2/28/2005

What's In a Name? A lot

This StartupJournal article offers advice for naming a business:

"According to David Burd, president of The Naming Company in East Stroudsburg, Pa., it's common for new entrepreneurs to try to convey too much in their business names. 'A name is not an ad campaign,' he says. 'It allows you to write checks and do business. It's not the end-all, be-all of marketing.'

Instead, he says, your name should be memorable, simple and easy to pronounce. Start-ups should avoid long names such as Genevieve's Fishing and Tackle Supplies, which are difficult in some media, he adds. 'On the radio, she'd be saying, 'that's Genevieve, spelled, g-e-n-e-v-i-e-v-e-no apostrophe-s hyphen fishing hyphen tackle dot-com, let me repeat, that's...' '

When conjuring up a name for a new company or product, Mr. Burd and his team consider four types: descriptive, suggestive, arbitrary and fanciful. A descriptive name says just what it is (Beaded Jewelry Inc.). A suggestive name applies a quality or attribute of your product (say, Indonesian Jewelry, if all your beads were from Indonesia). An arbitrary name has no connection to what you are selling, along the lines of, say, Apple Computer Inc. A fanciful name is a made-up word: Xerox Corp., or Accenture Ltd. "

It should be noted as well that the four types of names are also ranked in order of the "strength" of a trademark. Not the value of the trademark, but its strength -- the potential for the holder of the mark to prevent others from using similar marks. The "strongest" marks in this sense are (in order) -- fanciful, arbitrary, suggestive, descriptive.

Women Entrepreneurs Can Promote Their Companies and Encourage Others by Sharing Lessons Learned

The re:invention blog - for women entrepreneurs is starting a new weekly feature stating:

"This is a chance for the nation's 10.6 million women entrepreneurs to get free publicity and exposure for their business. The new feature, 10 Tips for 10 Million WomenTM will appear each Saturday.

We'll share background about your company and a link to your company website along with your personal top 10 success strategies tips; the top 10 things you have learned while building your business."

Great Idea.

How to Catch Website Copyright Infringers

"Copyright protection for a web site is just as enforceable as it is for traditional media. U.S. copyright law states that electronic files—including web files—are copyrighted the moment they're put into a tangible form, even if they're not on display to the general public. Protected web files may include the site's content, code, scripting, graphic images, sound and video files.

'One way to determine if your site's content has been stolen is to use the search engines,' said Matt Naeger, Vice President and General Counsel at IMPAQT. 'The primary way is to see your copy in the search results. Copy-paste an extended piece of text from your web site and see what other web sites show up for that same text. Typically two sites shouldn't legitimately show up for the exact same web copy. I would say I have seen higher rates of recidivism, if you can show publication through the search engine.'"

From Search Engine Watch article via this Small Business Software post.

2/27/2005

Starting a Business? Find a Soul Mate

"So how does a web-based application startup actually get started? Guy Kawasaki's Art of the Start gives us good rules for getting going, such as

Think big. Don't just do things 10% or 15% or 20% better. Think 10 times better. Think more dramatic improvement. Think different curve, not same curve. Think getting to the next curve. Think creating the next curve.

When you design your product or service you should not be afraid; you should want to polarize people. You should want people to look at your product or service and say "I love it" or "I hate it". The worst thing is indifference.
But my favorite Guy Kawasaki rule for getting going is,
You need to find soul mates. You know, in America, and particularly Silicon Valley, there is the myth of the sole entrepreneur. This is the Steve Jobs, the Henry Ford, the Anita Roddick, the Richard Branson, the Thomas Edison working alone, genius doing it by all by himself. And in fact, I think if you analyze even these companies history is wrong. All of those people had groups and were members of a team. History is wrong.

It is not about one person, the sole entrepreneur, it about the group of entrepreneurs. Hence my second recommendation is you need to find some soul mates, the people who are drinking the same Kool-Aid that you are. Find some soul mates."


From this Adam Rifkin post.

2/25/2005

Research, Research, Research Your Small Business Idea

"So how do you know if your idea [for a small business] will fly? Research, research, research. Here are a few tips on how to get started.

Talk to Friends, Family and Strangers...

Next, talk to people in the industry you're targeting. Be careful, of course, but don't be paralyzed with fears that these people will steal your idea...

You might also want take your business idea to a chapter office of SCORE, the Service Corps of Retired Executives...

Market Research

We'll be blunt: Market research is essential. This kind of information-gathering can include everything from paying a research firm to prepare a sophisticated industry report to passing out a questionnaire on a street corner...

Try a Test Run

No matter how great your business idea looks on paper, you won't know how your target audience will react until you give it a trial run..."

From this Smartmoney.com article via this ESD post.

Just Do It

"I think action and risk taking is what separates great entrepreneurs from the pack. I am not advocating blind risk taking, but I am advocating making a decision based on less than perfect information and going for it. More often than not, you will be rewarded for doing that."

From A VC: Analysis Paralysis.

2/24/2005

VOIP: "If it moves, tax it"

"Over the course of the next year, VoIP and other Internet content providers will face an increasing number of tax questions. Although the protections of the Internet Tax Freedom Act were extended - IP voice was excluded from the scope of the new legislation. Although Senator Sununu and Congressman Pickering introduced versions of the 'VOIP Regulatory Freedom Act of 2004' the legislation has not yet been reintroduced. Under these reasonable proposals, VoIP would have been exempt from a patchwork of multiple and discriminatory state regulations; the bill would have also preempted the states from imposing upon VoIP applications various geographic tax burdens.

While it's unclear what 2005 holds for VoIP, President Ronald Reagan's thoughts on government generally can provide some foresight on the upcoming legislative and regulatory debate. When asked whether the government's view of the economy could be summed up in a few short phrases, Regan responded: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. Whatever direction telecommunications reform takes in 2005 - taxation, regulation and subsidies will clearly be at the top of the policy agenda for VoIP."

From this Swidler Berlin LLP article from Mondaq.

Ex-Steeler Swann Eyes Pa. Governor Post

"Former Steelers star Lynn Swann has taken the first step toward running for governor of Pennsylvania.

