K. Fung and Yoram (Jerry) Wind (Wharton School Publishing, 2007.) A book filled with solid tips to create a flexible organization capable of competing anywhere.The Facility Management Handbook, by David G. Cotts Kathy O. Roper and Richard P. Payant (AMACOM, 2009.)A great reference guide for understanding and implementing best practices for the modern workplace.
$50,000 for Social Entrepreneurs
The top Web apps for business growth. It takes a lot to run a small business -- but what do you do when there's too many tasks and not enough help? Tech entrepreneur and blogger Neil Patel has put together a list of the top 25 online tools that can help you get projects done, manage your finances, leverage social media, and even have a little fun. There are a few high-profile choices in the bunch, such as Mint and HootSuite, but also some fan-favorites that are still under the radar, such as Recurly, which helps set up and maintain recurring billing for customers, and RescueTime, an automated time tracking and management program.
Putting your business on the (Google) map. If you've done a Google search for just about anything lately, you've probably noticed the handy map that pops up on the results page complete with a handful of pushpins pointing out the relevant local businesses. Marketing guru Jane Dueease has some tips for anyone who has ever wondered how their business can land a spot on the Google map. And as she explains, that map is prime real estate. Companies that appear on the map "not only show up above the 'organic' or 'natural' search results, but [the map] has a higher click rate than the Google Adwords." Austin-area residents interested in learning more can catch Dueease today at the RISE Austin conference discussing ways to improve your company's Web site.
Young social entrepreneurs, here's a way to win $50,000. The Hitachi Foundation is scouring the country to find young entrepreneurs making an impact in their communities, particularly start-ups that "help move people out of poverty and into the mainstream of American society," says the Foundation's chair. Six applicants will be selected and each will receive $50,000 and technical resources to strengthen their business. Apply here by March 22.
Making pay-per-click pay. Paid search engine marketing can be more profitable than search engine optimization, but it can be costly and futile if misapplied. The Wall Street Journal suggests following these tips to optimize your efforts: In addition to buying your company name and your competitors' names, consider asking customers what terms they use when they search for your products; Use keyword tools like Google Trends and Google's keyword suggestion tool; Monitor your results; Make sure your landing page aligns with your ad; and be specific in order to filter out undesirable clicks that you will still need to pay for.
Tesla production on schedule despite engineers' deaths. Two weeks after three of its top engineers died in a California plane crash, electric car maker Tesla said on Wednesday that it is sticking to its plan to produce and sell its first sedan within three years, The Associated Press reports. The young automaker, led by CEO Elon Musk, is hoping that the $49,000 sedan will "cement the Tesla brand in the market place," chief designer Franz von Holzhausen said. The company's only current car on the market is the $109,000 roadster.
Omniture customers get new analytics perks on Facebook. Though the analytics powerhouse and the social media giant first joined forces in May 2009 to build upon Facebook analytics capabilities, TechCrunch now reports that the two companies will be expanding their social media marketing partnership even further. The partnership will now allow businesses using Facebook to utilize Omniture's SearchCenter Plus product, which will enhance its search engine marketing management application with better efficiency for purchasing Facebook Ads. As a result, Omniture customers will now be able to compare Facebook ad campaign metrics with other media channels (learn more about how to advertise on Facebook here), and they will also be able to generate reports specifically designed to understand ad effectiveness for Facebook Pages and applications. For more on how Omniture grew from a college start-up to its $1.8 billion acquisition, check out our How I Did It on co-founder Josh James from Inc.'s March issue.
The changing landscape of e-commerce. It's becoming increasingly difficult to recall a time when pundits scoffed at the possibility of e-commerce outlets as viable businesses, but Half.com founder turned VC Josh Kopelman remembers it. He also notes on his blog, Redeye VC, that up until recently the e-commerce field has been pretty stagnant innovation- wise (via peHUB). "The online shopping paradigm is finally changing," he writes. "We've seen more innovation in the last 10 months than in the last 10 years." Kopelman lists game-changing e-commerce opportunities in the post and proudly touts the fact that his firm, First Round Capital has invested in over a dozen ventures in these fields. For strategy tips for your online store, check out our guide to selling online.
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When's Your Tech Refresh?
It's been some five months since the release of Windows 7 and according to Microsoft sales are brisk. So far, more than 90 million copies of Windows 7 have sold; a third of that sold just since the start of the year. That 90 million translates to a little over 7% of computers.
By comparison, 66% of computers still have Windows XP; 17% with Vista (Vista? Vista, who?) (And yes, I know there are other brands of operating systems out there. But, this is a posting about Microsoft.)
Microsoft's chief financial officer, Peter Klein, told investors on a Morgan Stanley conference call this week that he's predicting Windows 7 sales will really pick up later this year or early next year when more companies are poised for a "tech refresh".
It doesn't take a rocket scientist to make sense of this one. Companies are still reeling from the "Great Recession" and therefore most IT budgets are still tight; really, really tight.
As months (years!) go by with all this clench-fisted spending, it stands to reason that lots of technologies are not getting upgraded on their normal cycles. At some point, the money taps will open again.
My question is when do you think your company will have it's next "tech refresh" and is the wait to upgrade noticeable?
File Under "Shameless Self-Promotion"
Jill Blashack Strahan, founder and CEO of Tastefully Simple, says that in business (as in life), it is important to celebrate your successes. So with that in mind, I’m happy to report that Inc.com has been nominated for a National Magazine Award for Digital Media in the category of best online tool — for the valuation calculator that was created by our friend and frequent collaborator Tommy McCall.
The award is intended to honor “the outstanding use of interactive tools that enable users to create or share content, participate in communities, improve the quality of their lives or enjoy recreational activities.”
Our fellow nominees in this category are ESPN.com, Instyle.com, MenHealth.com, and Spectrum.ieee.org. Elsewhere, the judges bestowed nominations on NYMag.com, TheAtlantic.com, Wired.com, Slate, and the Daily Beast.
