Low-Tech Businesses Are Booming

"Forget Web sites and molecular imaging. The biggest fields of opportunity for aspiring entrepreneurs are the same mundane ventures that have been kicking around for decades.

Think landscaping companies, child-care providers, janitorial services and nail and hair salons. In a generally buoyant market for low-technology businesses, those are four of the biggest winners by far. Altogether, sole proprietorships in the United States, a rough measure of the size of the small-business low-technology sector, grew by nearly 4 percent in 2002, the latest year with statistics available, to 17.6 million, and their combined revenue increased by 5.5 percent, to $770 billion. The figures come from the Census Bureau's Economic Census, a snapshot of the American economy that is taken every five years.

And the trends that drove the increases in low-tech businesses have only accelerated, the bureau's economists say, as the nation's economy has rebounded and employment has recovered."

Read more in this NY Times article.

Start a Startup; Make Microsoft Hire You

"Most CS undergrads hope to get a good job when they graduate. But as the age of startup founders creeps downward, I foresee an alternative path for the most ambitious: instead of going to work for Microsoft, start a startup and make Microsoft buy it to get you.

This change will do more than make some young hackers richer. It will fuse recruitment with product development. Instead of applying for a job and then being told what to work on, you join the company as a complete development team, with a beta version. Results: (a) a shift in power from companies to hackers, and (b) an increase in the rate at which new technology gets developed.

Obviously this new model will be a better deal for the best hackers. But I think it will also be better for the Microsofts. The few tens of millions extra that they'll pay will be a bargain for what they'll get. "

From the abstract of an upcoming talk by Paul Grahamto be presented by the Computer Science Undergraduate Association of the University of California at Berkeley.

Patent Trolling Convincingly Defended

Below are excerpts from an excellent rant from IP Litigation Law Blog that puts the "patent terrorism" issue in perhaps a more proper perspective:

“Yet another article I came across -- this time in The Motley Fool -- that intentionally or unintentionally spreads lies, untruths and disinformation about the patent system...

Last I checked, Article I, Section 8 of the Constitution speaks of "promot[ing] the progress of science and useful arts," not "regulating and encouraging fair business." And it speaks of doing so "by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries," not, as the author of this article claims, by ‘businesses us[ing] patents and copyrights to protect their intellectual ideas as a defensive moat.’…

The author goes on to say, "Often, these organizations [i.e, patent terrorists] purchased the patents or swallowed companies that were going under to acquire the ideas, which is called patent trolling." Let me get this straight -- going out into the open market and "acquiring the [patented] ideas" of a failing business is somehow wrong?...

Big business is and always has been the primary beneficiary of the patent system. The cries we hear now are not those of innocents "victimized" by an unfair system. Rather, they are the cries of those who don't like finding out they're expected to follow the laws and live under the same system they have mostly created themselves. Some call that unfair. Others call that justice.”


Online Business Intelligence Resource Guide Available

An Internet MiniGuide, released 04-26-05, titled "Business Intelligence Online Resources," is a 23 page research paper listing selected resources for online business intelligence, and is available via this post from Marcus P. Zillman, M.S., A.M.H.A. Author/Speaker/Consultant.

Compliance with CA Privacy Laws Requires Attention

"The California state legislature has already enacted more than a dozen laws that regulate how businesses, universities and other organizations that collect personal information on California residents must manage private data. And that's just the beginning...

Like a large hurricane sweeping in off the Pacific, these laws will wreak havoc on all kinds of business processes, including how websites can collect personal data and the management of databases that store personal information on customers. They will influence how companies share personal data with third parties and restrict their ability to contact consumers via cell phones and faxes. State lawmakers are also considering laws that could affect how your company outsources services that handle personal information.

And keep in mind: Any company that sells a product or service to a California resident, even if the company is based outside the state, may be affected. Just having a website that a California resident visits—and one out of 10 Americans lives in California—can put you under the jurisdiction of these laws...

Many CIOs whose companies do business in California may think they are in compliance with some of these laws. But they would be wrong. For example, executives may assume they are in compliance with the law requiring a privacy notice on their corporate website that states clearly what personal information is being gathered on browsers. However, as many as 80 percent of the privacy policies at corporate sites are out of compliance, according to the Ponemon Institute, which conducted a survey of up to 500 randomly selected websites..."