The Hall of Fame wide receiver filed papers Wednesday forming a campaign committee for governor, which allows him to begin raising money for a campaign.

Mr. Swann, a Republican, has worked as a broadcaster since his retirement as a wide receiver.

'I will spend time introducing myself to communities across the commonwealth,' he said in a statement. 'As I consider my personal decision regarding the upcoming gubernatorial race, we will also explore the potential political and financial support for my candidacy.'

From this Pittsburgh Business Times article.

College-Cult DVDs

If you like me have a kid in college, you may wonder what the latest college cult flicks are on campus. Wonder no more. This article from The Daily Princetonian reveals:

"As Hollywood perfects its formula for high-grossing, high-profile and high-budget movies geared toward audiences with ever-decreasing attention spans, the college-cult DVD has emerged as a niche for innovative films and TV shows — even those doomed to poor ticket sales and a limited audience. Thanks to a limited but devoted fan base, these DVDs enjoy unusually high sales despite their seemingly limited appeal and usually art house form. After an informal campus survey, we've compiled a must-have list with a few classic and some more recent cult DVDs — for those with an interest in escaping Hollywood for a while." The list:

Donnie Darko
Napoleon Dynamite
The Big Lebowski
Kill Bill I & II
Eternal Sunshine of the Spotless Mind
Spirited Away
Garden State
Le Fabuleux destin d'Amélie Poulain
Rushmore
Fight Club
Nip/Tuck
The Ring
Super Troopers
Aqua Teen Hunger Force
Harold and Kumar Go to White Castle

Selecting Small Business Accounting Software

"In the process of selecting accounting software for your small business? There are quite a few choices: Quickbooks, Peachtree, Microsoft Great Plains, Microsoft Solomon, MYOB, Netsuite, Accpac, Simply Accounting, AccountEdge and a hundred others. How do you find good small business accounting software that works for your business?"

This article from Gaebler Ventures discusses some important things to consider when buying accounting software.

Pay-To-Play, A-OK

Two recent Delaware cases permitted merger transactions to proceed despite the fact that the sole purpose of the merger was to circumvent the consent rights of stockholders who opposed amending the company corporate charter to allow a "down round" rights offering to existing shareholders.

This article from Faegre & Benson explains:

"For start-up companies, cash is life and a lack of cash often means death. When things don't go well at a start-up, the critical next round of financing usually comes mostly (or entirely) from the company's existing or "inside" investors.

Inside financing rounds can raise a thicket of legal and practical issues, including claims of self-dealing or breach of fiduciary duty, because the inside investors typically have seats on the company's board and often have majority control of the board. Those issues can be especially acute when the inside financing is a "down round" or if it includes a 'pay-to-play' feature that adversely affects any stockholders who do not participate in the proposed deal.

Two court decisions from Delaware, WatchMark Corp. (2004) and Benchmark Capital (2002), provide some helpful guidance to companies trying to secure financing in an inside round. Those decisions are also a cautionary note to venture capitalists and other investors who might be opposed to a particular inside, down or 'pay-to-play' round."

The lessons from the cases according to the article

"1. Charters Need to be Drafted Carefully...

2. That Applies to No-Impairment Clauses Too...

WatchMark makes clear that no-impairment clauses, like other preferred stock provisions, will be interpreted very strictly. A catch-all “no-impairment” clause will not make up for careless drafting.

3. Endorsement of Participation Rights and Pay-to-Play Fairness...

After WatchMark, we would expect rights offerings to become even more of a standard feature in down, inside or pay-to-play financing rounds...

4. The Importance of a Good Record.

As is often the case in Delaware corporate law case decisions, WatchMark highlights the importance of making board decisions in the right way and carefully documenting this process for the record."

2/23/2005

Legal Reasons to Retain E-mail, Web Pages and Other Records

A "document retention policy" is a set of guidelines that a company follows to determine how long it should keep certain records, including e-mail and web pages. The policy is important for many reasons, including legal requirements that apply to some documents. This article from GigaLaw.com explains why and how long to retain important business documents, stating:

"How long to keep a document, when and how to store the document, and how to dispose of the document, will depend on the type of document. The inquiry focuses on at least six issues:

1. Is there a legal requirement for keeping the document?...

2. After the item is used for its intended purpose, what other purpose could it serve?...

3. What is the consequence of not being able to locate the document?...

4. Can the item be reliably reproduced elsewhere if needed?...

5. Once the possible use of a particular item is determined, the question becomes how long to retain the document...

6. Certainly, if the document is in any way related to pending or threatened litigation, it is wise to keep the item until the matter is finally settled or all appeals are exhausted."

Searching for a Knock Out? Meet TESS

At the Project GATE class on entrepreneurship legal issues that I taught yesterday morning at Duquesne University, I stressed that before using a new trademark, it is important to know if anyone has prior rights in a similar or identical mark. A "screening" or "knockout" search will spot obvious conflicts.

If the mark survives the knockout search, this does not mean that it can be safely used without infringing the rights of others. The knockout search should be viewed as preliminary in all respects. If you find that your proposed mark is the same or confusingly similar to an already registered mark, you may consider the mark to be "knocked out", and determine that you are better off looking for a new mark. If the mark survives the knockout search, a more thorough search by a professional search firm or attorney should be conducted.

To conduct a basic "knockout" search you really should meet TESS. TESS is for the new web Trademark Electronic Search System of federally registered and pending marks that is part of the trademarks section of the US Patent and Trademark Office. TESS has 40 search fields, including owner name and address, priority date, pseudo marks and translations, live/dead status, section 8 and 15 affidavits, and intent-to-use, and it is FREE on the PTO web site.

Video Introduction to the Patent System

"This 17-minute videoris designed to be shown to jurors in patent jury trials. It contains important background information intended to help jurors understand what patents are, why they are needed, how inventors get them, the role of the Patent and Trademark Office, and why disputes over patents arise.

An Introduction to the Patent System was developed with the assistance of an advisory committee of district judges and patent attorneys. Special care was taken to ensure that it provides an impartial and objective view of the patent process."

Via this I/P Updates post.

2/22/2005

An Entrepreneur's View of VCs (continued)

More excerpts from Tom Evslin's lessons on how to select and work with VCs. Excerpts from lessons #1 - #4 are available here.