Down the hall, our colleagues in Inc.'s art department are celebrating five merit awards presented by the Society of Publication Designers. SPD recognized Inc. for the still-life photography in the Inc. 500 issue, an illustration of author Ayn Rand that appeared in the November issue, and our recurring photo essays "Behind the Scenes," "Passions," and "Innovation."
We're thankful for the recognition, and hope you've enjoyed the work we've been producing for you, both in print and online. Feel free to post a comment below telling us how we're doing, and what we could do better. After all, Tastefully Simple's Strahan says humility and striving for excellence are important too.
Website Uptime Means Happy Customers
Last week's piece about keeping customers was more a discussion of customer service. This week, I'm profiling a company that ensures your customers can be kept - by making sure your website, store or service is up all the time. This is very important for keeping customers happy, especially if the web is the primary method by which customers reach you or buy your products or services.
Web service uptime is critical for Jay Graves, CTO for edo Interactive, a company that has a technology that puts coupons directly onto customer's debit cards. edo has 27 employees and works with large companies like Coca-Cola for an under-the-cap loyalty program, as well as the financial institutions that issue debit cards.
Jay told me "In the modern age of service-oriented architecture, if we're hosting a web service for a customer, unless we can prove it is up, they're going to think it is down. We use AlertSite DejaClick to track our web site and web services for our clients. AlertSite monitors East Coast, Central and West Coast for us. We give customers a report with the AlertSite logo that shows we had 99.97 percent or greater uptime. When you're dealing with larger companies as a startup organization, this reporting helps your reputation. You have to be prepared for an extra level of scrutiny, but if you want to be a successful startup you have to be prepared for that scrutiny anyway."
Ken Godskind, Chief Strategy Officer of AlertSite opined "In Small and Medium businesses, they don't want to be monitoring experts. They know their store, blog, or website. With our DejaClick product, you don't have to be highly trained, you just have to know how to click through an application. It is designed so a normal user can accomplish it."
The demo I saw allowed a user to hit a 'record button' and capture their path through the site. If there were user names or fields to fill out, the product captured those. They can be edited or conditional logic can be added. It even worked on a flash site I was shown. Setting up the monitoring was not rocket science - most site owners could do it with little help or coaching. AlertSite then tests your site, using your script, from data centers around the country. They then report back how long it takes for your site to load, and ensure that the service can successfully complete the scripted transactions.
Godskind describes their product set as services that help customers make sure that whatever the important thing they're doing on line, it is working well for end users. In Retail, that may mean, "Can shoppers go to home page, search for products, view products from a catalog, add to a shopping cart and check out?"
Graves said "They can spit out monthly reports, let us know when we were up, and since they're a 3rd party, they're immediately more trustworthy than if we reported to the client. We also share reports internally with entire company so everyone knows our uptime and our reliability."
How big does your company have to be to consider monitoring services? "If you're a web based business," Godskind told me "and you're putting a lot of effort into sharing a brand feeling - and keeping customers - you want to make sure your site is available, functions reliably, and you want to know how your load time changes during the day. There's a very inexpensive, availability monitoring service for $10/month, but if you have multi-step store transactions to test, you can expect to pay more like $100/month and up."
If your business lives and dies by its website, $1,200 a year to have peace of mind that your site is up seems a pretty small price to pay. Do you track your online uptime and make sure your customers can buy or contact you at any time? How do you do it? The comments are open.
New Small Business Server from Lenovo
Lenovo recently unveiled the ThinkServer Ts200V, a new server designed for small businesses. The single processor server comes loaded with Intel Active Management Technology that makes remote management easier for companies without a dedicated IT staff. It also has an EasyStartup feature for quick server set-up. The servers, which come in either tower or rack models, start at under $500. You'll also get a 90-day free trial of Lenovo's ThinkPlus Priority Support, which gives you 24/7 phone access to technicians.
DocStore Opens Up to More Sellers
Last week, online document marketplace DocStoc launched a new platform that lets anyone sell professional and business documents on the site.
To start selling in the DocStore, simply sign up for a free account and begin uploading documents onto the site (you also can embed DocStore documents on your website). DocStoc handles all the financial transactions and sends you a check at the end of each month. Sellers keep 100 percent of all sales for the first 60 days, with no hidden fees. After that, you'll split sales evenly with the store, which will send you a check for your 50 percent of sales in any given month. You can set any price you'd like for your documents, those most on the site sell for between $15 and $30. You also can track sales on a personalized dashboard.
Of course, the store won't let you sell just any document. All documents posted for sale are reviewed by DocStoc. If a document is not approved, you'll receive an email with an explanation for the rejection.
New Patent Law Ruling Could Cost You Big Bucks
Got a patent, or have you labelled your product "patent pending" before you've actually put the application in the mail? A recent court ruling on false marking could make you liable for some big bucks – and anyone (not just a competitor) can file a lawsuit.
Patents, of course, stop competitors from stealing your ideas, and if you don't mark them on your products, you're limited in the amount of damages you can recover. But if you stamp your baby wrongly in an attempt to head off competition, you may find yourself on shaky legal ground; a December court decision seriously has raised the stakes.
On December 28, 2009, the Federal Circuit Court of Appeals held in the case of Forest Group Inc. v. Bon Tool Co. that patent owners and others may be fined up to $500 ($250 for the plaintiff and $250 for the federal government) for every product or advertisement bearing a false patent marking. (Note that the fine is per item – if you've got 1,000 items mislabelled, you could be liable for $500,000 – a big change from pre-ruling, when it was a single $500 fine per decision). What's considered false marking? Saying there's a patent pending when you haven't actually filed an application, using a patent number that doesn't cover the product, and marking a product with a number that has expired. (If you think it was such a struggle to get the patent that you'd never let it expire, keep in mind that if you miss a maintenance fee, your patent can lapse prematurely).