Read more in this article from CIO Magazine.


IRS Offers Small Businesses One-Stop Online Resource

"The IRS yesterday announced the availability on the IRS web site of a Small Business and Self-Employed One-Stop Resource to assist the nation's 45 million small business and self-employed taxpayers with their tax responsibilities."

From this TaxProf Blog post.

IRS Offers Small Businesses Retirement Plan Resource Guide

"Small business owners can now learn virtually everything they need to know about setting up and maintaining IRA-based retirement plans for their employees, thanks to a new, free compact disc from the Internal Revenue Service...

The CD-ROM, Individual Retirement Arrangement (IRA) Resource Guide for Small Business Owners and Individuals, contains information about both traditional and Roth IRAs. It also covers IRA-based retirement plans for employers, including simplified employee pensions (SEPs), SIMPLE IRAs, and payroll deduction IRA plans."

Via this post from Stark County Law Library Blawg.


Open Source Intellectual Property Issues

“Many intellectual property issues arise when “open source” software is used, both because of the contractual restrictions that govern the use of the code, as well the absence of any intellectual property warranties that normally protect source code…

A licensee’s use of open source software obtained under the terms of the GPL in commercial software may create a “work” that must also be distributed under the terms of the GPL. In that case, the licensee would have no intellectual property or proprietary right to the work, no matter how much effort the licensee made to improve the “open source” code. This is the so-called “viral effect” of the GPL.

There are, however, ways to mitigate the “viral effect” of the GPL…using dynamic linking… [or] through the use of published application program interfaces (API)…”

Read more in this Woodcock Washburn newsletter.

Step-by-Step Guide to Time Management

"Step 01: Get started
Step 02: Set clear goals and objectives
Step 03: Keep an activity log
Step 04: Handle e-mail and phone calls in batches
Step 05: Divide larger tasks into groups of smaller ones
Step 06: Prioritize tasks
Step 07: Set aside chunks of time to do nothing
Step 08: Don't overwork yourself
Step 09: Learn when to say no
Step 10: Know when you need time management help"

Read more in this article by Krissi Danielsson .

Beginners to Bigshots: How Businesses Use the SBA to Grow

"This special section of bizjournals, available this week only in honor of small business week, provides a collection of case studies illustrating how small business owners have benefited from the Small Business Administration. From low-cost loans and microlending to contract and export assistance, the SBA has helped the small businesses profiled here. Bizjournals will tell you how.

"From Beginners to Bigshots" also includes a ton of tips -- including instructions for writing a business plan -- to get your business off to a great start."


SOX Compliance List of 48 Questions

From Ernst and Young, a firm that works with companies to help them address critical business issues, comes this list [via TechRepublic] of the 48 questions that need to be answered in order to gauge a company's compliance with the Sarbanes-Oxley act.

Tips for Getting Your Tech Product Quickly to Market

"Be convinced that, if your technology were 100 percent successful, the impact would be worth the investment compared to alternative technologies...Develop a convincing storyline and an elevator speech...Generate a risk list and identify potential showstoppers...Construct a roadmap and budget assuming that the project will be completely successful...Pick low-hanging fruit to get into the game...

Identify product organizations that can benefit from the technology. These are potential suppliers of resources...Take the story on the road. Publicize your work, plans and potential outcomes...Eschew hype. Manage expectations. Never promise more than is reasonable and believable...Encourage product groups to become stakeholders...Focus attention on the critical path goals and milestones..."

Read more in this Small Times article.

IP Protection Mistakes Startups Make


Read more in this article by Dennis Fernandez found via this post from EEJD Blog.


When and Why to Seek VC Money

"VCs look to make 5-10x their money in any investment in 4-6 years. If they can't see a reasonable path to this, they won't find the investment appealing. VCs also typically like to invest a minimum of $5-10M per company (some less, some more, but let's focus on the bulk of the bell curve). If that $5-10M investment buys 20-30% of the company over time (typical), it means VCs typically invest in a post-money valuation at the end of the day that ranges from $15-50M. Seeking a 5-10x multiple on this investment means VCs look to invest in businesses that will be worth $75M-500M in 4-6 years....