"Lesson #5: ask VCs about their firm’s “exit strategy”...

At some point, the VCs will sell or distribute the stock they hold in your company. Whenever it is, you won’t like it; but it is better to understand this in advance than to be surprised...

Lesson #6: look for VCs who can and do distribute.

When the time comes for a VC to liquidate some or all of its position in your company, it can usually either sell the stock outright or distribute it to its LPs. I believe that distribution is better for the company than an outside sale. For one thing, it doesn’t send the same signal to the market as a huge sale by an initial investor which may have to be reported publicly depending on how recent your last equity event and the size of the VCs stake...

Lesson #7: check VC references...

Lesson #8: Choose VCs you’d trust with your own money...

Lesson #9: use your VCs relentlessly...

Lesson #10: push to speak to the Limited Partners.

Every VC firm I know has an annual meeting of the LPs and usually invites some of the portfolio companies to present or at least mingle. These LPs may become (or may already be) direct investors in your company. Most important, if the VC distributes your stock to the LPs, you want to have convinced them that yours is a stock worth holding in their own portfolios. You won’t convince them all but, if you do a good job, there won’t be quite the same rush to sell on distribution as there would be otherwise."

2/21/2005

Passion Can Be Profitable

From this "re:invention blog - for women entrepreneurs" post:

Passion IS contagious....and it CAN be profitable. But turning a lifelong passion or hobby into a career still requires you to ask some hard questions.

A short checklist:

- Is it marketable (and how will you promote it)?
- What are your true costs?
- What are your income and long term growth expectations?
- What specific resources do you need to progressively turn passion into tangible success?
- Who will embrace your product, service or idea...why will they buy it? and what exactly are they buying (peace of mind, freedom, confidence, validation)?
- How are you different than the competition?
- Who do you know who can provide practical business advice, business leads, and critical feedback - and how can you convince them to connect you with additional resources?
- How will you prioritize business opportunities?
- Where will you sell your product or service (what's your best bet distribution channel)?
- How will you price your product - and how do you justify your price point?
- How will you keep score (i.e., measure success and return on your investment)?
- What valuable aspects of your business (an invention, expression or literary creation, unique name, business method, industrial process, chemical formula, computer program process, or presentation) will you need to protect (also known as intellectual property)?

Passion is good, but it isn't enough. Women entrepreneurs who want to build a serious business need to be sophisticated in their approach. You need to be as smart and savvy as you are about buying Spring shoes, planning your child's education, and investing for your future."

More VC Money Becoming Available

"Venture capital funds in the United States raised $17.6 billion in 2004, nearly double the amount raised in 2003. All indications are that 2005 will be an even bigger year, both in terms of the number of VC funds seeking financing and the total amount raised.

The healthy pace of fund-raising activity is likely to continue in the coming year for a number of reasons. First, many venture capital firms delayed fund raising in 2004... in Second, emerging managers are entering the marketplace at a faster rate than existing venture capital firms are shutting their doors, increasing the total number of players in the market. Third, many of the larger venture capital firms are expected to come to market in 2005...

From this Boston Business Journal article

Lessons in Dealing with VCs

Over the next two days Tom Evslin will blog the nine lessons he learned as a serial entrepreneur about dealing with VCs. Here are excerpts from the first installment

Lesson #1: there are times when raising venture capital is a bad idea...

Lesson # 2: there are times when it makes sense to raise venture capital...

Lesson #3: raise your venture funding as late as possible...

Lesson #4: pick your VCs well...

Your VCs will monitor what you do with your money closely. Some of them will end up on your board...Incompetent VCs, of course, are a disaster. A good VC, like a good startup CEO, must be able to learn and adapt! Sure, you all agreed on a business plan before they gave you the money and you ceded absolute control over your company. And, just as surely, at least half the assumptions that business plan was based on will turn out to be wrong as well as many of its conclusions. If your VCs won’t let you – won’t help you – adapt, you’re toast."

From Fractals of Change: Venture Capital - An Entrepreneur's View

2/20/2005

New SBA Government Contract Rules to Take Effect

"On December 20, 2004, the Small Business Administration (“SBA”) published a final rule imposing new responsibilities on prime contractors to ensure that small businesses have significant opportunities to participate in the performance of federal government contracts.1 This rule becomes effective on March 14, 2005...

The rule contains a lengthy list of possible “efforts” a prime contractor may undertake—and which SBA will evaluate—to provide small businesses subcontracting opportunities. These efforts include:

*Breaking out contract work items into economically feasible units, as appropriate, to facilitate small business participation.
*Conducting a reasonable amount of market research to identify small business subcontractors and suppliers. This may include utilization of small business associations and local government-run small business assistance offices.
*Soliciting and providing sufficient information regarding the proposal to small business concerns as early in the acquisition as practicable to allow them sufficient time to submit a timely offer.
*Negotiating in good faith with small businesses.
*Directing to the SBA interested small businesses that require assistance.
*Assisting interested small businesses in obtaining financing, bonding, insurance, and other tools.
*Participating in the mentor-protégé program."

From this Public Contracts Advisory.

2/18/2005

Do Software Patents Stifle Innovation?

This post from Small But Disorganized started as a comment to my earlier post on software patents which talks about Martin Fink, HP's vice president of Linux, and his comments that software patents are here to stay and that we should just grin and bear it, and that its foolhardy not to pursue them. Quoting the response:

"I think what disturbs the open-source programmer is that large corporations use their patent library as a shield and club, cross-licensing them with other companies, thus avoiding lawsuits. Small companies, open-source projects and individual developers can't protect themselves from large corporations' patent claims by cross-licensing as they have no huge library of patents with which to engage in cross-licensing.

Most cannot even afford the cost of pursuing a patent, so the issue of being foolhardy in not pursuing a patent is moot.

The effect of all this is to stifle innovation and create stagnant monopolies. The little guy can't innovate for fear of lawsuits and the cost of the patent process. This leaves a few large corporations in control of the industry, where they don't have to innovate. They can just sit back and collect license fees."