Who besides a competitor would bother to file a lawsuit? Anyone with access to Google (you can check a patent's lifespan and other particulars here) and a bit of free time – the new fines make it potentially more lucrative than, say, eBaying what's in the basement. Some 60 lawsuits have been filed in federal courts in the past two months – 28 of them from one Chicago-area man. Compare that 60 to just seven filed in the eight months before the ruling. Once upon a time the courts were lenient about false marking, generally looking for – and finding – good faith on the part of the company that the patent number used actually covered the product. But in recent years the courts have made it clear that it's up to patent owners to fork out the funds required to make sure markings are correct. In 2005's Clontech Labs, Inc. v. Invitrogen Corp., the court found Invitrogen had falsely marked molecular biology products and in its ruling highlighted the public interest in free market competition. It stated: "the act of false marking... externalizes the risk of error in the determination, placing it on the public rather than the manufacturer or seller of the article, and increases the cost to the public of ascertaining whether a patentee in fact controls the intellectual property embodied in the article."
What can you do to minimize your liability?
Lawyers Gerry Kraai and Justin Poplin of intellectual property firm Lathrop & Gage suggest documenting your reasons for marking a product as you have. You can get a lawyer to do this but the notes of a supervisor or engineer will suffice – the point is to show that you have a review process in place and could help you demonstrate good faith if a suit is ever brought.
Second, avoid any conditional language – both "this product may be protected by" or "this product is protected by one or more of" (in the latter, you need to know exactly which patents it's protected by). If you're not sure if you can use a patent number, you'll need to consult a lawyer – this goes back to the court's ruling that it's up to the holder to pay for any costs associated with using a patent.
Kraai and Poplin also suggest a regular review of products, blogging that "the costs involved with implementing a policy to avoid falsely marking will be only a very small fraction of the costs associated with defending against a false marking suit."
10 Things Every Geek Should Know
TechRepublic is at it again with a funny list of things geeks should know, including:
Every geek should be able to give the Vulcan “Live long and prosper” hand signal from Star Trek.A true geek must be able to carry on a conversation using only Monty Python quotes.
A romantic geek can say “I love you” in binary. I would say additionally that you must be able to say at least a few words in Klingon, have had heated arguments - or maybe even lost friendships - over the Mac vs. PC debate, the vi vs. emacs, or the Android vs. iPhone debates.
Generally to be a geek is to take things that are basically irrelevant far far too seriously. (guilty as charged.)
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The iPad Cometh
Here's the latest from the iPad rumor mill: the iPad is expected to be available by March 26th in Apple stores.
The examiner is reporting that the iPads will actually arrive in stores as early as March 10th for store employees to start their training.
iPad commercials will be coming to a television near you on March 15th.
Apple is expected to roll-out only the WiFi version of the iPad first. The 3G version will likely not come available until April or May.
Here's my favorite part of this "sources say" update: Apple will be offering a "special gift" for those who camp out at stores to purchase on launch day.
Hmmm.. after the winter most of us have had, I hope it's glove warmers. Tell me again why this couldn't wait until June, like all the iPhone launches?
The High Cost of Distractions
Why you need an FAQ page. Let's face it -- good customer service or not, answering daily queries about the same topics can become tedious and time-consuming. That's why you should consider creating an FAQ page for your company's website, according to a recent post over at Web Worker Daily. A good FAQ page not only educates clients and customers about your services, but it can also provide useful info about your work processes and pre-empt absences and missed deadlines. "An FAQ page can help you reduce the frequency in which you provide the same information to different people," the post says, "It can also help you to remain productive and focused on tasks that actually require your expertise."
What Krishna can teach you about business. As we mentioned yesterday, Austin-area entrepreneurs might want to check out this week's RISE Austin conference, a free conference designed to encourage the sharing of ideas and encouragement between entrepreneurs. On the RISE site, Bijoy Goswami, founder of the Bootstrap Network, discusses the business lessons he has learned from an even higher power--the Hindu god Krishna. Taking lessons from the Bhagavad Gita, a sacred Hindu scripture, Goswami tells of how Krishna explains to a young warrior that, "Your job is not to be good at everything...your job is to know what you're good at, discover what it is, and then deepen that capability. From that excellence, you will then find out what you're here to do. And then you will find people to come along with you on that journey." Consider it a lesson in delegating from a higher power.
Quiet time: not just for kindergarten anymore. All of the dings, buzzes, and alerts coming from your computer and cellphone might be small distractions, but they can add up to big losses for your business. Reuters reports today that interruptions and distractions cost the average desk worker 2.1 hours of productivity every day and the companies they work for as much as $1 billion annually. In addition, constant e-mail lowered workers attention spans, increased stress, and decreased job satisfaction and creativity. Intel dealt with this problem by imposing a four-hour "quiet time" on its engineers. The 14 people worked alone and all messaging and contact was banned. Although you might not be ready to enforce an all-out ban on communication, Inc.'s guide can help you develop a cell phone policy that fit's your company.
Google secures a patent for location-based advertising. While most of the blogosphere was distracted with Facebook locking down the patent for its news feed format, Google stealthily nabbed a patent for location-based advertising, reports VentureBeat. The patent itself, which was fairly broad, was filed 6 years ago. It governs location for targeting, setting a minimum price bid for an ad, offering analytics, and changing the content of an ad. VentureBeat says that it's still unclear whether start-ups should be alarmed, calling it "a defensive practice, rather than as a tool for pressuring other companies to desist or pay license fees." But it certainly gives Google, which has made location-enabled search and advertising a priority in the past year, an edge in its war with Apple over mobile advertising. Indeed, competition has heated up recently with Google acquiring Admob in November and Apple buying Quattro Wireless in January.
Another start-up bites the dust (thanks to Google). Google's recent buying spree continues with the announcement that the search giant has acquired Picnik, a start-up that offers an online photo editing service, The New York Times reports. The service allows users to edit photos through a browser without having to download any software. "The sale puts Google in yet another competing business with Adobe, going up against Photoshop.com, and with Apple and the basic photo editing tools within iPhoto," the Times writes. Picnik CEO Jonathan Sposato previously sold another company to Google--Phatbits, in 2006.
