Emerging Tech Clusters in Western PA

Emerging Clusters

Over the past 20 years, southwestern Pennsylvania has transformed itself into a recognized center of excellence in information technology, the life sciences and advanced manufacturing.

These technology industry sectors have become key drivers of the region’s overall economic growth and vibrancy. However, if southwestern Pennsylvania is to continue to build its technology base, it must look to the future and pinpoint current industry niches and strengths with the potential to grow into economic generators.

The Pittsburgh Technology Council has identified eight such emerging clusters – cybersecurity, data storage, electro-optics, fuel cells, nanoscience, robotics, system on chip and tissue engineering – as part of its annual State of the Industry Report, which is conducted in conjunction with Carnegie Mellon University’s Center for Economic Development (CED)."


SBA and the National Urban League Join to Promote Entrepreneurship

From prnewswire:

"The U.S. Small Business Administration (SBA) and the National Urban League (NUL) have entered a new partnership, SBA Administrator Hector Barreto has announced. This collaboration is prompted by and part of the Urban Entrepreneur Partnership (UEP), an innovative public-private initiative announced by President George W. Bush on July 23, 2004 inDetroit."

Determining Which International Market To Enter

From the The Global Small Business Blog:

"I stumbled upon this incredible analysis for determining which international market has the most potential for your product or service offering. The focus of the study is to rank the market potential of 24 countries identified as 'Emerging Markets' by The Economist.

The country listings are then broken down into nine categories: market size, market growth rate, market intensity, market consumption capacity, commercial infrastructure, economic freedom, market receptivity, country risk and overall market potential index.

Find out why Hong Kong, Singapore and South Korea have such high ratings. Should they be considered as the top three markets for your product?"


The Importance of Self-Assessment and Self-Reflection

Professor Jeff Cornwall offers the following observations, with which I agree, and a list of entrepreneurial self-assessment questions in this post from The Entrepreneurial Mind:

"I feel very strongly that examining one's core values is essential in planning a business and consciously developing its culture as it grows. I ask entrepreneurs to list their core personal values that they intend to bring to their business (for example, treating people fairly, giving something back to the community, etc.). Where does each of these core values come from (religious faith, family, etc.)? Why is each of these important to them? How will they put them into active day-to-day?"

Lessons on Turning a New Invention Idea Into Money

Click on this link from about.com to the following series of lessons written in simple terms that give an overview of the invention commercialization process:

Lesson 1: Understanding Intellectual Property.
Lesson 2: What can I Patent?
Lesson 3: How Do I Know if my Idea is Patentable?
Lesson 4: Conducting a Search for Prior Art.
Lesson 5: To Patent or Not to Patent.
Lesson 6: How to File for a Patent.
Lesson 7: Proving this Idea is Mine.
Lesson 8: How Do I Make Money from my New Invention?
Lesson 9: How Do I License my New Invention?
Lesson 10: How Do I Create a Business Plan?
Lesson 11: How Do I Raise Money?

Blawger Bowl Update

One of the things we Blawger Bowlers do every week (for our own entertainment) is take turns writing a weekly wrap up. This week, it is Invent Blog's turn.

the [non]billable hour: Decker on Growth

From Matthew Homann comes this post:

"Sam Decker has just written 7 Keys to Company Growth. Really great stuff and worth the complete read. Here are the basics to his P.A.S.S.I.O.N:

Push the organization with big vision.
Account for big goals.
Seek out new ideas.
Show wins along the way.
Ignore distractions.
Ownership must be clear.
Neutralize negativity."

NIST helps capital facilities industry join information revolution

From Eurekalert:

"The capital facilities industry, which includes everything from power plants to commercial buildings, engineering, construction and management firms to all kinds of suppliers, has been slow to harness information technology for the design, procurement, installation and maintenance of equipment. Too often industry partners have unique software systems and cannot exchange information with other software systems. This causes inefficiencies, delays and sometimes errors. Researchers at the National Institute of Standards and Technology (NIST) are collaborating with industry to overcome such difficulties.

NIST with FIATECH (an industrial consortium for advancing the integration and automation capabilities of the capital facilities industry), and with other industrial organizations, has developed specific consensus language for various types of project and technical information. This data exchange vocabulary, called the Automating Equipment Information Exchange (AEX) XML Schemas,* specifies ways to express everything from pump design conditions to procurement dates. "

*The AEX schemas and documentation are available without charge from the FIATECH Web site


Eight Key Steps to Selling Your Business

This article from Nolo suggests following these steps for making the process of selling a small or midsize business go smoothly:

1. Determine a Realistic Price Range
2. Understand the Tax Consequences
3. Prepare for a Sale
4. Seek Potential Buyers
5. Negotiate Your Deal
6. Sign a Sales Agreement
7. Plan for the Closing
8. File Paperwork With the IRS

Via Small Business CEO

Tips for Dealing with a Business Broker

This article from StartupJournal observes and advises:

"Competition to buy small or midsize businesses is getting stiffer. More buyers -- those who have been downsized, taken early retirements or just taken all they can of working for someone else -- are chasing a finite number of deals.
One way to cut through some of the clutter is to turn to a business broker -- a person specializing in putting business buyers and sellers together...

What can eager buyers do to make sure they'll be first in line when a broker comes across their dream business opportunity? Consider the following tips to attract, and keep, a business broker's attention:

Talk to as many brokers as possible...
Give them more than they ask for...
Show you are financially qualified to purchase a business...
Disclose up front how much money you expect to make to maintain your lifestyle...
Be flexible about location...
Drop your preconceptions...
Persistence counts...
Be prepared to act quickly...
Don't listen to naysayers... "

Tips for Dealing with a Business Broker

This article from StartupJournal observes and advises:

"Competition to buy small or midsize businesses is getting stiffer. More buyers -- those who have been downsized, taken early retirements or just taken all they can of working for someone else -- are chasing a finite number of deals.
One way to cut through some of the clutter is to turn to a business broker -- a person specializing in putting business buyers and sellers together...

What can eager buyers do to make sure they'll be first in line when a broker comes across their dream business opportunity? Consider the following tips to attract, and keep, a business broker's attention:

Talk to as many brokers as possible...
Give them more than they ask for...
Show you are financially qualified to purchase a business...
Disclose up front how much money you expect to make to maintain your lifestyle...
Be flexible about location...
Drop your preconceptions...
Persistence counts...
Be prepared to act quickly...
Don't listen to naysayers... "

Small Business Security No Passing Fad

From Just For Small Business:

"According to security experts, here are some things you can do to make your business more secure.

Establish and enforce procedures for handling customer data.
Monitor areas where cash is handled.
Conduct background checks and drug screening on potential employees to help you hire right the first time.
Have regular employee meetings to discuss issues.
Conduct surprise audits."

Test Your Entrepreneurial Potential

From StartupJournal:

"If you're thinking of going into business for yourself, it may be comforting to find out if you have the traits and characteristics typical of entrepreneurs. This interactive quiz measures your entrepreneurial potential. "

Via Small Business Brief

Storm-damaged PA businesses get tax extension

From the Pittsburgh Business Times:

"Pennsylvania businesses damaged by the remnants of hurricanes Frances and Ivan can get extra time to file their corporation tax reports.

Secretary of revenue Gregory Fajt announced the deadline extension Tuesday for corporation tax reports due between Sept. 8 and Nov. 18. Eligible businesses that had reports due during that time period may file them as late as Nov. 18. "

Executive Order Aids Service-Disabled Veteran-Owned Small Businesses

From Law & Entrepreneurship News (reprinted in full):

"President Bush issued an executive order meant to increase opportunities in federal contracting for small businesses owned by service disabled vets.

Under the order, heads of agencies are to provide significantly more contracting and subcontracting opportunities to service-disabled veteran-owned small businesses by more effectively implementing section 15(g) and section 36 of the Small Business Act.