Tips for Preventing Identity Theft

This post from May it Please the Court contains practical tips to use in an effort to avoid becoming one of the possibly 110,000 people who have become vicitims of identity theft.

Background Check How-To

"An excellent article by Genie Tyburski, Web Manager of The Virtual Chase. This is another one of her fine Internet research articles and discusses the best and current methods and resources on conducting a background check. A listing of resources as well as current privacy issues are discussed. "

From this post by Marcus P. Zillman.

Licensing as an IP Strategy

"In this strategy, the patent portfolio is developed with an intent to offer a licensing agreement to one or more other companies, presumably for royalty income.

An example of a very large technology is one that may be used across an entire industry, where the technology may be used like an industry standard by which many companies' products may be interchangeable. For example, some of the MPEG standard is a licensed patent portfolio that is subscribed to by all manufacturers of hardware that uses MPEG. A key to bringing this technology to market is to get all of the big players on board so that the patent portfolio becomes an industry standard.

In another example, a company may develop a unique processing machine or method to manufacture its products. The processing machine or method may be useful outside the company's industry by non-competing businesses. Patents on the processing machine and method may be licensed outside the patent owner�s industry. The patents may be a rich source of revenue without negatively affecting the company's competitive position in its main market."

From this post by Russ Krajek.

Raising Money for a Small Business

"Many people simply don't have the resources to finance a small business by themselves. Here are five major sources of funds.

1. The Government...
2. Bank Loans...
3. Family and Friends...
4. Venture Capitalists...
5. Angel Investors"

From a fine article from Smartmoney.com that details the pros and cons of each source. Via this ESD post.

2/17/2005

Researching Companies Online - A Tutorial

"This business research tutorial presents a step-by-step process for finding free company and industry information on the World Wide Web.

Accurate and timely information is essential for any business to remain competitive. With the Internet, you can gather a tremendous amount of business intelligence information on prospects, competitors, vendors, suppliers, customers, or other companies in just a few hours. "

SBA Solutions Newsletter Posted

The February edition of the SBA Solutions newsletter contains information that will help you breathe easy this tax season, including:

1. Need-to-know changes the IRS is implementing to make small-business taxes more understandable and compliance simpler.

2. Last-minute actions that might minimize your tax bill.

3. A comprehensive list of tax forms your business must complete.

4. Advice from SBA Administrator Hector V. Barreto on how to survive tax season as a small business owner.

2/16/2005

VC's Favoring Shorter Lead Time Technologies

This article from techreview provides a mixed review of venture capital startup funding, stating:

"For the most part, companies just starting up are still struggling. And venture funding for one of technology’s most speculative, albeit promising, fields has been one of the biggest casualties... That means nanotech startups are finding it harder to do research in areas that could have tremendous long-range impact: new nanomaterials for optics and chip-cooling systems; biological diagnostics based on ultrasensitive nanosensors; and smart, automated delivery systems for protein drugs...

By contrast, areas of technology that require much less time in development are continuing to gain attention. One area that is attracting interest these days is RFID technology, which uses radio frequency identification tags that work like bar codes to track merchandise more precisely...

Other technology sectors finding favor with venture capitalists:

Mobile applications: entrepreneurs and venture capitalists are creating and funding companies that are developing new applications and services for cell phones, MP3 players, and other mobile devices...

Business on the Internet: the growing number of computers online and higher broadband penetration into households is helping business on the Internet to finally begin to fulfill its promise...

Anything having to do with IT security...Viruses, worms, and spyware are on the rise, and entrepreneurs have leaped at the chance to make a buck off the fears they inspire...

Biotech startups: people will always get sick. Health-care costs continue to soar, and the drug pipeline remains constricted. So investors are turning to biotech, and especially to drugs for cancer, inflammation, and neurological and infectious diseases."

Software Patenting: Grin and Bear It

"Open-source programmers might not like the idea of software patents, but those critics would be better off adapting to the fact that they're not going away, Hewlett-Packard's top Linux executive said Tuesday.

'At the end of the day, software patents are a way of life. To ignore them is a little bit naive,' Martin Fink, HP's vice president of Linux, said here at the LinuxWorld Conference and Expo. It's fine to object to software patents, but it's foolhardy not to try to acquire them, he said.

'Refusing to patent one's ideas is leaving oneself exposed for absolutely no good reason,' Fink said. 'For some, (getting patents) may seem like selling out. You can comfort yourself that it's what you do with the patent that matters, not the fact that you have one.'"

From this ZDNet article.

The Power of "Patent Pending"

"Patents and patent applications are very effective marketing tools and deterrents to competitors. When a patent application is filed, a product may be properly marked as "patent pending." This marking serves two very important functions.
In a general marking sense, the "patent pending" or "patented" markings indicate to consumers that the product is unique and cannot be obtained anywhere else...

When a product is marked "patent pending," and additional business device is invoked, that of doubt in a competitor. During the prosecution of a patent, the actual extent of the patent claims is unknown, since the examiner and the patentee have not finalized their understanding of the scope of the patent.... Before the patent issues, however, a competitor is always in doubt about how much coverage the issued patent will give the patentee. The competitor must weigh the costs of developing a competing product with the risk that his or her product may directly infringe when the patent issues. In many scenarios, the "patent pending" moniker is more effective as a business tool than the actual issued patent."

From this post by Russ Krajek.

Free Fun OSCAR Pick Em POOL

Every year when the Academy Award nominations are announced, I make it a point to see all the movies nominated for Best Picture before the Oscar telecast. Having accomplished this task, I am now ready to make my predictions of the winners. If you would like to do the same, I invite you to participate in the first:

BIZZ BANG BUZZ OSCAR POOL

To Join in the fun go to Oscar Pick'em - from Yahoo! Movies, sign up and join Group 1510 with the Password - bizzbangbuzz. Remember, it is the Group ID# (1510), not the group name, that you use to join the group.

The pool is strictly for fun and bragging rights, although if I can think of an appropriate prize between now and the February 27 show, you may be the lucky winner.