Why Joel Spolsky is Giving Up His Blog. He wants to focus on other ways to market his business. Spolsky is the creator of Joel on Software, a long-running and very popular blog about programming, the founder of Fog Creek Software, and an Inc. columnist. He writes in his latest column that he has decided to hang up his pen for awhile and will no longer post Tweets, record podcasts, or speak at conferences. "The truth is, as much as I've enjoyed it, blogging has become increasingly impossible to do the way I want to as Fog Creek has become a larger company," he writes. "We now have 32 employees and at least six substantial product lines. We have so many customers that I can't always write freely without inadvertently insulting one of them." Meanwhile, Spolsky says that although blogging has been an effective way to reach people who read blogs, he has been ignoring customers who might be reached through more traditional marketing channels. So, bad news: Joel is giving up his Inc. column. But, good news: We're adding a new columnist, 37 Signals founder Jason Fried.
Starbucks unruffled by gun-toting customers. In the past we've covered the debate over workplace gun policies but now chains including Starbucks are being drawn into the fray. Even in states that allow people to carry firearms openly, businesses can choose to ban them. Fans of the 2nd amendment in those states have been parading through establishments forcing them to take a stand on the issue. While California Pizza Kitchen and Peet's Coffee & Tea have given the NRA crowd a chilly reception, Starbucks is letting it's customers flaunt their firepower, writes the Huffington Post. John Bruce, a University of Mississippi professor and gun policy expert says, "Starbucks is a special target because it's from the hippie West Coast, and a lot of dedicated consumers who pay $4 for coffee have expectations that Starbucks would ban guns. And here they aren't."
Make way for a new chocolate entrepreneur. From your everyday extras, like caramel, toffee, and almonds, to more daring additives, like chili peppers or bleu cheese, there are plenty of ingredients you can add to chocolate to make it taste better - even air bubbles. While aerated treats have become all the rage in Europe and other countries worldwide, air-infused confectionary goodies have yet to make a real mark in the U.S., until now. The Boston Globe reports that a year-old, Salem, Massachusetts-based company called Bubble Chocolate is attempting to become the first successful aerated chocolate bar business in the U.S. market. The company has begun nation-wide distribution through Whole Foods and Duane Reade, with additional talks in the works with other retail giants, such as Wal-Mart and Target. According to owner Paul Pruett, "The U.S. is the last frontier for this type of chocolate. The premium chocolate category is looking for something new."
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Hiring and Wages on the Rebound
What a difference a month makes! If most people equate these economic times with an emotional roller coaster, small business owners have been on the ride of their lives.
Last month I reported a near-record-low level of small business optimism, 46 percent. In other words, fewer than half the business owners out there felt confident about the direction of the economy. That pessimism came despite an increase in small business hiring and other signs of stabilization, as indicated by the SurePayroll Small Business Scorecard, an economic indicator we created in order to track the health of the U.S. small business economy.
Luckily, the numbers continued to improve in February. Hiring has increased by 1.9 percent year-to-date. And paychecks were essentially flat (up 0.2 percent) for the first time in February following two years during which paychecks declined month after month. The biggest difference of all involved employer confidence. More business owners report that they feel good about the economy. In fact, optimism shot up 16 percentage points over January’s numbers. Now well over half of small business owners say they are optimistic about the small business economy.
So the big question is: Will that sentiment endure and propel the economy forward?
Truth is, while the numbers are telling us we’ve bounced off the bottom and are now heading in the right direction, only the actions of the small business owners will demonstrate when we’re completely out of the water. When they’re feeling positive, we’ll see their safe-bet decisions, such as hiring contract workers rather than adding full-time employees, turn into more aggressive actions, such as adding headcount and making capital expenditures. When that starts to happen, more money will move through the economy, building positive momentum. We’ll see paychecks holding steady, without erratic dips or slight increases. We’ll also see our optimism levels return to 2007’s highs of nearly 80 percent. For business owners and for everyone else, we can't get off this wild ride a minute too soon.
How to Lose Customers and Alienate People
Your company may have a strict social media policy, but that still doesn't make it immune to Facebook, Twitter et al's special brand of justice.
Consider the case of Evergreen Entertainment, a chain of seven cinemas in Minnesota, South Dakota, and Wisconsin, which is suffering a several-thousand-member-strong Facebook boycott thanks to a problem as old as business itself: How to handle customer complaints gracefully. (Here's Benjamin Franklin on the subject back in 1749: "If customers slight your goods... do not affront them: do not be pert in your answers, but with patience hear, and with meekness give an answer; for if you affront in a small matter, it may probably hinder you from a future good customer.")
It all started last week, when Sarah Kohl-Leaf of Minnesota, her husband and another couple headed to a 9:40 pm showing of Shutter Island at the St. Croix Falls Cinema 8 in St. Croix Falls, Wisconsin. Kohl-Leaf and her husband had only brought enough cash for snacks, but the theater didn't accept credit or debit cards for tickets and the lobby's ATM was out of cash. So far, so solveable – the couple's friends wrote a check.
But then the theater staff needed to check for eight underage patrons who'd apparently sneaked into the R-rated film, and so spent about the first 20 minutes of the film wandering through the aisles with flashlights, examining ticket stubs – and distracting Kohl-Leaf from Leonardo DiCaprio.
When she got home, she wrote a strongly-worded letter of complaint to the cinema owners. "I did not pay $18.00 to have a distracted experience," she wrote. " ... I would rather drive to White Bear Lake, where they obviously know how to run a theater than have this experience again."
The response that greeted her the next morning: "Go f*** yourself. If you don't have money for entertainment, get a better job, and don't pay for everything on your credit or check card," wrote Steven J. Payne, the company's vice president. (To read the whole letter – warning: expletives abound – click here.)