Section 15(g) of the Small Business Act provides that the President must establish a goal of not less than 3 percent for participation by service-disabled veteran businesses in federal contracting. Section 36 gives agency contracting officers the authority to reserve certain procurements for service-disabled veteran-owned small businesses.

The order also requires the SBA to provide service-disabled veteran-owned small businesses information and assistance concerning participation in federal contracting; advise and assist heads of agencies in their implementation of the order; and make available to service-disabled veteran businesses training in federal contracting law, procedures and practices that would assist such businesses in participating in federal contracting."

Do a business plan, even if a bank isn't involved

From USATODAY.com:

"Far too many new business people believe that a business plan is only necessary for getting financing. This is not the case at all. Putting together a business plan allows you to stroll through many aspects of your business future and helps you to have ready answers when needed. In other words, it's your roadmap to success."

Via Law & Entrepreneurship News


The 7 Traits of a Successful Entrepreneur

From webrpronews.com:

"How often have you either referred to or considered the expression, 'Success is a journey and not a Destination?' Probably many times, yet often being in a hurry to get there, we forget that success is not an end unto itself, but is instead an ongoing process.

Though some people seem to have the Midas touch and easily turn everything to gold, most of us have to give our endeavors lots of time, effort and the sweat of our brow before seeing things come to fruition. The simple truth is that the majority of us are simply not born leaders, but become leaders by who we are and the actions we take. Consequently, whether or not you're an established entrepreneur or just starting out on your journey, there are particular traits you'll usually find operating within the exceptional entrepreneur. In fact there are 7 particular traits you'll generally discover deeply embedded within the exceptional and successful businessperson..."


1) Successful Entrepreneurs Gain the Respect of their Peers

2) Successful Entrepreneurs Believe and Trust in Themselves

3) Successful Entrepreneurs Follow a Plan

4) Successful Entrepreneurs Think Creatively

5)Successful Entrepreneurs Explore Their Exceptional Skills

6) Successful Entrepreneurs Envision Their Success

7) Successful Entrepreneurs Never Give Up

The Americans with Disabilities Act: A Primer for Small Business

A basic summary of the ADA is available from theEEOC here.

Avoid Wrongful Discharge Suits

From lexisonevia TechnoLawyer:

"Avoiding wrongful discharge claims starts in the hiring process. Supervisors and managers must know how to offer a job without implying an employment contract. Employment handbooks and job applications must contain an 'at-will' statement. Then, it's a matter of managing performance by:

1) Providing specific written notice of all problems with job performance, and give the employee a fixed period of time to correct the problems.
2) Keeping careful records of each employee's job performance.
3) Keeping specific, detailed, files on employee performance and reviews. For instance, don't note: 'Frequently leaves early,' or 'Work has numerous errors.' Record the dates the employee left early (and how early) or describe examples of error-filled work.
4) Include in the file written summaries of any warnings given to employees about their performance problems. Use a documented system of progressive discipline, escalating from oral warnings to written warnings to suspension to termination
5) Mete out discipline evenly. Don't overlook problems in one employee for which you discipline another.
6) Have an employment policy book setting out examples of offenses that will lead to termination.
7) Never make the decision to fire somebody out on impulse. If an employee's behavior pushes a manager to the boiling point, give the employee the rest of the day off and ask the manager to go back in his/her office and cool off. If the employee's behavior is seriously inappropriate, put him or her on immediate leave pending an investigation.
8. Run terminations past a lawyer so s/he can examine the worker's history and membership in any potentially protected group as well as the company's past practices and adequacy of documentation. "


Should City and County Governments Merge?

This Gongol.com describes the plus and minus of the topic graphically and verbally.

The article may be of particular interest to Pittsburghers for whom the idea of merging city and county governments may become a necessity, given the current state of the city's fiscal affairs,

The Big Picture: Carnival of the Capitalists - October 25 2004

The Carnival of the Capitalists for this week is up at The Big Picture. Check it aht.

The Nine Drafts of a Compelling Business Plan

This article by Frank Demmler published in the newsletter of Techyvent/Pittsburgh reminds entrepreneurs:

"The business plan has two primary purposes – to help you determine what kind of business you want to build and how to go about it; and to attract the necessary resources (people, equipment, contacts, mentors, as well as money).

That order is important, by the way. First and foremost, you must plan for the business that YOU want to create. You should not create a plan primarily for the purpose of raising money, which is often the primary business planning motivation of many first-time entrepreneurs..."

He continues by stressing the need to draft and redraft the business plan and as a final step to package it for the intendend audience, advising:

"*Resist the urge to stop at the second draft of your plan.
*Be honest with yourself.
*Plan the business to be what you want it to be.
*Make sure your plan reflects the real world...
*Package the plan, after The Plan has been developed, to appeal to the audiences to which it is directed."

Frank Demmler is Associate Teaching Professor of Entrepreneurship at the Donald H. Jones Center for Entrepreneurship at Carnegie Mellon University



From Small Business CEO:

"This is a great site for all things small business and technology and small technology businesses. Check it Out!"

Entrepreneur TV


"Businessweek Online has a roundup of tv that might interest entrepreneurs."

If You are Not Moving Forward, You are Moving Backward

This excellent article form Small Business CEO stresses the need for continual personal and organizational improvement stating:

"The question for us as individuals, and for organizations, is how to keep on the growth, innovation and improvement upward vector. It can be done, but it takes positive, continuous action and energy. It has to be made to happen because the inertia tends to be towards status quo (decay)...

Getting people to buy-into, and support, change can be accomplished by combinations of: participation in change definition and planning, education classes/meetings, and extensive communications. All this needs to take place well before the change is implemented so people are ready and supportive. This is the step that is usually ignored or insufficiently completed...

During the change process, people resist change for one or several reasons. First, they may not like the change itself. Second, they may not like the way the change is being implemented. Third, they may not like the person who is leading the change - the change agent. If a change implementation is having difficulty, check in all of these three areas. The problem could be in one, or several, of the areas. Of course, when you are fixing a failing change process, you are engaging in another change process.

So change is what we manage...

The challenge is to proactively manage change. Become the change agent and you are shaping the future."

Mantra not Mission Statement

From Paul Allen: Internet Entrepreneur:

"Guy Kawasaki's advice for startups: skip the mission statement, build a mantra instead (usually just a couple of words describing what you do). If you really need a mission statement, use Mission Statement Generator."

An example:

It's our responsibility to authoritatively revolutionize parallel methods of empowerment and professionally engineer corporate technology to exceed customer expectations.


Outsourcing E-commerce Order Fulfillment

"When your e-commerce business grows to the point where you can no longer package and ship the orders yourself, it's time to consider outsourcing your order fulfillment. Fulfillment warehouses offer small business the opportunity to compete with the 'big dogs'."

This article from about.com takes a look at the benefits most fulfillment warehouses offer to small business owners. "

Serial Entrepreneur Q&A

Entrepreneurs Janusz Bryzek, CTO, chairman and founder, LV Sensors; Charlie Janac, consultant, former Nanomix CEO; Michael Pak, CEO, founder of Nanostellar; and Greg Schmergel, CEO, Nantero, answer the following questions put to them by Small Times:

How do you determine whether lessons from past work experiences are valuable?

Is there one mistake that has changed the way you make decisions now?

Have you found anything unusual or unique about developing small tech?

How would you rate your appetite for risk and how does that influence the career choices you’ve made?

Is there a job you could imagine doing for the rest of your life?

Seven Traits of Successful CEO's

From aim Careers

A recent survey of 150 CEOs identifies these traits as keys to getting ahead:

Passion -- Do What You Love; Love What You Do.
Respect -- Make People Your Priority
Vision -- Clearly Communicate the Future
Humanity -- It's Not Just About the Paycheck
Curiosity -- Look, Listen, Learn
Integrity -- Honesty Above All, to All
Pragmatism -- Know What You Don't Know


Carnival of the Capitalists

Visit the Carnival of the Capitalist at Accidental Verbosity

Advice for Pharma Partnering

From Bioentrepreneur:

"As big pharmas fall over each other to proclaim themselves the 'partner of choice' for biotechs, there are still some lessons the younger sibling can learn.