By the way, here is a list in alphabetical order of the 2004 movies I have seen, with asterisks next to the ones I especially enjoyed:

The Aviator
Eternal Sunshine Of The Spotless Mind*
Fahrenheit 9/11
Finding Neverland*
Garden State*
The Grudge*
Harold and Kumar Go to White Castle
Harry Potter and Prisoner of Azkaban*
House of Flying Daggers*
The Incredibles*
Kill Bill Vol. 2*
Maria Full of Grace*
Million Dollar Baby
Napoleon Dynamite*
Open Water
The Passion of the Christ
Phantom of the Opera
Ray
Shaun of the Dead*
Shrek 2
Sideways*
Spider-man 2
The Terminal

2/14/2005

Defensive Publication as an IP Protection Strategy

"The defensive publication strategy protects a company’s intellectual property by getting it into the public domain, but while optionally retaining rights. In this strategy, a business publishes their technology before an aggressive competitor can file a patent on the same technology.

For example, if a business is afraid that a stronger or more aggressive competitor may develop a similar technology, the business may attempt to dump as much of the technology into the public domain before the competitor may develop and patent the same technology. If the aggressive competitor were to obtain patents in the area, it may attempt to enforce the patents against the first business.

In this strategy, the technology is made known in the art before anyone else can develop and patent the technology. This benefits a business because an aggressive competitor cannot patent the technology and sue the first business.

On the down side, the technology that was disclosed could have been secret, proprietary, and otherwise a trade secret. In essence, the cat is being let out of the bag."

Read more at this post from Russ Krajek

The 4 C's of Successful Family Businesses

What distinguishes successful family controlled businesses (FCBs)? Perhaps it is these distinctive approaches -- the Four C's:

"Continuity: Pursuing the dream. Our long-lived FCBs commit enduringly and passionately to a substantive mission - to do something important exceptionally well. They invest deeply and for the long run in the competencies needed to attain that mission. And because the company is the vehicle for achieving their dream, families strive to ensure corporate health and continuity, exercising careful stewardship over resources and encouraging long executive apprenticeships and tenures. Short-term tactics and quarterly earnings are furthest from their minds.

Community: Uniting the tribe. To realize their missions, thriving FCBs often insist on building a cohesive, clanlike team. They embrace strong values that rally people around what is important, socialize staff to assure that these values will prevail, and often pamper employees to elicit loyalty, initiative, and collaboration. Bureaucratic rules and financial incentives are secondary.

Connection: Being good neighbors. Many great FCBs cherish enduring, open-ended, mutually beneficial relationships with business partners, customers, and the larger society. These relationships vastly exceed the time span, scope, and potential of episodic market or contractual transactions.

Command: Acting and adapting with freedom. FCB leaders desire the discretion to act independently - quickly and in original ways - often to renew or adapt the firm. They typically work with an empowered top team whose members are similarly free to communicate openly and make decisions. Unlike at many non-FCBs, these leaders do not face hobbling constraints from shareholders."

From this HBS Working Knowledge article.

Encryption Important to Small Businesses, Too

"What happens if a company laptop is stolen or lost? Is the hard drive data protected against unauthorized access? The standard password login to Windows isn't enough protection. Encryption provides the definitive solution. Scrambling digital data limits access to only those with the proper keys (think of these as akin to passwords, but stronger) and can guard against eavesdropping of communications, prevent undetected alteration or deletions and deny unauthorized access.

But we know that already. The problem is, small and medium-sized businesses don't use encryption enough. Savvy large enterprises are adopting crypto to protect data stored on personal computers, but few SMBs implement it now. This is quite dangerous, given that data on computers is valuable and vulnerable, regardless of company size."

Read more in this searchsmb article.

2/13/2005

Managing Open Source Software M&A Risks

"Open source risks have become a significant diligence issue in many mergers and acquisitions. Open source issues need to be included on today's due diligence lists. The treatment of open source at a target company may affect representations, warranties, indemnification, covenants and other contract provisions. Open source issues may affect the risk assessment and structure of the deal. These issues are likely to become more important in mergers and acquisitions in coming years as the presence of open source software in global businesses continues to grow...

Fundamentally, open source issues impact a merger or acquisition transaction because buyers need to know what rights and liabilities are being transferred. Thus, if open source code is disclosed during due diligence, the buyer will need to determine the effect open source code has on the risks being evaluated by the buyer in the proposed transaction. For example, even though open source software being used by a target was only modified for internal use, it is possible in an asset transfer transaction that the open source derivative work rules may apply to the transfer of software assets containing open source code. Below are some questions to consider in merger and acquisition transactions:

What seller products are affected by the open source code?

How is the open source code incorporated in seller's products?

What open source licenses apply to the open source code related to Seller's products?

Will the open source code trigger the derivative work open source licensing requirements?

May the open source code be replaced with closed proprietary code if necessary?

What is the value of the product or products affected by open source to the overall deal?

Do the affected products represent a substantial source of revenue to the company?

Are the affected products part of an integrated software solution or suite of products?

Are the affected products used solely for the internal operations of the company?...

From this DLA Piper Rudnick article from Mondaq that also includes an excellent summary of what constitutes free and open source software.

Battelle - Technology Forecasts

"Technology experts at Battelle think they have 2020 vision. They don't mean perfect eyesight today. They're talking about the ability to see the world of 2020.

A team of top scientists and engineers at Battelle, a world renowned technology organization based in Columbus, Ohio, has compiled a list of the ten most strategic technological trends that will shape business and our world over the next 20 years."

And what do the Battelle experts see?

1. Genetic-based Medical and Health Care
2. High-power energy packages
3. GrinTech (Green Integrated Technology)
4. Omnipresent Computing
5. Nanomachines
6. Personalized Public Transportation
7. Designer Foods and Crops
8. Intelligent Goods and Appliances
9. Worldwide Inexpensive and Safe Water
10. Super Senses

Read more here.

2/12/2005

How an Operating System Works

"The purpose of an operating system is to organize and control hardware and software so that the device it lives in behaves in a flexible but predictable way."

This article from Howstuffworks explains "what a piece of software must do to be called an operating system, show you how the operating system in your desktop computer works and give you some examples of how to take control of the other operating systems around you."

The Entrepreneur as Pain Reliever

As an entrepreneur "you really have only one job, to relieve someone else's pain.