Payne also sent a subsequent, calmer email: "As vice president I should never have reacted that way, no matter how I felt about your e-mail."
But it was too late. Kohl-Leaf posted the e-mail exchange on her Facebook page and friends followed. The next thing you know someone created a "BOYCOTT St Croix Falls Cinema 8" page. As of Tuesday morning, it had 5,082 members – more than two times the population of St. Croix Falls. (Payne did not respond to an e-mail seeking comment. He is the subject of a "We support Steven Payne" group, but it has a mere 177 members.)
The public outcry led the company to post a letter of apology on its website: "The officer in question has acknowledged that he made a serious mistake and has apologized for his conduct. We hope that you will accept our apology as well."
This may be an extreme example – most people dealing with customers wouldn't write a profanity-laden e-mail (or if they did, they wouldn't hit the send button). But it's worth keeping in mind that November 2009 research by Covergys, a Cinncinnati company that provides call-center services, has shown that a bad review on social media can cost a company about 30 customers. How did they get that figure? Some 45 people view each remark and about two thirds of them avoid the brand being criticized.
Bottom line: If the customer isn't right, don't say so in an easily forwardable format. Or better yet (and simpler): Mind your manners.
What do you think? How would you handle a customer complaint? And would you discipline a manager who sent a profane e-mail to an unhappy customer?
Do Your Prospects Understand You?
Last week I met a brilliant and driven solopreneur at a networking event. When I asked her to tell me about her business I could feel my eyes glazing over and my mind wandering to the buffet table without my body in tow. Now, I’m a great listener and I have a strong passion for business. Even so, my new acquaintance couldn’t keep my attention.
As I pulled myself back to the present, I worked hard at taking in this business owner’s concept. It was then that I realized the problem – she was making me work to “get it.” She had a unique, and potentially profitable, twist on her area of expertise and proceeded to explain it to me in lengthy, highly technical mumbo jumbo. It was only the passion and excitement in her voice that kept me focused and piqued my curiosity.
I often have the same experience when I visit my prospects’ websites. What do they do? And who do they do it for? Now, they think they’re doing a great job of explaining their product or service because every industry-specific word they can think of is scattered throughout their pages. But you know what? If I’m going to hire you it’s because YOU are the industry expert and I shouldn’t have to learn your language to truly understand how you can help me.
Try these simple tips to begin with: Record your 60-second pitch so you can hear it yourself. Listen to it as a newbie to your industry. Also, create a 10 second pitch. Read your marketing content from a fresh perspective. Take a look at your homepage. Count the words over 2-3 syllables and the ones that the average “Joe” wouldn’t use in their everyday vocabulary. Is your content written above the 8th grade level? Did you know that the average reading level in the US is between 8th and 9th grade?
The genius behind great content is the ability to write in a way that the marketplace can understand it without having to work too hard. Information is being pushed to us all day long, it can be exhausting! Identify with your prospect. Let them know that you understand their problem and that you can help them fix it. People buy from an emotional place, connect to their emotion.
Try starting your verbal pitch with a question or a statement that will get the person’s attention. The other day I asked a solopreneur if she ever felt like she owned a hobby, rather than a business. Did she ever wonder if she’d bring home a bigger paycheck by working at the coffee shop? She laughed and asked me how I knew? Then I simply told her that I knew because I have helped hundreds of people just like her to turn their businesses into money-making machines. Simple and short; that’s all it took. I had just found a new client.
Whether you’re writing or speaking, ask yourself a simple question. “Am I making them work too hard?” Catch the industry-specific words and use metaphors and analogies instead. Remember that the mind thinks in pictures. The better the picture you paint, the easier it is for your prospect to grasp what you can do for them. Today you are an artist; tomorrow you are more profitable!
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Top Tech Cliches
Yesterday, I ranted about the tech sector's love of the overused prefix "e".
As some of you pointed out, why not? Companies, like Apple, are laughing all the way to the bank using the "i" prefix on their product lines (iPhone, iPod, iMac and now iPad).
For fun, I'd like to build on a list started by "SSS" in the comments section.
Here's SSS's:
- "e" - "i" - "Soft" - "Mac" - "PC"
Here's mine:
- "Micro" - "Byte" (that one hits close to home!) - "Tech" - "Wired" - "Data" - "Meta" - "Mobile" - "Cyber" - "Digital" or "d" for short - Anything ending in "-fi" - or "2.0" - or "dot com, dot anything really" - or starting with "smart" - or "green" - or "Tele" - or "wiki" - or "net"
Also, add to my list:
- using all lower case letters to look cool. - using this _, instead of proper punctuation to look cool - using @ to look cool - using periods between syllables or words to look cool (like the rapper, Will.i.am) - using kindegarten-esque primary colors for each letter in your logo to not look cool, but rather to look like Google (which would be cool, if you were even a fraction as big as Google). - using thin, minimalist and undersizedt font styles to look futuristic and cool. - using what appears to be a random sequence of upper and lower case letters in the name of a product or company logo to look like a password (and therefore cool). - Using highly unreadable fonts that moosh together like a captcha in the name of a product or company logo (so not cool! please stop!).
Feel free to add to the list. I'm sure there's plenty that I have missed.
The Pros and Cons of Setting Up a C Corp
A great way to build some legal protection into your business is to incorporate. Many people incorporate to gain limited liability to protect personal assets from company liabilities such as lawsuits or creditors. Incorporating also can reduce a business' taxes if it earns a lot of revenue, make it easier to seek venture capital or other outside investment, and in some cases provides more flexibility for your business. For federal income tax purposes, corporations are governed by the Internal Revenue Code and there are different types of corporate structures to consider. The basic type of American corporation is governed under Subchapter C of the Internal Revenue Code, so they are called C corporations. S corporations start out as C corporations but make a special tax election to have income, deductions, etc. taxed directly to shareholders (S corporations are governed by Subchapter S).From a legal standpoint, C corporations are separate entities that can sue and be sued. From a tax standpoint, they are separate taxpayers, paying tax at special corporate tax rates that differ from those applicable to individuals. Whether you are in business by yourself or with one or many other co-owner and want to set up a C corporation, be sure to follow certain legal and practical steps to help ensure success.The following sections will review what a C corporation is, the pros and cons of structuring your business as a C corporation, and how to go about setting up a C corporation.