A brief survey of the world's largest pharmaceutical companies reveals their changing attitude towards collaborating with biotech firms. At recent conferences and meetings, it seems that pharmas have been fighting to position themselves as the most biotech-friendly.

This change in pharma's attitude reflects a shift in the dynamic between the old giants and the younger biotech sector. Pharmas are becoming increasingly more reliant on licensing products from biotechs to fill their pipelines, and the terms of deals are becoming more complicated and, in some cases, more favorable to the biotech partner. But as more and more biotech companies emerge to sell their wares, there are some things a startup should note to rise above the din."

Mind Map of EU Employer/Employee Rights and Responsibilities

From Jottings By An Employer's Lawyer :

"Clever mind map at Employer/Employee Rights and Responsibilities.

'The purpose:
The two mind maps above give an indication of just how big this area is - it covers many thousands if not millions of pages of legislation. Clearly, you are not expected to know details about all these areas but you will be expected to understand the main features of these key pieces of employment legislation.

The first task therefore is to get a basic understanding of the key points of the legislation relating to employment law.
And that's what the mind maps set out to do.'"

Blawger Bowl week 6 memo

Below is an excerpt of the memo from Chris Rush Cohen:

"It was another exciting week for us attorney and techie fantasy footballers. We may be too busy and/or lazy to actually get up and throw a real ball, but a few of us sure can shuffle our fantasy players around effectively.

Bizz Bang Buzz should know by now that attorneys like to see full on winners and losers. Yet, for a second time BBB pulls off the unlikely tie game..."

You may read the rest of the
memo here/a>.

Why Family Firms Do Well When Founders Are at the Helm

From Knowledge@Wharton:

"Despite the lack of independent directors on their boards and voting power for minority shareholders, family-run companies are still the better bet for all stakeholders as long as the founder of the firm is involved as chief executive officer or chairman. If the descendent of a founder runs the company, value is lost.

Those are some of the conclusions of a paper by Wharton professor Raphael (Raffi) Amit and Harvard Business School professor Belen Villalonga. The paper - 'How Do Family Ownership, Control and Management Affect Firm Value?' - suggests that family ownership of corporations performs better than non-family firms when the founder serves as the CEO of a family firm or as its chairman with a hired CEO. When a descendent serves as the CEO of a family-run company - even if the founder remains chairman - the firm's market value declines. "


Blawger Bowl Update...Invent Blog continues to roll

Check out the latest results, including a second sister kissing tie for Bizz Bang Buzz at The Invent Blog

Office Space: Lease or Buy?

From about.comvia Small Business Brief:

"With ever-changing U.S. office vacancy rates and stock markets, it is uncertain what the future may bring. A small business owner needs to carefully weigh the pros and cons of leasing or buying office space."

Pros of Office Space Buying

Lock in Fixed Costs
Availability of Interest, Taxes and other Income Tax Deductions
Additional Rental Income from Third Parties
Real Estate Appreciation Potential

Cons of Office Space Buying

Lack of Flexibility
Upfront Costs

Pros of Office Space Leasing

Prime Property More Readily Available
Frees-up Working Capital
More Time to Focus on Business

Cons of Office Space Leasing

Rents and Other Charges are Variable Costs
No Equity in Property


Outsourcing: The New World Order

From Ramesh Emani, of Bangalore, India, president, embedded & product engineering, Wipro Technologies, in the Pittsburgh Post Gazette:

"Extended Engineering" is a paradigm where product companies look to external partners in the design, development and sustenance phase of the product. This has become a successful strategy because the customer perception of value in products and services changes so rapidly...

Customer value is created by continuously shifting development to the most appropriate players, either external or internal, while leveraging their knowledge base.

Modern communications tools and the Internet have obviated the need for product design partners to be physically close, so you shop the world to find the best partners...

Product collaboration is about leadership and common sense, working to understand what a company can do extremely well, because no single company can do everything well. Collaboration leverages each partner's capabilities and creates a stronger product...

The bottom line is product companies need to focus on the market and the user patterns, as they retain the product design and how the product looks and how it works. They can leave the job of engineering the product and integrating the components based on the specifications to a partner.

Product development 24/7 is the new world order."

How to Save the World--Decisions shape how we live

How to Save the World

Forget Venture Capital

In this article from the Pittsburgh Business Times, Michael Brocks, of Michael Brocks and Co. advises small business owners to be realistic about seeking venture capital, stating:

"So, who qualifies for VC?

Star-quality leadership. The market defines a star as someone who has taken a startup from zero to $50 million in revenue.

Proprietary technology. The technology must provide a competitive advantage in an industry with very strong growth prospects over the next five years.

A top-tier management team. Before Google had its IPO, it hired a cadre of very seasoned executives who had a history of successful IPOs. The CEO of Google is 18 years older than the founders.

A large potential market. The target market must have the potential of generating at least $1 billion in revenue.

Proven market adoption. The best companies will have made sales to blue clip customers before they are funded.

If you do not meet the above criteria, you should seriously reconsider the VC route. "


Learn from Taking No for an Answer

From entrepreneur.com:

"Some of the best ideas are born from unwelcome criticism. Negative comments often contain kernels of truth -- they are just delivered incorrectly. Your mission is to engage the naysayers, determine what they are basing their comments on, and discover new information that can help you succeed."

Family Planning Natural Part of Entrepreneurship

This article from The Daily Camera stresses the need to discuss with and prepare family members for the rigors as well as the potential rewards of the entrepreneurial journey. This is necessary in view of the pressure that comes with the responsibility of owning a business.

“With this kind of pressure on you, the owner, don't be surprised if the stress permeates everything you do. Don't be surprised if questions arise in your mind right in the middle of a social gathering, a tennis match or watching your child's soccer game. The problem is that the stress of this relationship with your business doesn't go away.

And you'd better figure out a way to handle it. Having that far away look in your eyes when you're at a family gathering is not going to contribute to your being a family participant. If you think this is likely to affect the family plan for togetherness, think again about entrepreneurship.”

Top 10 Nanotech Venture Firms

From an article in spacedaily.com:

The leading nanotech VCs as identified by the journal, Nanotechnology Law and Business -- those that offer the strongest combination of scientific expertise, industry contacts, and a history of nanotech deal success--- are, in alphabetical order:

- ARCH Venture Partners.
- Ardesta
- Draper Fisher Jurvetson
- Harris & Harris Group
- Lux Capital
- Morgenthaler Ventures
- Nanotech Partners, the investment arm of Mitsubishi.
- NGEN Partners
- Polaris Ventures
- Sevin Rosen Funds

PA Angel Network Starts Web site

From the Philadelphia Business Journal:

"The Pennsylvania Angel Network has launched a Web site for the state's wealthy investors and companies seeking funding from them.

PAN, which is based in Harrisburg and has received almost $500,000 from the state to create the Web site and pay employees, got its site up and running last month at www.paangelnetwork.com.

The site gives members of the state's roughly 20 angel groups a way to check out companies seeking seed or early-stage funding. "

Small Businesses Must Adjust to Check Float Changes

From The Business Journal of Milwaukee:

"Federal legislation that goes into effect Oct. 28 and aims to streamline how banks clear checks means business owners will have to be more cognizant of having funds in place to cover checks...

The Check Clearing for the 21st Century Act, otherwise known as Check 21, requires banks to clear checks electronically rather than sending paper checks through the mail to settle accounts. As a result, the time between when a business or individual customer's check is issued and cleared by the bank, known as the 'float,' will be reduced from a period of several days to one day or less...

'Some people will have to change the way they do business. You have to have money in your account before you write a check'..."