They are trying to do something, and they cannot do it themselves, that is pain. Your job is to make that pain go away. You don't even have to do it yourself, you can just get them together with someone you know who can make their pain go away.

That is the essence of entrepreneurship."

From this Engineer2Entrepreneur post.

Fundraising? Observations from Recent Meetings

After some recent meetings with entrepreneurs looking for capital, a few common things surfaced from those conversations and VC Jason Caplain shares his insights here.

Credit-Card Financing Comes with Risks

There are "potential risks and rewards for entrepreneurs who lean heavily on credit cards when starting up a business. Plastic can be useful for people who can't get loans from banks or family, or who are sitting on a can't-miss idea and just need some help getting over one big hump. But owners of less explosive businesses can get bogged down quickly in debt, especially if a missed or late payment prompts the card company to ratchet up interest rates. And even though entrepreneurs can open up card accounts in their business's name, they are usually personally liable for bad debt.

'The issue is that almost all credit-card agreements have fine print with very sharp teeth,' says Fred Wainwright, executive director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business. 'If you miss even one payment, the attractive terms can convert to over 20% annual interest rates and outrageously high penalty fees.'"

From this Lodgix.com post.

Ten Questions to Ask Before Buying a Franchise

What type of franchise is it?
Does the business lend itself to the franchise model?
What does the offering circular say?
How many franchises does the organization have?
How much is the franchise fee?
How much will you have to pay in royalties?
How much money will your business really make?
Can you work with these people?
How will the franchiser help you?
Is the franchise company legitimate?

From this allbusiness.com article.

Web Services Report

"Business Week has a special report on Web services:

'Web services refer to a set of programming standards used to make different types of software talk to each other over the Internet, without human intervention...Unlike the ASPs, which were building out massive data centers and basically running rental services for other people's software, today's Web-service companies design their software from the ground up to be delivered over the Internet as a service. That's a big difference. It means their business model can scale, and the bigger they get, the more profitable they become because they're building on that initial research and development investment.'"
From this E M E R G I C . o r g post.

Vertical Integration An Obsolete Idea

"Vertically integrated companies can’t compete! The oxymoron of “internal customers” is poison to a competitive culture. That is the lesson of the computer industry and it is a lesson the telecommunications industry apparently has not learned yet...

A horizontal company has a high surface to volume ratio. It sells all of its outputs in a competitive market. It is free to buy all its inputs in a competitive market. Its managers are not isolated from the markets they compete in. A vertical company spends most of its time and energy dealing with itself rather than the external market. Meetings are dominated by esoterica like transfer pricing between divisions because this is what determines internal success.

The real marketplace is distant from most of the managers trapped inside the vertical structure. Buy vs. build and capital allocation decisions inside a vertical company are made by office politics in a vain attempt to optimize across the whole vertical organization. Horizontal competitors optimize only for the layer they are competing in and so end up being superior to the vertically integrated company layer by layer."

From this post from Fractals of Change

Toll Free Numbers Primer

"Considering a toll free number for your small business? It could be a good call for your business (no pun intended).

As you probably know, a toll free number (or a 1-800 number as they are often called) is a telephone number that can be called by your customers and prospective customers at no cost to the caller.

You, as the business owner, pay for the call.

But how much do 1-800 numbers cost, what are the benefits of a toll free number, and how do you get a toll free number?"

This article from Gaebler.com provides the answers.

2/11/2005

Technology Strengthens Small Business Bottom Line

From a Pittsburgh Post-Gazette article:

"Ruby's Cleaners is among a growing number of mom-and-pop shops and nonprofits breaking out of their traditional methods and going high-tech to increase productivity, customer service and their bank accounts. Tech spending among small businesses is forecast to rise 7.5 percent this year, nearly double last year's 4 percent increase, according to the Cambridge, Mass.-based tech research firm Forrester Research.

'It's far easier to deploy technology in a small organization when you're not bogged down with the overwhelming training and costs to deploy,' said Chris Sweeney, chief executive officer of 3 Rivers Connect, a local nonprofit that helps companies and organizations incorporate new technology in their operations.

Part of the push simply reflects the costs. Technology is now so inexpensive that more business owners are realizing it pays to upgrade, said Anita Campbell, the Cleveland-based editor of Small Business Trends"

2/09/2005

The Importance of a Coordinated IP Strategy

"Companies of all sizes focus their time and energy on building shareholder value by developing and implementing profitable business models, moving products closer to the market and/or gaining market share. In the shadow of these primary goals, the long-term investment in time and resources needed to ensure the development of a strategically aligned patent portfolio can be forgotten. In the chaos, many companies accumulate patents in an ad hoc manner, rushing to file patent applications when inventions happen to surface, omitting patent applications on potentially valuable inventions because their value is not understood, rushing to make patent investment decisions at the last minute and seeking to understand the output of this process only when the pressure is on.

Such a minimalist approach to IP planning and processes is clearly out of touch with the true value of IP. Strategy and tactics for managing an IP portfolio should infiltrate the biotech company from the business strategy to the product teams, from the boardroom to the bench scientist. Managing IP requires the implementation of an IP strategy and standards that control the development of the IP portfolio. Just as a company would never leave the development of its product pipeline open to chance, so it should actively and strategically manage its IP pipeline to ensure maximum return on its IP investment."

From this Bioentrepreneur article.

Tips for Approaching the Venture Capitalists

"A quality introduction is a must. It carries more weight than directly approaching the Venture Capitalists with a business plan...

Venture Capitalists are very busy people. It is always a good idea to rehearse your meeting in the privacy of your own office and time yourself while describing salient points about your company...

Present yourself as a Global Player....

Demonstrate your willingness to risk everything you own....

Remember, Venture Capitalists are smart individuals....If you need a million, do not ask for 10....

Then there are other small things, you must remember:

* Wear a conservative suit to the meeting and avoid flashy apparel.
* Demonstrate your frugality by travelling Economy class and in a modest car.
* Use a decent leatherbound cover to present your business plan."

From this BusinessWorks Inc post.

Turn Data into Information and Measure Everything

"While it's easy to get lost in "data" rather than synthesizing and understanding "information", I find way too many early stage companies measuring very little - thinking this is something that "only big companies bother with." Microsoft shows how it's completely ingrained in their culture - in my experience with them, they've been measuring everything forever.