Prospective employees, customers, partners and service providers all recognize and appreciate the that start-ups with VC investments are more likely to survive and succeed. A good VC firm and partner should bring a wealth of connections that help in team-building, business development and strategic partnerships.

And...VCs bring capital - not just in the round they invest in, but in theory in their commitment to continue to invest in the company over many years, through good times and bad (albeit at varying valuation rates and thus varying levels of dilution!)."

Read more in this post from Seeing Both Sides.


Software Development Project Checklist

"There are many, many ways to estimate a software project, ranging from formal models that can only be worked by a University professor through to a salesperson's hopeful guess.

Here We Present a simple, proven software project estimation method that produces reasonably accurate results and has been used estimate substantial fixed price work.

This method is based on a quick but robust initial design on the premise that later versions of the design will reduce the amount of work as developers come up with smart ideas for saving work.

This method also calls for participation by a substantial number of people, increasing buy-in and gaining accuracy....


This estimation method has three steps:

1. Design the System.
2. Estimate each Part of the System.
3. Schedule the Work.

The outputs are:

1. A project schedule with allowances for schedule risk, internal dependencies and known outages.
2. A list of other assumptions made during the estimation.
3. A list of the project's external dependencies.
4. A list of other risks to the project schedule. "

Potential Crisis Looms on Open Source Software Proliferation

"As open source software penetrates ever deeper in to corporate America, a potential crisis looms. There are all sorts of licenses and therefore all sorts of rules for how different open source packages can be used. As a result, companies not only have to track the many pieces of software floating around in their organizations but also keep all the rules straight. It's relatively easy if they're using one thing - say Linux. But, beyond that, the headaches ensue. The way to head off trouble is to simplify licenses, pare down the number of licenses, and automate the tracking of software. Fortunately for corporations, open source mavens have been hard at work on all three."

Read more in this businessweekonline article.

The franchising business model in a nutshell

"Franchising is a method of business expansion whereby a business owner allows someone to market products or services under their name and trademark and in strict adherence to a system he/she prescribes. In return, the franchisee, as that person (or organization) is called, pays a fee and, usually, an ongoing royalty. Moreover, the franchisee pays all of the costs of getting into his or her own business.

There are three basic elements to being a franchise.

1. The Name - You allow someone the use of your name or trademark.
2. The System - You require them to operate their business, using your prescribed system.
3. Payment of a Fee - In return for the use of the name and system of operation, they pay you a fee or royalty.

By having these three elements items in place makes your business a franchise, and you are then required to follow the federal guidelines of having a Uniform Franchise Offering Circular."

Read more in this Fresh Inc. article.

Free Online Courses from Business Week Online

With topics ranging from technology to business, Free Online Courses with Business Week Online may offer a course of interest to you.

All courses are led by experts in their fields, and offer you the opportunity to interact with the instructors and other students online.

Courses include "Start-Up Basics for the First-Time Entrepreneur"

Advice for Independent Contractors and Self-Employed

"If you work as an independent contractor, or are self-employed, there are a number of things to keep in mind concerning the work you do, your legal rights, and your obligations.

The "Independent Contractors and Self-Employment" topic in FindLaw for the Public's Employees' Rights Center can help you get the information you need -- from how to determine if you are an independent contractor or an employee, to tips for creating a written agreement with your client, and how to file income taxes as a self-employed taxpayer."

Click hereto get started.

From this Stark County Law Library Blawg post


A Project Planning Checklist

"Talking to corporate executives across the country, I often find that project planning is an issue. I developed this project planning checklist to scan possible ideas to be considered in your projects. It is especially good when you're just brainstorming, and giving yourself permission to capture any and all ideas that pop into your head. "

Check out the checklist at this David Allen post.

Legal Aspects of Franchising

"There are many elements of the franchise agreement, as well as the franchise deal itself, that can benefit from the advice of an attorney.

These can include:
-Reviewing the franchisor's offering circular (the UFOC) and evaluating the opportunity
-Negotiating points of the final contract
-Limiting your personal liability by establishing the correct business structure
-Dealing with trade secrets and other proprietary issues
-Establishing your own trade name
-Dealing with state statutes "

Read more in this Howstuffworks article found via this Innovative.Franchising.Blog post.