Entrepreneurship is a Process

Reprinted in full is an excellent post from Jeff Cornwall:

"When assessing possible opportunities, entrepreneurs should avoid the pitfall of getting too rigid in their plans. I challenge all entrepreneurs to really understand the fundamental sources of the opportunity they are pursuing. What are the macro forces and the industry trends that have created the potential opportunity?

Macro forces can go all the way up to economic, social, cultural, political, technological issues that are shaping the industry. This may require some additional research, but will pay off over time. Often the reason there is a new opportunity in the first place is a result of these forces being in constant flux and change. As Peter Vaill calls it, a state of perpetual white water. So, the very changes that created your opportunity can move past you and make your business obsolete if you do not continue to adapt, evolve and innovate.

Entrepreneurship should be an on-going process, not a one-time event."

Kauffman joins minority entrepreneurship program

From the Business Journal of Kansas City:

"The Ewing Marion Kauffman Foundation is teaming up with the federal government and two national nonprofits on a pilot program intended to encourage minority entrepreneurship.

The Urban Entrepreneur Partnership, announced Friday morning at a press conference in Washington, will provide inner-city entrepreneurs greater access to financing and business training, the foundation said in a written release.

The program will be tested in Kansas City, Atlanta, Cincinnati, Cleveland and Jacksonville, Fla. Program business centers in those cities should be open by early 2005, the Kauffman Foundation said. "

Secrets of Startups that Stick

From mainetoday:

"What makes an entrepreneur? Drive. What makes a successful entrepreneur? Drive plus planning.

Recognizing and jumping on a business opportunity is a key trait of the entrepreneur, said Valerie Lamont, director of the Center for Entrepreneurship and Small Business at the University of Southern Maine. But having a handle on marketing, business goals, cash flow and other business basics is the key to staying in business."


Ten Questions to Assess Your Customer Focus

"Keeping customer-focused can be difficult without some simple reminders to help us do so. Use the questions below to evaluate your company's service attitude.

1) Do we survey our customers to find out how satisfied they are with our products/services and ask for suggestions for improvements?

2) Do we survey our staff to find out how satisfied they are with the working environment and ask for their suggestions for improvement?"

For the other questions visit the Small Business CEO here.


Pittsburgh Dragon Boat Festival

The Pittsburgh Dragon Boat Festival will be held on October 23, 2004.

The mission of the festival is to highlight Chinese and pan-Asian cultures in Pittsburgh, and to promote cultural understanding between the East and the West in a fun way.

2004 marks the third anniversary of this growing event. Last year's festival was attended by over 10,000 people and attracted significant media attention.

Dragon Boat Racing is a 2,400-year-old traditional Chinese activity known for its color and excitement. The ornately carved and brightly painted dragon heads and tails that adorn the front and back of each craft distinguish the 44 foot-long boat. A Dragon Boat seats 20 paddlers in 10 pairs, a steersperson and a drummer.

Friday Fun Stuff

Check out the creativity of the Flash Animation Award finalists and winning entries via j-walk blog.

The Onion reports that "Cheney Vows to Attack U.S. If Kerry Elected" via Always On Network.

Check out the photo posted on "Patent Pending" to answer the question Why Women Live Longer than Men

And this just in from Eurekalert: Study confirms that Brown-nosing works better than boasting in job interviews.

Patents Best for Detectible Software Elements

From Anything Under the Sun Made By Man:

"When an embodiment of an idea is expressed in a language that is compiled and distributed as executable code, how can that idea be detected? If it cannot be detected, there is no way to know if someone infringes...

For the Patent Office, it may be enough that an invention is novel, useful, and non-obvious, but for the business owner, detectability is a very important factor that should be considered before investing in patent protection."

Taking Orders Through the Mail

If you take orders through the mail, you should become familiar with the Mail or Telephone Order Merchandise Rule of the Federal Trade Commission. The rule is also explained in an easy-to-read booklet, A Business Guide to the Federal Trade Commission's Mail Order Rule, published by the FTC.

Source: Small Business Brief

Non-Compete Covenants Enforceable in Franchise Agreements

From Law & Entrepreneurship News:

"The Massachusetts Supreme Court reviewed for the first time in that jurisdiction whether covenants not to compete are enforceable in franchise contexts. The court held that such covenants are enforceable, and the court further held that they would be reviewed with the less critical treatment accorded to covenants not to compete stemming from sales of businesses."


Envision the Indispensable

From A Sack of Seattle:

"The key for any early stage product is to become indispensable. My Nokia cell phone, nike running sneakers, starbucks coffee are all indispensable....the objective in technology development is the same. Microsoft Outlook, Salesforce.com, CNN.com, Powerpoint, Google, are all indispensable for their respective customers. The challenge for a start up is seeing the indispensable before it exists. "

Getting Your Startup Paperwork in Order

From Small Business Brief:

"Entrepreneurs aren't known for being lazy, but most entrepreneurs I know are notoriously lazy about doing legal paperwork. But there's no place for laziness when it comes to getting licenses and permits for your business. It might seem like an insignificant detail or a waste of money, but it's necessary. This article provides some information on the types of licenses and permits that small businesses need and how to go about getting them cost-effectively."

Three Leadership Don'ts

From Brewed Fresh Daily:

"In The Four Fold Way, Angeles Arrien excerpts Thomas Cleary's Zen Lessons:

In leadership there are three don'ts: when there is much to do, don't be afraid: when there is nothing to do, don't be hasty; and don't talk about the opinions of right and wrong. A leader who succeeds in these things won't be confused or deluded by external objects."


Blawger Bowl

The Blawger Bowl continues to rise in status as the premier “sporting league” for legal bloggers. Here is a rundown of this week's results at Patently Obvious: Patent Law Blog

Consider These Questions Before Starting a Business

"Before you decide to start a business, you might want to think about the qualities you possess, what makes you tick and how that might help you be a more successful business owner. But before you make that big decision, ask yourself these questions:

Personal questions:

Am I a self starter?
Do I enjoy challenges?
Am I a creative problem solver?
What are my strengths and weaknesses?
What interests, talents, and skills do I have that will assist me in running my new business?
What skills do I need to learn or brush up on to run my business effectively?
Will I be doing work that is meaningful and really interests and excites me?

Business questions:

Do I really have a money-making idea?
Who is my competition?
What do I offer that the competition doesn't -- what makes my services or product unique?
Who are my ideal target customers?
Do I have effective marketing and sales plans?
Have I established business goals?
Will I need capital to startup my business? If so, how much?
Have I written a business plan?
What are the things that my business will require that I cannot do myself? Will I have funds to pay for them?
What type of managerial and leadership skills do I possess?
What financial risks are involved?

Read the full article from Workz.com here. ( via Small Business CEO)

Listen to Customers, but Translate What They Say

I heard Michael Feuer, founder of Office Max and currently CEO of Max Ventures, LLC, speak last night at a meeting of the Pittsburgh Chapter of the Association for Corporate Growth. His rousing speech contained several entertaining stories and valuable nuggets of wisdom for entrepreneurs.

He urged entrepreneurs to listen to customers, but to translate what they are telling you. He explained that when the first Office Max store opened he spent many evenings in the store conversing igcognito with customers. They told him that what they wanted was cheaper, less expensive merchandise. Mr. Feuer translated this to mean "My customers want value," not "My customers want cheaper goods."

A similar point is made in this post from Innovation Weblog:

"Innovation strategy: When listening to customers doesn't make sense

According to John Byrne, writing in the FC Now Weblog, it doesn't always make sense to listen to customers, especially if you want to move in an innovative direction, beyond linear product improvement. John quotes Christene Heckart, VP of worldwide marketing at Juniper Networks, an innovative telecom equipment provider:

'Customers will take you down a status quo path every time. They are after linear improvements. Customers can help you do that. But if you want to hit an inflection point and get non-linear improvement, the worst thing you can do is listen to a customer about what they want. Customers can only think about solutions for problems they know about.'