Dig Deeper: How to Choose the Right Legal Structure
Forming a C Corporation
Among the different types of business structures available in the U.S., almost all larger corporations with more than 100 shareholders and virtually all publicly traded companies are C corporations. All companies that are considering going public, seeking venture capital, or taking on equity investors are also usually C corporations. That doesn't mean, however, that a small business or a sole proprietor is barred from becoming a C corporation."A C corporation can consist of one person, anybody over the age of majority. There is no restriction," says Cliff Ennico, an attorney and nationally syndicated small business columnist and author of Small Business Survival Guide (Adams Media 2005). "The law recognizes that you can form a corporation for the sole purpose of limiting your personal liability for business debts, agreements and lawsuits, and, as long as you follow the rules regarding corporations, it should be there to protect you."Many smaller businesses, however, choose to start off as a limited liability company (LLC) or an S corporation. There are several reasons. LLCs don't require formal meetings and generally have less paperwork involved. Both LLCs and S corporations are "pass-through" entities for the purpose of taxation, meaning that the business isn't taxed but profits or losses pass through to the shareholders to include on individual tax returns. That is significant if the business isn't making a lot of money or incurs a loss because individuals may take that loss against other income on their tax returns. S corporations are limited to 100 or fewer shareholders, but about 97 percent of S corporations have three or fewer shareholders, according to Barbara Weltman, a tax and business attorney and author of such books as J.K. Lasser's Small Business Taxes (Wiley 2009).Most start-ups register first as an LLC or S corporation because they can always file to become a C corporation at a later date. "Very commonly what people do is form an S corporation during the early years of their business, when they are losing money, so that the losses flow through to owners. Then, as soon as the business becomes profitable, they switch it to a C corporation to shelter some of the profits from taxes," Ennico says. Once an S corporation becomes a C corporation, however, it may have to wait a few years before it can elect to be taxed as an S corporation again. Also, Ennico points out that it may be extremely difficult to convert a C corporation into an LLC without adverse tax consequences.
Dig Deeper: Searching for the Perfect Form
Benefits of using C corporation format
There are a few key reasons for opting to create a C corporation, as opposed to the other business structures, according to Weltman. These include the following:
The opportunity to use a medical reimbursement plan. "This enables the corporation to deduct all medical payments up to a fixed dollar amount (set by the corporation, not tax law) while shareholders-employees enjoy this benefit on a tax-free basis," Weltman says. The need for venture capital. A business that needs substantial start-up and/or expansion capital (more than $5 million) may turn to venture capitalists for help. "Usually, such financiers are interested providing money for businesses organized as C corporations because there is more flexibility in making ownership arrangements," Weltman adds. The intention to take the company public. If there is the potential for growing the business to such a level that it can attract financing by becoming a public company traded on a national exchange (such as the New York Stock Exchange), the business must be a C corporation, Weltman says. Tax considerations: Besides the opportunity for shareholder-employees to obtain tax-free fringe benefits, there is another key tax edge for C corporations: The ability to accumulate earnings for future expansion at a lower tax cost than other types of entities.Dig Deeper: The Fringe Benefits of Forming a C Corp
Drawbacks of Using C Corporation Format
There are also several reasons that argue against forming a C corporation if your business has the option to form under a different legal structure. These include the following:
The potential for "double taxation." The chief drawback of a C corporation is the so-called "double taxation" potential. "Profits are first taxed to the corporation," Weltman says. "Then, when they are distributed to shareholders in the form of dividends, they are taxed again; the corporation cannot deduct dividend distributions." However, the threat of a double tax can sometimes be mitigated for following certain strategies. The requirement to file more paperwork. Corporations are required to hold formal board and shareholder meetings and keep accurate minutes of these meetings. In addition, there are a series of tax forms that may need to be filed with federal, state, and even local officials, including corporate taxes (IRS Form 1120), taxes on salaries and other employee compensation (W-2s), and profit distribution to shareholders (Form 1099-DIV). "A C corporation complicates your life," Ennico says. "Most entrepreneurs I work with want to spend their time making or selling their products. They don't want to stay up until 3 a.m. doing paperwork." Filing corporate tax forms may require an accountant. The tax forms for corporations can be complicated and may require you to get some help from an accountant. In addition, corporations have to pay federal taxes by March 15 -- a full month before the individual federal tax filing deadline.Dig Deeper: The Problem of Double Taxation
How to Set Up a C Corporation
Once you have an idea for a company, whether this means selling a product or a service, and you decide to set it up as a C corporation be prepared to devote time, use business methods, and get set up properly so you can make more money, minimize taxes, and generally avoid potential problems.
1. Choose a state in which to form your C corporation.
A C corporation is a creature of state law. It is formed under state law in accordance with the rules of each state. You can complete the set-up steps yourself or use an attorney for this purpose. Either way, there are state filing fees for incorporation that can range from $50 to $500 depending on state law.Usually it is advisable to set up the corporation in the state in which you are based, rather than in another state that is considered to have laws more favorable to corporations, for example, Delaware or Nevada. For a small corporation, starting out and operating from a single state is less costly, avoiding the need to register to do business and, in some cases, pay additional taxes in multiple states. "If you form a corporation in Delaware or Nevada but are not actually doing business there, you will need to register your corporation as a 'foreign corporation' in the state where you are actually, physically, located, and pay taxes there" Ennico cautions, adding that "if you don't, you will be viewed as operating an illegal business in your state, and it will be only a matter of time before you receive a nasty letter from your state tax authority inviting you to come down for a chat."