Entrepreneurship Nuts and Bolts

"While a bold idea, unflagging determination and patient financial backers are all crucial to successful start-ups, entrepreneurs must also focus on less dramatic aspects of running a company, according to seasoned entrepreneurs who spoke at the 8th Annual Wharton Entrepreneurship Conference."

Read more in this CNET News.com article.

Notes on Josh Wolfe Nanotechnology Presentation

Josh Wolfe, co-founder and Managing Partner of Lux Capital, the owner of Lux Research and Editor of Forbes’ monthly investment publication, the “Forbes/Wolfe Nanotech Report,” gave a “state of the industry” overview at The Business of Nano - PA Nanotechnology Conference 2005.

What follows are my notes from his presentation.

Mr. Wolfe defined nanotechnology as purposeful engineering on a scale of less than 100 nanometers to achieve desired properties, functions and performance characteristics.

Nanotechnology is not just about size; it is about creating new properties to change existing markets and products. New properties open new markets.

Nanotechnology is highly multi-disciplinary in nature and applies accross a broad spectrum of industries.

Nanotech is important becaouse control of the structural properties of matter leads to new high performance products, improvements, markets and industries.

Nanotechnology leads to "simplexity" -- taking complexity and simplifying it. Owners of recipes (patents) in this area will be most successful. Growth in GDP comes from new combinations of existing resources. Nanotechnology contributes to growth by making use of new compounds in more valuable ways.

The nanotechnology phenomenon may play out like the railroad and electricity industries; from infrastructure to applications; from experiments to proofs; from speculation to common sense.

Seven examples of the types of impact nanotechnology will have:

1. Decisively improving existing products, e.g. nanotech coatings and nanofabrics;
2. Creating new products and markets;
3. Disrupting existing competitive dynamics and cost structures, e.g. flat panel displays;
4. Cutting manufacturing costs;
5. Medium-scale platform shifts;
6. Large-scale platform shifts, e.g. bio-assembled electronic deposition
7. Unexpected derivative effects, similar to those which caused an increase in the sales of razors when nylon stockings came into fashion.


Recommendations for Family Business Succession Planning

"Assemble a high-quality and experienced succession team including a facilitator, accountant, attorney, investment adviser and key family members.

All dynamics of the family business succession are interdependent, so use a facilitator that understands all of them.

Align the company's structure for compatibility with the overall goals of the family.

Assess the ability of aspiring family successors and build a training curriculum that prepares them for the responsibilities they will assume.

Make sure key managers are locked in to assist family successors with the transition.

Build financial independence from the business so you do not hold on too long.

Make sure family members understand what you are trying to do. Secrecy is a killer.

Building a succession plan typically takes three steps. In the first, the business undergoes an overall assessment to identify problems and opportunities that need to be addressed in a comprehensive succession initiative. Next, develop a compatible plan and make a commitment to implementation. And, finally, remember that succession planning is a process, not a project. Make a commitment to ongoing maintenance and refinement of the plan. "

From this Orlando business Journal article.

Inventor's Handbook

"This Handbook was created by the Lemelson-MIT Program to address the independent inventor's and aspiring entrepreneur's most frequently asked questions regarding United States patents...

Chapter 1: What Is Intellectual Property?
Chapter 2: What Can Be Patented?
Chapter 3: Is My Idea Patentable?
Chapter 4: How Do I Conduct a Patent Search?
Chapter 5: Is My Invention Worth Patenting?
Chapter 6: How Do I Apply for a Patent?
Chapter 7: How Do I Prove the Idea Is Mine?
Chapter 8: What Are Some Options to Commercialize My Patent?
Chapter 9: How Do I License My Invention?
Chapter 10: What Are Some Guidelines in Developing a Business Plan?
Chapter 11: How Do I Raise Capital?
Resources for Inventors"

Checklists and Templates for Project Management

See this post by Phil Wolff for a great collection of "useful tools to keep...projects organized and to help with project initiation and communication. These MS Word, Excel, and Project templates reflect some best practices and hard-earned PM lessons. Like 'nail down scope clearly before starting a project;' 'line up executive sponsorship;' and 'define your acceptance approach up front.'"