That's great advice, especially if your strategy is pursuing breakthrough innovation! In reality, however, your business may be focused on linear, incremental improvements in some areas while pursuing breakthrough innovations in other areas. Knowing when to talk to customers about their needs and knowing when to trust your gut isn't easy --but it is essential!"

Lessons in Failure

From Inc.com:

"In classic Greek tragedies, the hero often turns inward, choosing to believe in his eminence despite signs to the contrary. He assumes the decisions that brought him greatness remain valid, and he actively shuts out other people. Meanwhile, his world crumbles around him. It's an age-old lesson but one that modern executives and small-business owners should take to heart: Just because you've made it to the top doesn't guarantee your spot there. Make any one of these five classic mistakes, and your rapid decline will quickly outpace your upward struggle.

Harboring a false self-image...
Falling back on yesterday's answer...
Embracing the fallacy of first-mover advantage...
Closing down dissent...
Disrespecting competitors..."

Digital Greenhouse, Idea Foundry land DCED funding

From the Pittsburgh Business Times:

"The state Department of Community and Economic Development announced more than $13.6 million in funding from the Ben Franklin Technology Development Authority, including $2.5 million for the Pittsburgh Digital Greenhouse and $750,000 for the Idea Foundry. "


Why is Shareholder Liability Limited?

"What is the best reasoning behind why shareholders have limited liability for a corporation's environmental and social costs? Not on a case by case basis, but why it is the blueprint for the most powerful pillar of society?"

Read a good answer in this post from Due Diligence.

Future of Enterprise Software

From E M E R G I C . o r g:

Ed Sim blogs about a talk by Chris Thomas, Intel's EStrategist, on the future of software in the enterprise:

Chris' view is that we are moving towards a service-oriented world, where enterprises can tap applications and resources on demand and on the fly...As we move into this world of SOAs, there will be tremendous opportunities for software investment as enterprises consolidate, modularlize, and virtualize their data centers. Chris highlighted the 5 buckets or themes that mattered to him:

1. Software and data delivered as services
2. Hardware as a virtualized resource
3. Autonomic data sources (RFID, tags, smart sensors)
4. Occasionally connected usage (Intel's mobile theme)
5. Services cross firewalls (security)

Chris' bottom line was that asynchronous XML messages are what makes this service-oriented world possible. "

Carnival of the Capitalists - Anniversary Edition

Carnival of the Capitalists is one year old and BusinessPundit has posted the anniversary edition for your reading enjoyment.


Angel and Strategic Investors

The OnlyOnce blog offers these tips for dealing with non-VC investors in startups:

"1. Be very selective about who you let invest in the early stages of your company

2. Make sure angel investors acknowledge to you verbally (above and beyond the accredited investor rep they give you) that they are totally comfortable losing all of their money

3. Make sure angels and strategics understand that in order to preserve the value of their investment, they may need to continue investing in your company if you end up raising multiple rounds of financing

4. Without being unfair, try to limit the rights (or assign them by proxy to you or to the Board or to a lead investor) of less sophisticated financial investors who aren't and won't be close enough to your business to participate in major corporate decisions down the road. Along these lines, you should strongly consider selling both types of investors common stock, especially if it's early on in the company's life"


Friday Lite -- Rodney Dangerfield Jokes

With all due respect, follow this link from About.com to a treasure trove of the humor of the late, great comedian.

Step Right Up to the Pittsburgh Slopes

Originally uploaded by TigerTigerTiger.
In this travel article from the Washington Post (free registration required), Christine H. O'Toole waxes eloquently about the South Side Slopes:

'Pittsburgh, observed newspaper columnist Ernie Pyle in 1937, 'must have been laid out by a mountain goat. It's up and down, and around and around and in betwixt.'

Laboring up a concrete staircase called 18th Street, I find myself wishing for hooves. They'd come in handy for climbing the city's oddest attraction. Instead of street signs, these hills should sport black diamond trail markers.

As I climb -- make that crawl, at this point -- I realize I should have brought a walking stick. And maybe a cardiologist. With nearly 700 steps just to the crest of the South Side Slopes neighborhood, the workout's extreme, but it's the views that are killer. San Francisco and Cincinnati brag about their trademark city steps, but they don't stack up to Pittsburgh. In this former steel town about 260 miles northwest of D.C., there are more than 300 legal streets that are actually staircases: no cars, no curbs, just steps.

In a city whose traditional street grids begin optimistically, but quickly encounter topographic adversity, most of its neighborhoods feature a few of these step streets. But the Slopes claim 68 staircases, making this slice of the city on the South Side feel like a European village: a blend of historic piety, cliffside houses and quiet corkscrewed streets."

For the energetic, The Pittsburgh StepTrek 2004 on Sunday, October 17, 2004, "combines photography, historic narrative, sweeping views, several open houses and a perspective look at the changes to this eclectic neighborhood that overlooks downtown, Oakland and the mighty Monongahela River. Walkers will enjoy all of these features as they tour, at their own pace, over 2,700 steps and the intertwining streets and sidewalks that connect them.

Breathtaking views of Downtown, Oakland, South Side and the rivers are revealed from the hillside streets and stairways. These views have earned Pittsburgh the recognition as having the most spectacular urban view of any city in the United States, according to USA Today. An alternate course takes walkers high into the Slopes along 18th Street to view the recently completed mural by acclaimed artist Richard Bach. This festive, colorful look at the South Side features people, buildings and trades from across the years that have made the neighborhood an eclectic slice of Pittsburgh."


What's In a Name? (Part 1)

This post from Marketing Playbook via NW Venture Voice gives an overview of naming from a marketing perspective. (For a summary of naming from a legal perspective click here.)

"Some naming realities :

*Names are for people outside your company
*Names are things you want an audience (i.e. people) to remember
*Names are things you brand and even trademark, they are things you invest in, if you don't they are just words
*Names communicate and simplify

Some people realities:

*People are easily confused - complexity does not work well in names
*People have a limited cache - they can't digest too many names at once
*People forget - they need to be reminded over and over again of the same one or very few names

What is 'naming convention'? A basic framework that...

*allows you to know WHAT you are actually naming and not naming,
*helps keep these names consistent and compelling, and
*makes it faster and easier to name each time.

Keeping things straight.

Generally the things you name are as follows (make sure you really know the difference between them and how they relate to each other):

*the company - this is the longest lasting name you have to have. You pour your values, personality, mission, vision etc into this brand (e.g. Microsoft)
*the product line - a family of mulitple products that are related to each other (e.g. Office)
*individual products - the products within a family, either different variations or component products of the core family (e.g. OfficePro)
*product versions - as the specific individual products evolve, this is the means of keeping track (e.g. OfficePro 95)
*ingredient names - the green crystals or Secret Sauce. These should be lasting technologies or concepts that cut across more than one product (e.g. Intellisense, Retsin)
*feature names - usually version specific functionality"

What's in a Name (Part 2)

This article from Harvard law gives an excellent overview of Trademark Law including the following excerpt that pertains to the strength of the IP protection that may be afforded a mark, such as a brand name. (For a summary of brand naming from a marketing perspective, please refer to this post.)

"In order to serve as a trademark, a mark must be distinctive -- that is, it must be capable of identifying the source of a particular good. In determining whether a mark is distinctive, the courts group marks into four categories, based on the relationship between the mark and the underlying product: (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. Because the marks in each of these categories vary with respect to their distinctiveness, the requirements for, and degree of, legal protection afforded a particular trademark will depend upon which category it falls within.

An arbitrary or fanciful mark is a mark that bears no logical relationship to the underlying product. For example, the words "Exxon," "Kodak," and "Apple" bear no inherent relationship to their underlying products (respectively, gasoline, cameras, or computers). Similarly, the Nike "swoosh" bears no inherent relationship to athletic shoes. Arbitrary or fanciful marks are inherently distinctive -- i.e. capable of identifying an underlying product -- and are given a high degree of protection.