2. Decide whether to incorporate on your own or get help.
There are many legal websites these days that enable you to incorporate a business on your own over the Internet. These services charge fees ranging from less than $100 to nearly $500 for do-it-yourself instructions, forms, and sometimes CD-Roms. These services include such sites as LegalZoom, The Company Corporation, and BizFilings.com, among other services. "Some of them are not bad. They tend to do a good job in completing the most important steps in incorporating a business such as filing the Certificate of Incorporation and getting your federal tax ID number (EIN) from the IRS," says Ennico. But Ennico cautions that "none of the do-it-yourself incorporation websites I'm familiar with complete all the steps, such as registering your corporation for state sales, payroll and other important taxes. The better websites will tell you where to go to complete these steps, but they leave it up to you to finish the job. If you're not disciplined enough to follow through, you may not have completed the incorporation process and that may cause problems for you down the road." Ennico advises that businesses enlist an attorney or CPA to help them form a C corporation. The cost, he says, will usually range from $1,000 to $2,000 and is a good idea, because "that way, you know the job will be done 100% correctly, and if it isn't, you've got someone you can sue for any damages you may incur. The last time I looked, you cannot sue yourself for your own malpractice."
3. Write articles of incorporation.
Articles of incorporation act as a charter to create a corporation. "It's like the birth certificate of the corporation," Ennico says. "It's going to be a matter of public record." Each state dictates what must be included in order to form a corporation in that jurisdiction, Weltman says. Some states require several filings at different times so be sure to check your state's rules. Usually, Weltman says, the information must include the following
The name and business address of the corporation. The corporation needs a name to describe the business. "The name cannot be one that confuses the company with another business and cannot be one that is barred by state law -- for example, one that is obscene," Weltman says. You also want to coordinate your corporate name with a domain name if you plan to create a website. Your corporate name must be followed by the abbreviation for corporation, incorporated, or limited (corp., inc., or ltd.). For example, if you are starting up a landscaping business, your corporate name might be Lush Landscapers, Inc. (assuming the name is not already in use in your state). The nature of the corporation's business. This can be a general description of conducting any legal business activity or it can be restricted to a particular activity. The designation of a registered agent in most states. This is a person authorized to receive legal notices from the state or third parties, such as service of process to start a lawsuit, Weltman says. The registered agent can be a corporate officer or a professional registered agent. Information about stock. This includes the number of initial shares being authorized, whether there is more than one class of stock, and the value of each share.The articles of incorporation name the incorporator, who is the person or company responsible for filing required forms with the state, Weltman says. The articles of incorporation may also name the initial directors of the corporation -- the people taking control once the corporation comes into existence, she adds.
4. Write by-laws and a shareholder agreement.
To operate a corporation, there must be by-laws and other written guidance as dictated by the law in the state you incorporate in and dictated by good business practices. By-laws are the governing rules for the corporation. "They stay in existence for as long as the corporation does, although they can and usually are amended from time to time," Weltman says. State law may outline many required rules; corporations can in some cases create their own rules. Weltman advises to include in the by-laws such information as:
The time and place for meetings of officers, directors, and shareholders. How many directors there will be and how long they will serve (state law may dictate this). The compensation of officers (which can be amended from time to time). The business year of the corporation (which can be a calendar year or a fiscal year in some cases). Rules for adopting and amending by-laws. Rules for approving contracts, loans and other actions of the corporation (e.g., whether an officer can act on behalf of the corporation or there must be agreement among shareholders). The location for inspection of corporate records."It is also advisable to create a shareholder agreement -- also referred to as buy-sell or buyout agreements -- to specify what happens to ownership interests in case of death, disability, retirement, bankruptcy or other contingency involving a shareholder," Weltman says. "For example, will a deceased-shareholder's shares be bought back ("redeemed") by the corporation or purchased by the remaining shareholders?"
5. Pay your taxes.
A C corporation is a separate taxpayer for federal income tax purposes. It files a return, IRS Form 1120, to report its income and expenses. There is a separate tax rate schedule for corporations, with rates ranging from 15 percent to 35 percent.Shareholders of C corporations only pay tax when and to the extent they receive distributions from the corporation, Weltman says. These distributions can include:
Salary and bonuses. These are taxed to shareholder-employees at their personal tax rates. Payments are also subject to payroll taxes, including Social Security and Medicare taxes, FICA, paid by both the corporation and shareholder-employee. Compensation and the corporation's share of payroll taxes are fully deductible by the corporation. Dividends. These are taxed to shareholders at a maximum rate of 15 percent (this rate may be increased in the future for higher-income shareholders). The corporation cannot deduct these payments, but they are exempt from payroll taxes. Fringe benefits. Many of these are tax-free to shareholders. Assuming the benefits meet tax law requirements (usually they must be provided to all employees on a nondiscriminatory basis and not just to shareholder-employees), then the corporation can deduct them and, in most cases, the benefits are exempt from payroll taxes, Weltman says.There may also be state-level income taxes on C corporations in the states in which they do business. Usually there is a minimum payment required to do business in a state; this is sometimes called "a franchise tax" even though there is no franchise involved.
6. Attend to other details.
Make sure to deal with various other business matters before your begin operations:
Obtain a federal employer identification number. A new C corporation must obtain a federal employer identification number (EIN). Obtaining an EIN can be done instantaneously and at no cost from the IRS. Any principal officer, such as the corporate president, can do this on behalf of the corporation. Pay other taxes. Check with your state tax authority to learn about sales, use, payroll and other taxes that may apply to the corporation's business. The corporation may be required to collect sales taxes on the goods and services sold and to turn over collections to the state, as well as to report on collections on sales tax returns. To find your state tax authority's website, go to this website. Once there, click on the "Forms and Publications" link and download the form businesses are required to file to register for state taxes. Certain cities and municipalities require you to register for their taxes as well -- check with a local accountant to make sure you haven't overlooked any taxing jurisdiction where your corporation is located. Obtain licenses and permits. Depending on your type of business, the corporation and/or each owner-employee may be required to have a license or permit to operate legally. Obtain insurance. While the corporation affords shareholders personal liability protection, in order to safeguard business assets be sure to carry adequate insurance for the unexpected. Discuss these and other types of coverage with an insurance agent.Recommended resources:
Business.gov: Link to your location to find applicable requirements for registering your business. Internal Revenue Service: IRS Publication 542, Corporations, explains how C corporations are taxed; it also provides guidance on recordkeeping and other tax-related information. U.S., Small Business Administration: How to choose a business structure. Legal Zoom: Help choosing a business structure.