How to Give and Take Criticism

Consider reading in full this excellent essay by Scott Berkun, portions of which I have highlighted.

"Good feedback is rare. It can take a long time to find people who know how to provide useful criticism, instead of simply telling you all the things they think are “wrong” with you or whatever you've made.…

There are four fundamental assumptions bad critics make:

1. There is one universal and objective measure of how good and bad anything is...
2. That the critic is in sole possession of the skill for making these measurements...
3. Anyone that doesn’t possess this skill (including the creator of the work) is an idiot and should be ridiculed...
4. That valid criticisms can and should always be resolved….

How to give critical feedback

Before you speak, know the goals: What problem is the work trying to solve? What are the goals? If you don’t know the intention of the work it’s very difficult to offer careful evaluation and judgment….

Good and bad, is not the same as what you like or don’t like…
Talk as much about what it is, as what it isn’t...

Receiving critical feedback

It’s much harder to receive criticism than to give it…most people…tend to avoid it or ignore it. Nothing can be worse: feedback is essential…, but to master the skills of milking it for all it’s worth:

Shut up. Just shut up and listen....
Ask clarifying questions…
Refer back to the goals…
Ask for what changes you can make that will satisfy the criticism…

Ground Rules

Take control of your feedback process...
Pick your partners...
Strive to hear it all, informally and early..."

Check Out the SBA's Business Startup Center

For a ton of useful information, check out the SBA's business startup center. It contains much of the info you need (all in one place) to start a company. Explore important topics such as finding a niche, estimating costs, creating a marketing plan, sorting out employment laws, handling payroll taxes, and more. The center also has dedicated information for women, veteran, Native American, minority, and young entrepreneurs.


Web Apps to Run Your Company On

"One interesting thing about starting a company today versus a few years ago: Lots of cool web apps are now available that you can more or less run you company on..."

Read more in this post from Evan Williams.

If You Don't Document It, It Never Happened

"The Department of Labor does not like people being fired without a company following its own termination policies and creating a paper trail along the way....

The easiest way to document poor performance is through regular performance reviews....

Yes, writing expectations takes work.
Yes, it takes away from production time.
Yes, it is not urgent.
Yes, it is very important.

As a side benefit, creating written expectations and job descriptions goes beyond protecting oneself from lawsuits.

The process of thinking through what is expected of the various positions in your operation creates a clear picture in your mind of the ideal workplace. And the clearer you can see it in your mind, the easier it is to create in reality..."

Read more in this post from Management-Issues.

FTC Guide to Buying a Franchise

"From the people who brought us the Do Not Call Registry, our friends at the FTC, comes a great article on buying a franchise. In it, they talk about "The Benefits and Responsibilities of Franchise Ownership" and discuss several components you should consider within a franchising system:

The Cost
Terminations and Renewal

They then go into Selecting a Franchise, Shopping at a Franchise Expo, and finally, and most importantly, go into Investigating Franchising Offerings."

For links and more, see this Innovative.Franchising.Blog post.

Estate Tax for Small Businesses May Be Paid in Installments

"Section 6166 of the Internal Revenue Code allows the estate to elect to pay the estate tax attributable to an interest in a closely held business in installments over, at most, a 14-year period. If the election is made, the estate pays only interest for the first four years, followed by up to ten annual installments of principal and interest....

The benefits of Section 6166 are not available to all estates. The value of the business must exceed 35% of the adjusted gross estate..."

Read more in this post from Tax & Business Law Commentary .


Yahoo Offers Small Businesses Free Web Space

"Yahoo is giving away web page hosting services to small businesses, in a bid to bolster its search and related advertising business.

The company yesterday introduced a new service that lets any small business sign up for a free web page to appear in Yahoo's local directory. The move will help otherwise unwired small businesses come online, said Paul Levine, Yahoo's general manager of local services, as well as help consumers find more local information. "

From this silicon.com post.

Software's Top #10 Trends

This is a list of the Top 10 Software Trends posts fromBurnham's Beat in the last month:

10. Consolidation
9. Data Abstraction
8. Composite Applications
6. Inter-Enterprise Applications
5. Message Aware Networking
4. Service Oriented Architectures
3. Software As A Service (SaaS)
2. Open Source
1. XML

For more and links to the posts visit this Burnham's Beat post.