A suggestive mark is a mark that evokes or suggests a characteristic of the underlying good. For example, the word "Coppertone" is suggestive of sun-tan lotion, but does not specifically describe the underlying product. Some exercise of imagination is needed to associate the word with the underlying product. At the same time, however, the word is not totally unrelated to the underlying product. Like arbitrary or fanciful marks, suggestive marks are inherently distinctive and are given a high degree of protection.

A descriptive mark is a mark that directly describes, rather than suggests, a characteristic or quality of the underlying product (e.g. its color, odor, function, dimensions, or ingredients). For example, "Holiday Inn," "All Bran," and "Vision Center" all describe some aspect of the underlying product or service (respectively, hotel rooms, breakfast cereal, optical services). They tell us something about the product. Unlike arbitrary or suggestive marks, descriptive marks are not inherently distinctive and are protected only if they have acquired "secondary meaning." Descriptive marks must clear this additional hurdle because they are terms that are useful for describing the underlying product, and giving a particular manufacturer the exclusive right to use the term could confer an unfair advantage.

A descriptive mark acquires secondary meaning when the consuming public primarily associates that mark with a particular producer, rather than the underlying product. Thus, for example, the term "Holiday Inn" has acquired secondary meaning because the consuming public associates that term with a particular provider of hotel services, and not with hotel services in general. The public need not be able to identify the specific producer; only that the product or service comes from a single producer. When trying to determine whether a given term has acquired secondary meaning, courts will often look to the following factors: (1) the amount and manner of advertising; (2) the volume of sales; (3) the length and manner of the term's use; (4) results of consumer surveys. Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786 (5th Cir. 1983).

Finally, a generic mark is a mark that describes the general category to which the underlying product belongs. For example, the term "Computer" is a generic term for computer equipment. Generic marks are entitled to no protection under trademark law. Thus, a manufacturer selling "Computer" brand computers (or "Apple" brand apples, etc.) would have no exclusive right to use that term with respect to that product. Generic terms are not protected by trademark law because they are simply too useful for identifying a particular product. Giving a single manufacturer control over use of the term would give that manufacturer too great a competitive advantage. Under some circumstances, terms that are not originally generic can become generic over time (a process called "genericity"), and thus become unprotected."


Deal of Lifetime



By: Anthony Cerminaro

The purchase of a residence may be the single largest transaction in which most individuals will ever be involved. For an entrepreneur or small business owner a similar statement can be made about the buying or selling of a business. In short, it is often the deal of a lifetime.

Legal considerations affect even the most basic aspects of such a transaction. For example, the risk of assuming unwanted environmental or employee benefits liabilities may rule out a particular structure for a transaction or prevent the transaction from going forward at all. Consultations between client and counsel at an early planning stage are essential to (1) close the deal in a timely manner, (2) ensure a smooth post-closing transition, (3) avoid surprises about the value of the business, and (4) avoid the assumption of unwanted or unknown liabilities.

This Article briefly summarizes some of the major legal considerations involved in the buying or selling of a business. While the article focuses on corporate transactions and is oriented to the buyer's viewpoint, similar considerations apply to the seller and other types of acquisitions.


Several alternatives are available for the structuring of an acquisition. Among these are (1) statutory merger or consolidation, (2) asset purchase and (3) stock purchase.

In a merger or consolidation, two corporations are combined. In a merger, the stock of one is exchanged for the stock of the other, cash or other consideration. In a consolidation, the stock of both is exchanged for the stock of a third corporation, cash or other consideration. The surviving corporation carries on the business of the combined corporations and either or both of the original corporations ceases to exist.

There are certain advantages to a merger or consolidation. The acquisition can be structured as a tax-deferred transaction. In addition, there are no minority shareholders after the merger or consolidation. There are generally no sales tax or bulk sale problems. In relative terms, the documentation of a merger or consolidation can be simpler than that used to document other types of transactions.

Disadvantages include acquisition by the buyer of all liabilities of the target, whether fixed, contingent, disclosed or undisclosed. While this problem can be obviated somewhat by obtaining warranties, representations and indemnities from the target company and its major shareholders, warranties and representations made by the acquired company ordinarily do not survive the merger. In addition, target stockholders may have dissenters rights enabling them to receive cash for their stock at an appraised value set ultimately by a court.

In an asset purchase, an acquiror may purchase all, substantially all, or selected assets of the target in return for any combination of stock, cash, debt or property. The advantages of an asset acquisition include the ability to purchase selected assets free of liabilities not specifically assumed. As with a merger, after consummation of the transaction, there are no minority stockholders of the target with which to contend. Ordinarily, shareholders of the target do not have dissenters’ rights.

There are also disadvantages to an asset purchase. Identification of the assets to be acquired is of paramount importance. Consummation may also require obtaining consents to assignment of contracts and prepayment of debt. Deeds for real property transfers and other separate transfer documentation may be required for each asset, class of assets, license and permit to be acquired. More complex documentation and more time is therefor ordinarily required to conclude an asset purchase. Real estate transfer and sales taxes may also be incurred.

In a stock purchase, an acquiror may purchase all, substantially all or majority of the target's stock. Advantages include the preservation of the target's identity, franchises, licenses and permits. In general there are no transfer tax, sales tax or bulk sales problems. The contract rights of the acquired business are ordinarily not impaired. Less documentation may be required. Disadvantages include the fact that the transaction may leave minority shareholders in the target. All target liabilities are also acquired.

Variations and combinations of the foregoing are also possible, including the use of earn-out arrangements. In an earn-out, a formula based on the future perfor¬mance of the acquired business is used which results in additional purchase price payments. Problems with earn-outs abound, particularly as to the creation of the formula, measurement methods and verification. Invariably, if the maximum earn out is not achieved, disputes will result.


Sale of business transactions may be structured so as to defer the recognition of federal income tax. Analogous provisions generally apply to defer state income taxes. All such structures require the issuance of stock of the acquiror or its parent and that either the target's historic business be continued or a significant portion of its assets remain engaged in a new business.

In a tax-deferred transaction, the recognition of gain for the target and its stockholders is deferred. In such a transaction, the acquirer obtains a carryover basis in the stock or assets of the target and the tax attributes of the target are carried over to the acquirer. In a tax-deferred transaction, recapture of depreciation and invest¬ment tax credit, problems which can arise in a taxable transaction, are avoided.

Structures which require the recognition of taxable income and gain upon consummation of the transaction include a merger or consolidation where cash or debt securities are paid. In addition, a purchase of stock or assets for cash, debt securities, or a combination generally would be a taxable transaction, as would an installment sale of a business. Regardless of structure, the acquisition of a corporation with net operating losses, investment credit carry forwards or other carry forwards presents special problems which must be dealt with on a case by case basis.


A question frequently asked by a potential buyer of a business is, "Where will I get the money?" Sources of capital for payment of the purchase price range from self-generation from internal operations, to family and friends, to venture capitalists to banks, vendors, suppliers, employees and even the seller. If bank borrowing is involved, assets, such as real property, plant, equipment, inventory and accounts receivable usually serve as collateral. The interrelationships and priorities among financing sources can be intricate and require time-consuming negotiations and careful drafting to avoid later problems. For instance, fraudulent conveyance issues must be addressed when using the target's assets as collateral in a so-called leveraged buyout.

In addition, in many financing transactions, federal and state securities laws must be dealt with. In this area, ignorance of the law can be very painful to a business enterprise and its principals. All sales of securities are regulated under both federal and state securities laws. The term "security" for purposes of these laws is interpreted very broadly, and includes stock options, warrants and some forms of debt, along with common and preferred stock and convertible debt. The securities laws prohibit misrepresentations (whether by misstatement or omission) in connection with the purchase or sale of any security. The securities laws also require certain written disclosures about the financial and business status, prospects and management of the busi¬ness, the securities being sold, how the money raised in the offering will be used, the risks associated with the investment, and any other material facts that an investor should know before making an investment decision.