The value of building this discipline into the fabric of a startup is huge. Automate as much as you can early in your life - turn "data" into information - and continually refine what you are measuring to make sure it's the relevant stuff. But measure it."

From Brad Feld post.

Pricing Your Goods and Services

"For virtually all businesses, pricing comes down to a delicate balancing act among three factors: Your internal costs; the demands of the market you're in; and, the one most people forget, your company's strategic goals.

Think of these key variables as the legs of a tripod on which your pricing policy must have balance. The balance between cost and market is fairly obvious and doesn't require a lot of space here. But the issue of company goals and maintaining the balance among the three is key over the long term."

From this article from Gaebler Ventures.

2/08/2005

Franchisees Lose Part of Their Independence

"In this New York Times article, the author explores a franchisor's right to control franchisee operations and product purchases.

Presently, 7-Eleven is battling a lawsuit with its franchisees in California over changes made to their franchise agreements that allow 7-Eleven to select 85% of the franchisees' product mix and designate suppliers for those products. Franchisees argue in the lawsuit that the franchise agreement change will negatively affect their profit margins by robbing them of the chance to bargain shop and negotiate. Little Caesars faces a similar argument from a group of franchisees it sued last year for offering unapproved product at their locations.

Although franchisors claim that they are able to maintain quality control and negotiate better bulk prices through approved distributors, franchisees remain skeptical of the benefits of franchisor purchasing decisions. "

Reprinted from Wiggin and Dana's Franchise Law Blog: Approved Product Skirmishes.

The Value of Preventive Legal Audits

"Preventive legal audits are a comprehensive appraisal of a company's legal affairs whereby the attorney can make constructive recommendations for changes in a company's procedures. Annual preventive legal audits can help you

+ avoid court,
+ avoid jail and fines,
+ reduce legal costs,
+ improve your reputation and public relations,
+ take advantage of future trends,
+ educate your employees, and
+ improve your work environment...

Businesses need help spotting potential legal problems before they occur. They often neglect legal matters such as partnership agreements or fail to comply with employment regulations such as documenting reasons for firing an employee. They do not realize they have a problem until they end up in court.

Preventive legal audits preempt trouble before it occurs. For a flat fee, attorneys with extensive backgrounds in business visit a company, analyze legal vulnerability, and draft a remedial plan for the client explaining potential legal exposure; recommend compliance guidelines, legal forms, and employee training; and provide written reminders regarding leases, loans, and other agreements...

The legal issues reviewed include: OSHA compliance; ADA compliance; accounts receivable; credit and collections; human resources (benefits; employee manual); pension/retirement plans; antitrust violations; insurance (malpractice; workers' compensation; general liability; disability); buy-sell shareholder agreements; fraud; corporate structure (bylaws/minutes); limited liability company Articles of Organization and Operating Agreement; workplace violence prevention; real estate (leases, entity, income, expenses, and zoning); record retention/ storage; loans, payroll, accounts payable (phony invoices, kickbacks); environmental compliance (lead paint, asbestos, hazardous materials, sick buildings); consumer laws; product liability; employee theft; licensing agreements; Securities and Exchange Commission requirements; tax planning (S corporation status and alternative minimum tax); contract forms (purchase orders, warranties, brochures); recent legal developments affecting the company; tax return filings; and electronic media."

From Small Business Legal Tax Guide & Information - Businessweek.com

7 Good Reasons to Call a Lawyer

I can think of more good reasons, but this list from Microsoft small business is a good start:

"Here are seven signs that suggest your business may benefit from the involvement of an attorney:

1. You're starting a business...
2. Check your contracts...
3. Review your exit strategy...
4. Check your debt collection practices...
5. Begin to draw on your wealth...
6. Keep the business going after you retire...
7. Resolve a business dispute."

2/07/2005

Compiled Applications Headed for Extinction?

"Compiled applications are dying. They are being ripped apart, piece by piece, until there's almost nothing left... and it's a good thing. In their place, a new class of execution engines is emerging. These engines can power any kind of application, from spreadsheets to supply chains, and all they need to work their magic is a few lines of structured text. While this trend started at the periphery of applications with functions such as User Interfaces and Data access, it is now migrating to the core of application functionality: business processes, algorithms, semantics, and state. Software will never be the same...

My argument is not that compiled code is going away completely, but that the code that makes an application distinct (business logic and presentation logic, config parameters, etc.) is indeed migrating to XML. Some of this "code" is simply using XML as a flexible container and is loaded and compiled at runtime anyway, but the point remains, the "code" that makes an application unqiue is being seperated out into XML, while what is left behind are generic execution engines that manage the low level tasks such as security, performance, integration, state, etc.

Finally, I am not suggesting that just because "code" is migrating to unstructured text that it will be much easier to program applications, but such migration does make code more flexible and accessible which is similar to what HTML did to the presentation layer. Perhaps this trend is not yet evident in Windows development tools, but it seems to be elsewhere."

From Burnham's Beat: The Death of Compiled Applications and the related comments.

Entrepreneurial success stories

"I'm a big fan of learning from the experience and insights of those who have 'been there done that.' Here are some great stories of entrepreneurs who have successfully made it happen. "

From this post at the Occupational Adventure.

Financial Lifecycle and Glossary

I stumbled upon the website of investment banker, Wall Street Organization, Inc. and found this useful graphical representation of the financial lifecycle of a privately held company, moving from idea to business plan to exit strategy. I also found useful this related glossary of securities terms.

IBM Offers New Small Business Financing Program

Reuters.com reports that:

"IBM is making its office equipment financing program easier for small- and medium-sized businesses to use, reversing a long-standing policy that favored big business clients.

The world's biggest computer company said the program offers competitive market rates, a simple rate structure, and a credit approval process that promises, in most cases, contracts are delivered within one hour for deals of up to $300,000. "

Via this post from ESD.

2/06/2005

How to Find A Buyer for Your Business

Now may be the time to sell your business. Both strategic and financial buyers are actively seeking acquisition targets and pricing is trending upward. If you have made a decision to sell your business, engaged an attorney, accountant and other experienced advisers to help prepare the business for sale, you may ask, “How do I find a buyer for my business?”