Sales Tips for Start-Ups
How to sharpen your sales pitch. Focus! That's the advice of Jason Cohen, who blogs at A Smart Bear about the virtues of focusing on a single competitive advantage rather than trying to explain how you're better at everything. "Hanging your hat on just one advantage that you can own completely is stronger than diluting your message across many advantages," he writes. "It's already hard enough to stake out a niche in this massive world!" To make the point, he takes three possible advantages--being obsessed with quality, being the little guy in a sea of large competition, and even having the most expensive product--and suggests what you might say on a typical sales call. (Via Hacker News.)
Fred Wilson on how to handle online criticism. Over at A VC, Fred Wilson explains why it's important to own your online brand. You can't stop people from tagging compromising pictures of you on Facebook or saying nasty things on blogs, "But you can control what the Internet sees about you by overwhelming it with your social media presence," adds Wilson, who points out that your posts will bury negative information deep within Google's search results. Wilson recommends thinking of your blog as a resume and says he's hired junior investment professionals based on blogs, rather than resumes or LinkedIn profiles.
The rise of the entrepreneur-in-residence. With ten-year returns for the venture capital industry down to 8.4 percent a year, there's a unique position gaining more and more popularity in the Valley these days: the entrepreneur-in-residence. As the New York Times reports, these in-house entrepreneurs "receive a monthly stipend of up to $15,000 to sit and think for about six months. In return, the venture capital firm usually gets the first shot at financing the idea that emerges from this meditation."
Facebook lets the e-commerce in. Here's a crazy thought: Instead of getting "friends" and "fans" on Facebook, soon you may actually make money. Facebook recently struck a deal with eBay's Paypal that will allow developers to incorporate the online-payment service in their apps and ads. As Facebook expands its internal store and more developers launch e-commerace apps using the Paypal platform, Facebook will look more like a store than ever before. According to Advertising Age, this could be fortuitous for advertisers. Ads on the site will be closer to a potential purchase, which could help Facebook make the leap from marketing tool to sales tool.
The rise of the free conference. Industry conferences are great places to network and get new information, but most tend to take a big chunk out of a company's checkbook. Hopefully that may beginning to change. TechCrunch announced today that they will be hosting TechCrunch Disrupt, a New York City-based conference held in May where start-ups get to have their products judged and critiqued by experts for the chance to win a $50,000 cash prize. Best of all, it's free for start-ups to attend. Here's the application. Today also marks the start of RISE Austin, a free conference held this week in Austin in which entrepreneurs organize and host their own sessions for fellow entrepreneurs. Among the conference's keynote speakers are auto entrepreneur Red McCombs and the founder of Toms Shoes, Blake Mycoskie.
What's changing about the global start-up scene? A lot, according to Robert Scoble, video podcast pioneer (and formerly of Inc.'s sister magazine Fast Company). Scoble wrote today on his blog Scobleizer about his current mission of traveling the world studying how start-ups get formed. While attending such events as YCombinator Demo Day, Scoble observed several emerging trends -- the first being that cloud servers have made it easier to start a company anywhere in the world. "That infrastructure didn't exist five years ago, and before then, if you wanted to start a Web company you would need to build your own data center," he says.
3D TVs hit shelves. As James Cameron's wildly popular film Avatar has proven, explosions are at least twice as awesome in 3D. Now, it looks like 3D may be a big business for gadget makers. The Los Angeles Times reports that the first TVs that can show 3D programming are hitting stores.
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Federal Teleworkers
The recent snowstorm in the northeast has led the U.S. Government to acknowledge the benefits of employees working remotely. TechRepublic reports that “according to the U.S. Office of Personnel Management, about a third of the D.C. area employees at their office and the General Services Administration logged on to their agencies’ mainframe computers, most likely from their homes. That’s productivity that wouldn’t have happened without teleworking capabilities.”
Teleworkers can save the federal government a lot of money, and can do the same for a lot of businesses. So what is everyone so afraid of? In 2008, PCWorld published an article entitled “17 Telecommuting Disadvantages” which includes, among others, the following reasons:
Technology gets in the way. You can't count on coworkers or clients to have the PC skills or hardware necessary to set up a remote meeting with screen sharing, webcams, etc. A lot of time is wasted sorting out those issues. Nor is this problem limited to others: When your own Internet access gets flaky, you can't get your work done.
You miss the "meeting after the meeting." You see it all the time when you're in the office: The meeting is supposedly over, everyone says their farewells, and the folks in the office hang up the speakerphone. Almost immediately, the conversation continues around the conference table in a far less inhibited way than it did when everyone was involved.
The lack of immediate, nonverbal feedback.When you attend a meeting in person, you can see when people look uncomfortable at an idea you propose, or when their body language indicates they are offended by a joke you tell. It's hard to fix social or team problems that you can't see.
Obviously, as with everything, telework has both advantages and disadvantages. The question is – which side wins out?
I think there are those people who have personalities that lend themselves very well to telecommuting. Other people are less blessed in this arena. I'm one of the latter. I find it difficult enough to manage people I'm sitting next to, much less people I rarely see. It also depends on the kind work you do.
When work is global, multicultural, multitimezone and multicompany, special project management challenges arise. If you work in such an environment, drop me an email at curt@journyx.com because I'm researching data for a book on this topic right now.
Curt Finch is the founder & CEO of a resource management software company.
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