Misrepresentations or omissions of material facts in connection with the purchase or sale of a security may sub¬ject corporate officers and management personnel to personal liability for investor losses. Personal liability may extend to the outside directors, and to others who are involved in promoting the purchase or sale of the security. Misrepresentations may be intentional or only negligent, and may include incomplete statements as well as failure to disclosure important information.


The objective of the due diligence examination is to evaluate the target's business. The examination should expose potential problems so that specific agreements can be reached to deal with them. Areas of particular concern include environmental, product liability, employee benefits, and other potential sources of contingent liabilities. A thorough due diligence investigation will also evaluate technology, proprietary rights, accounting systems and other aspects of the target's business and identify legal and contractu¬al impediments to completion of the proposed acquisition.


Other considerations which often are critical in structuring or documenting the purchase or sale of a business include those regarding (1) environmental matters, (2) pension and other employee benefit plans, (3) intellectual property, (4) product liability matters, (5) state corpo¬rate law considerations, (6) federal and state antitrust laws, (7) regulation of foreign investment or ownership, and (8) industry regulation.

Perhaps no area holds as many traps for the unwary as potential environmental liability. Federal and state laws impose liability for clean-up of hazardous substances on present owners and operators of real property from which there has been a release of any hazardous substances. The continuation, knowingly or unknowingly, of a prior practice may give rise to liability, as may a release arising from past activities which occurs or continues at a site. Past violations of clean air and water acts and other regulations governing emissions, discharges and permits may also become the respon¬sibility of the new owner. Fines may be imposed, operations forced to shut down and expensive pollution control equipment required. The purchase transaction may also trigger reporting obligations which must be complied with in order to avoid later problems.

Both to take advantage of what is termed the "innocent purchaser" defense to an environmental claim, and to learn more about potential liability exposure, environmental audits are strongly advised in all transactions involving the transfer of real estate or the lease of industrial property. Typically, these are done in phases. In a "Phase I" study, employees are interviewed, records reviewed and the site inspected. Based on the results of the Phase I study, a "Phase II" study involving testing and ground water and soil sampling may be required. Appropri¬ate representations, warranties and in¬demnification of the buyer by the seller in the acquisition agreement (and occasionally, walking away from the deal) are essential to protect against unwanted liabilities.

As to pensions and other employee benefit plans, the acquirer may become liable for excess taxes or become subject to a lien on both its and the target's assets if the target's plans have not met minimum funding or other require¬ments of the Employee Retirement Income Security Act (ERISA). If the acquirer wishes to assume, freeze or terminate the target's plans, specific steps must be taken to ensure compliance with ERISA. Multi-employer pension plans, employee stock ownership plans (ESOPs), profit sharing and other plans holding employer securities, and other stock plans for employees, present special problems which must be addressed on a case by case basis.

Intellectual property concerns revolve around the treatment in the acquisition of such items as patents, trade¬marks, service marks, copyrights and trade secrets. In general such items are transferable. Alternatively, ownership of intellectual property can be retained by the seller and use rights licensed to the buyer in exchange for the payment of royalties. Clear identification of the target's intellectual property must be made and the adequacy of the steps the target has taken to protect its rights must be determined. To the extent the target has not taken proper protective actions, curative measures must be undertaken to ensure that good title is transferred to the buyer.

With respect to potential product liability problems, liability for injuries and damages caused by products distributed by the target company will be assumed upon the merger or acquisition of stock of the target company. A carefully drafted purchase contract may limit the liabili¬ties assumed in this area. Note, however, that particularly where the target's business is continued in much the same manner by the acquiror after the pur¬chase or where there is an overlap or commonality of ownership before and after the transaction, successor liability is possible regardless of contract protections.

Regarding state corporate law considerations, directors of both the target and the purchaser must be cogni¬zant of their fiduciary duties to shareholders and, in certain cases involving compa¬nies that are insolvent, potentially to the creditors of the insolvent company. While directors may take advantage of the business judgment rule and statutory protection which insulates them from liability for actions taken in good faith, after due deliberation and believed to be in the best interest of the company, special situations may require that specif¬ic steps be taken. For instance, where transfer of control of the target is contemplated, elimination of a minority own¬ership interests is an important consideration, or in other contentious situations, it may be advisable to obtain fairness opinions from an investment banking or other like firm prior to approval of a transaction.

Depending on the size of the acquisition, the involved industries and the concentration of competition within the involved markets, federal and state antitrust laws may be implicated in the sale of a business. For instance, both the Clayton Act and the Sherman Antitrust Act prohibit certain business combinations which lessen competition. In addition, prior to concluding certain deals, the parties must file what is known as a Hart-Scott-Rodino premerger notification and observe a statutory waiting period. During the waiting period, the government may object to the transaction. Obviously any governmental interference should be anticipated and appropriately dealt with in documenting and implementing the proposed transaction.

Another area of potential concern, is regulation of foreign investment or ownership of United States companies and real estate. For instance a filing with the Committee on Foreign Investment in the United States (CFIUS) and a waiting period may be required if a transaction involves a non-U.S. acquiror. Filings and approvals under other federal laws may also be required, particularly where the business of the target is defense related or involves cer¬tain key sectors, such as maritime, aviation, mining, energy, real estate, commu¬nications, banking, government contracting or financial services.

Similar considerations may apply regardless of foreign involvement, if the proposed acquisition involves regulated industries. These include electric, gas and other utilities, insurance companies, banks or bank holding companies, savings and loan associations, airlines and other transportation carriers or television, radio and other communications properties.


Legal considerations permeate all aspects of the purchase or sale of a business. Because of the complexities involved, early consultation with counsel is advisable to ensure that the deal of a lifetime does not become a lost opportunity.

Snapshot of Women Small Business Owners

From re:invention blog - for women entrepreneurs:

"An updated snapshot of women small business owners.

55% vote in every election
34% are Democrats.
39% are Republicans.
24% are Independents.
86% are white.
4% are black.
6% are Hispanic.
49% are 50 or older.
45% have college or post grad education.
25% say the economy and jobs are the most important factors in choosing a president.
86% say they are more likely to vote for a candidate who supports controlling health care costs.
57% are unable to provide health insurance for their employees.
54% don't provide health insurance because it is too expensive.

Source: Lake Snell Perry & Associates and American Viewpoint for Women Impacting Public Policy survey, November 2003."

Blawger Bowl Week 4: The Update

Several of us blawgers are fighting it out in a fantasy football league. A quick snapshot of this week's results is available at Promote the Progress.

How Antitrust Laws Affect IP

From Larta:

'Patent rights promote innovation and expression of new ideas and inventions for the public benefit. Patent rights give incentives to inventors to express their ideas by giving them assurance that these ideas will be protected so that others will not be able to profit from them. However, while patent protection provides economic incentives for inventors, this protection is not unlimited.

Antitrust laws impose important restrictions to ensure that inventors are not overstepping their boundaries by restricting competition. Some ways antitrust laws are able to promote competition are by strictly monitoring firms' actions by regulating potential mergers and preventing firms from forming monopolies."

IRR Overstates Project's True Value

From The McKinsey Quarterly:

"Many executives use the internal rate of return as the measure of a proposed project's long-term value. This approach does have intuitive appeal, but the complicated model used to calculate the internal rate of return makes certain assumptions that exaggerate a project's true value. The higher the return, the worse the distortion...

Companies and their advisers use the internal rate of return at their peril. A modified version that sets more realistic interim return rates would be vastly preferable, but the best alternative measure is net present value."


SBA Announces 7(a) Changes

From Law & Entrepreneurship News:

"Over the weekend the SBA announced changes to the 7(a) program that are effective as of October 1, 2004 and will remain in effect until November 20, 2004.