Often the logical potential buyers are obvious from your understanding of the industry or may be uncovered by conducting research. The usual suspects include competitors, suppliers, customers, investors and others who have a proven interest in the industry or who could unlock potential synergies from an acquisition.

A threshold issue is whether to engage an intermediary such as a business broker or investment banker. Either will ordinarily ask for a contract with a 180 day or more exclusive right to sell the business. Business brokers typically charge a fee to the Seller equal to a percentage of the purchase price. Ten percent is typical. Investment bankers usually charge lower percentage fees since the transactions they work on are usually larger.

In exchange, the intermediary often prepares a presentation package for prospective buyers. An experienced intermediary professionally markets the business and can offer assistance in valuing and pricing the business, setting the terms of sale and evaluating offers. The result can be a considerable saving of the business owner's time and effort.

Alternatives to brokerage do exist, however, and may be explored before or, in certain cases, concurrently with, engaging an intermediary. Print advertising can be a viable way of advertising smaller, privately held, businesses for sale. The most popular ads are placed on Sunday in larger local newspapers or business publications such as the Wall Street Journal.

Business opportunity ads describe the business in several short phrases, keeping its identity secret and list a phone number (other than the business phone number) or a post office box for reply. Ads are worded to demonstrate the best qualities of the business and may include a qualifying statement about the kind of cash investment required.

Similarly, many sites exist on the internet that attempt to link buyers and sellers of businesses. These can be effectively used to find a buyer for your business.

Confidential discussions with key suppliers, customers and other industry or trade sources can often yield viable leads. Most industries also have trade associations and publications which can be used to communicate that a business may be available for sale. If a Seller believes that a buyer is most likely to come from the same industry, the trade association's publications department could be contacted to see if classified advertising is permitted.

Existing employees of the business should not be overlooked as potential buyers, particularly if your business is large enough to make the use of an ESOP feasible. Existing key employees know your business from the inside, and may already have a personal stake in its survival. Insiders may be willing to pay more for your company than an outside financial buyer, because their inside knowledge lowers their risk.

In any event, it is important to consider and have a plan for dealing with the rumor mill and the potential effects on your business should it become generally known that you are interested in selling. The more people who are aware of your plans, the harder it is to keep your plans secret. For this reason alone, many business owners prefer to deal with business brokers and investment bankers because of the perception that information may be more tightly controlled in so doing.

2/04/2005

Bizz Biznang Bizzy

I've been shnizzled or hizzled or something at Gizoogle.

Via this Jeff Nolan post.

2/03/2005

OSI Approves 5 New Licenses

The board of the Open Source Initiative has approved five new licenses for certification.

Apache License, Version 2.0
CUA Office Public License Version 1.0
EU DataGrid Software License
Fair License
Lucent Public License Version 1.02

From this post on the OSI News Weblog

Why Software-as-a-Service?

From a post by David Coursey comes this list of what makes a good "Software as a Service" (SaaS) and its benefits:

"1. The app provides functionality many businesses need, but isn’t terribly different from one company to the next.
2. The service allows customization, but the SaaS model prevents clients from doing too much reinvention. This saves money and grief. It also encourages best practices.
3. The service brings together information from several sources and presents it to the user in a friendly, web-based interface.
4. Hosted services are easier to get running, partially because of the limited customization potential but also because there’s no hardware to buy and no software to install.
5. There’s also no software to manage, fix, upgrade, etc. All that is the responsibility of the vendor. Customers get a semi-custom application without having to hire developers and people to keep it running.
6. SaaS costs are predictable and typically usage-based.
7. If the vendor doesn’t meet your needs, there usually is no long-term commitment and it’s easy to switch. This keeps SaaS vendors responsive."

2/02/2005

Common Small Business Legal Mistakes

This Allbusiness.com article provides a list of common small business legal pitfalls, stating:

"Small businesses make legal mistakes all the time—some of which can be disastrous. But knowing what pitfalls to watch out for can make all the difference. Below are some of the most common.

Not Having Good Written Agreements...

Not Getting an Experienced Corporate Attorney...

Ignorance of the Law...

Basic contractual rules
How to protect your ideas and inventions (copyright, patent, trade secrets)
Major employer-employee laws
Securities laws affecting how you can raise capital for your business
Governmental regulation of your industry
Not Keeping Proper Corporate Records...

Not Clearly Documenting Partners' Rights and Responsibilities...

Starting the Business as a General Partnership Instead of a Limited Liability Entity...

Ignoring Intellectual Property Issues..."

Everything You Always Wanted to Know About Employee Handbooks

This post from George's Employment Blawg provides a wealth of links and suggestions for creating and maintaining an employee handbook. On the fundamental question of whether an employer should have an employee handbook, George writes:

"1) Should an employer have an employee handbook?

Same answer as with a formal written employee evaluation. One that’s prepared and reviewed thoroughly and properly customized to the job and employee (if an evaluation) or employer (if a handbook) is great. But one done poorly, by rote, and without proper attention to detail can be worse than none at all, and can actually increase the risk of legal problems. Like a poorly prepared employee evaluation, poorly chosen words in a handbook can become opposing counsel’s "Exhibit A."

So my answer?

Have a handbook, do it right, and follow it; otherwise skip it.""

Software Freedom Law Center Born

"The Software Freedom Law Center is born. It will provide pro bono legal services 'to eligible non-profit open source software projects and developers' and note it is a global invitation. That could be you.

Here is their mission statement from the new website:

'We provide legal representation and other law related services to protect and advance Free and Open Source Software. Free and Open Source Software ('FOSS') is maturing at a rapid pace. The FOSS production ecosystem, once dominated by a few small not-for-profit entities and individual contributors, now includes a global array of individuals, not-for-profit entities, and commercial developers and redistributors. In this mixed-model organizational environment, all FOSS developers must have an environment where liability and other legal issues do not impede their important public service work. The Software Freedom Law Center (SFLC) provides legal representation and other law related services to protect and advance FOSS.' "

From this GROKLAW post.