Beginning on Oct. 1, the guarantee fee on loans of $150,000 or less is 2% (up from 1%). For loans between $150,000-$700,000 the new guarantee fee is 3% (up from 2.5%). For loans over $700,000, the fee will remain at the prior level of 3.5%. "

Got the Entrepreneurial Stuff?

From Business Week :

"To turn a business idea into a winner, you need a rare collection of character traits. Here's one professor's list "

1. You must be willing to take calculated risks.
2. You must move toward the edge and almost step over it.
3. You must truly utilize out-of-the-box thinking and rat-like cunning.
4. You must be ready to lead by example and empower your teammates to make decisions and handle crisis situations.
5. You must have a management style that is flexible and changes based on situations.
6. You must have 'passion' for what you are doing. If you do, then you will spend as much time at it as is required to be successful.
7. You must learn to come up with new and innovative ideas that produce meaningful and perceptive differences, and be able to communicate that idea.
8. You must surround yourself with a great team.
9. You must constantly reinvent your business.
10. You must always be ready to 'jumpstart your brain'

Via BusinessPundit


Compensation Serves Multiple Purposes in Startups

In this excellent post from Digitalyst the multiple roles compensation plays in startups is examined. Among the topics covered are:

Aligning the goals of the individual and the company
Providing flexibility
Conserving cash
Internal equity
External equity
Incentive compensation

The Bottom Line
"How the company compensates its employees says a lot about the company's philosophy and contributes to its culture. Everything management does in a startup is closely watched by employees who are always trying to read the tea leaves in an atmosphere of uncertainty. The more carefully architected and articulated your comp plan, the more comfortable your staff will be."

Do These Mentalities Plague Your Company?

According to Naomi Moneypenny four mentalities block new learning and plague companies:

"- Not Invented Here - it didn't come from us, so it isn't any good
- Already Invented Here - we already do whatever the 'new' thing and can't learn from anyone else
- Analysis Paralysis - we'll study the thing that might cause change to death, but never actually do anything about it
- Head in Sand and March Right On - what change? Why change? Our way or the highway..."

Via Innovation Weblog

FAQ about Software Reverse Engineering

This article from Chilling Effets Clearinghouse answers the following frequently asked questions about reverse engineering of software:

Q: What is reverse engineering?
Q: How does reverse engineering differ from other types of engineering?
Q: What stages are involved in the reverse engineering process?
Q: What is disassembly or decompilation of a computer software program?
Q: What is the difference between source code and object code?
Q: What is interoperability?
Q: What are the different uses of reverse engineering?
Q: Is reverse engineering legal?
Q: What 'copying' of computer programs is permitted under copyright law?
Q: Is the making of an intermediate copy in the reverse engineering process copyright infringement?
Q: What elements of a computer program are copyrightable?
Q: How does a court determine the difference between the ideas and expressions in a computer program?
Q: Are the functional elements of a software program protected by copyright?
Q: Is reverse engineering affected by patent law?
Q: Does trade secret protection of information contained within a product restrict reverse engineering?
Q: Should a reverse engineer worry about the original product manufacturer's trademarks?
Q: What kind of proof is necessary to show the copying of a computer program?
Q: What is UCITA?
Q: What is the difference between a license and a sale of a product?
Q: What are shrink-wrap, click-wrap, and browse-wrap licenses?
Q: Are licensing provisions prohibiting reverse engineering enforceable?
Q: Is the reverse engineering of a technological protection measure illegal under the DMCA?
Q: What are the limitations of the interoperability criteria for the DMCA's reverse engineering

Patent Tips for a Small Business with Grand Ideas

From Patently Obvious comes these tips for a company embarking on a business strategy that may use patents to protect its IP:

"1. If someone at your company has an idea that may be patentable, act quickly. You can lose rights by disclosing the idea publicly or by offering it for sale before filing for a patent application. This type of disclosure can even occur before you make any engineering drawings or working models.

2. Try to keep records that help establish the novelty of the invention and the date of conception. This evidence may be important at a later date -- especially if there is any delay in filing for patent protection.

3. Before you retain a patent attorney, bone up on the subject -- Read the book “Patents and How to Get One.” It is very short and is a great book to read on your next business trip.

4. Retain a patent attorney to discuss your issues, to help you decide whether to file any patent applications, and then to help with the preparation and prosecution of the patent applications... Get references.

5. When thinking about your potential inventions, remember that you can obtain patents on devices as well as methods. Methods, for example, may include methods of manufacturing an item, methods of doing business, methods of using a device, and process flow methods that describe the flow of data in a piece of software. (Merely a few examples.)"

Key VC Investment Criteria

This article from the Puget Sound Business Journal offers these three key criteria in today's market for successful funding VC funding:

1. The company must be cash-flow positive or will become cash-flow positive with a very high degree of certainty, post funding.

2. Seasoned management is a must. The ideal management team has done it before, preferably with a private equity fund partner.

3. High-growth potential must project out to a compounded annual growth that will enable the investor to achieve a targeted 40 percent internal rate of return over about a five-year holding period.

For more on this topic, please consider reviewing my article, Tech Startups Face New Reality

Deleted Files Pose Legal Challenge

This Kansas City business journal article explains:

"A business that designs its data backup system without talking to a lawyer may be making a big mistake.

Court rules are changing, and judges are becoming less tolerant of litigants who can't produce electronic documents on demand. "

Carnival of the Capitalists

The 52nd edition of the Carnival of the Capitalists is up at Drakeview and features many interesting articles including this post from Coyote Blog on how to buy a business.

For more on this topic consider reviewing my earlier post on this subject, here.


Biotech's Harsh Lesson in New Zealand

This story from STUFF explains:

"Players in New Zealand's fledgling biotechnology industry - a key pillar of the government's economic development strategy - have learned a harsh lesson."

And the lesson is one that many companies may want to heed: "Focus on the 'Do-able.'"

Is Your Growth Strategy Your Worst Enemy?

From Dispatches Weblog quoting from and commenting on an article from The McKinsey Quarterly:

""History is littered with companies that experience 'boom and bust' rapid growth followed by steep decline, often into oblivion...The challenge to finding a sustainable growth rate means striking a balance between growth drivers and constraints.'

The authors go on to describe six principles that are worth repeating:

Every action produces a reaction.
Structure shapes behavior.
Complex interrelationships make a system.
Time clouds the picture.
'Hard' and 'soft' factors interact.
Feedback reinforces and counteracts.

Business decisions made without due consideration of these principals are likely to result in unintended consequences. Young companies that are defined by scarce resources can ill-afford the cost of unintended consequences."


IP Software Seller Strategies

From Holland & Knight:

"For many software companies, intellectual property just happens. Programmers write code. Sales staff find customers. Executives book revenues. The company may have a sales strategy and a long-range view of technology, but the legal protection of its intellectual property becomes an after-thought -- a strategic orphan. Big mistake.

Companies that do not identify risks early, if not immediately, pay dearly when the day comes that a potential buyer or investor tries valuing the company's core asset -- its software. The strategy need not harmonize with every syllable of the business plan. However, the software protection regime must be more than a three-line checklist of patent filing deadlines, or the occasional piece of hate mail threatening to sue over pilfered computer code."

Small Biz News Nuggets

From Just For Small Business:

"Small business news from around the world just for small business owners.

NASA Selects Innovative Small Business Projects
US Small Business Administration Moves To Assist Victims Of Hurricane Jeanne
Small Business 'Creates The Jobs'
Oil Prices Dampen Small Business Outlook
Top Tips To Better Small Business Profit Margins (UK)
Big Lift For Small Business (AU)

This weekly post features key issues for small business owners."


Friday Funny Business

Links for your enjoyment

A Night at the Opera a Day at the WeinerDogRaces

Cap'n Crunch and the other Cartoon Boat Veterans for Truth

Yinz need helped with yer Pittsburghese 'n'at? Fine aht up 'ere an' up air

Working hard and other surefire ways to get fired