Microloans Make a Difference

"In the U.S., state and local programs make so-called microloans available, typically to small-business owners who are unable to get traditional loans from banks either because they have poor credit ratings or no credit history at all. About 500 community-based microlenders and a handful of state microlending programs make loans available -most for several thousand dollars-to these higher risk borrowers. These loans are riskier, so the interest rates are higher than those on conventional ones. Microlending programs in the U.S. are vastly different from those in developing countries. The Grameen Bank in Bangladesh, for instance, has no minimum amount for loans - a woman, for example, could borrow money to buy scissors�and charges low-interest rates. "

Read more in this fortune.com article via this Law & Entrepreneurship News post.

Where Entrepreneurs Err

"So, why do things go wrong? What can entrepreneurs do to avoid such mistakes – which can go potentially fatal for businesses? Or are such failures the rocket fuel that take businesses to the next level? Let’s start by taking a closer look at why failure happens. According to me, there are multiple areas where entrepreneurs err:

Too much Vision...
Wrong Idea...
Wrong Product...
Inability to Sell...
People Mistakes...
Flawed Execution..."

Read more in this E M E R G I C . o r g post.


Ten Commandments for Entrepreneurs Pitching Investors

"Allen Morgan just completed his Ten Commandments for Entrepreneurs...They're worth a read:

1. Do your homework, and contact the right person
2. Be on time
3. Tease, don't overwhelm
4. Know your audience
5. Create the 'Aha' early
6. Explain the idea by analogy to, or contrast with, older ideas
7. Go with 13 or less slides
8. Know what you don't know -- and admit it
9. Be like Goldilocks, when it comes to competition
10. Control the meeting -- but be smart about it"

For links, refer to this 106Miles Blog post.

How to Make a Million

"Yes- you need to start a business. In America, starting a successful business is the surest, most controllable path available to you for making a million dollars in less than 42 years.

And really, this decision to start a business gets us to a key part of our conversation. There are two mentalities at work in our economy today. Either you can be someone else's employee, or you can be the one who hires the employees. You can work for a business, or you can own a business of your own.

Now please note that I am not saying that "being an employee" is a bad thing. There are lots of good reasons to be an employee. For example, being an employee is a great way to learn how a business works so that you can open a business of your own. You simply need to become an employee with that approach in mind.

What you do is figure out a business that you would like to open yourself. Then you go work in a business like that for a year or two and learn the ropes. Go into the job with the intention of learning everything you possibly can while someone else pays you to get your education."

Read more in this Marshall Brain post.

Summer Job vs. Summer Seed Funding

"The first project [Summer Founders Program] is to fund a bunch of new startups this summer... We're going to call this project the Summer Founders Program, and it preserves many of the features of a conventional summer job. You have to move here (Cambridge) for the summer, as with a regular summer job.

We give you enough money to live on for a summer, as with a regular summer job. You get to work on real problems, as you would in a good summer job. But instead of working for an existing company, you'll be working for your own; instead showing up at some office building at 9 AM, you can work when and where you like; and instead of salary, the money you get will be seed funding."

Via this post from Marshall Brain.


Pittsburgh Thrift Stores Pool Resources

Sounds like a great idea:

"Five local thrift shop operations are joining forces to lower costs and improve services.

'From our research, this is the first coalition [of thrift stores] in the country to talk about these issues and concerns,' said Fred Just, executive director of the Society of St. Vincent de Paul, who brought the agencies together.

As the new Alliance of Nonprofit Stores, the combined 40 stores run by St. Vincent de Paul, Goodwill Industries of Pittsburgh, Salvation Army, Bethlehem Haven and National Council of Jewish Women will share information and resources.

They also will look at making group purchases of items such as clothing racks and truck fuel, and working together on joint advertising campaigns, Just said."

From this Pittsburgh Post-Gazette article.

Unwrapped Open Source

"One of the emerging problems of open source is the issue of intellectual property ownership. It is not unusual for a piece of code to be mistaken for open source when it is, in actuality, proprietary code belonging to a software vendor. If this code makes it into commercial products or even into a corporate infrastructure there could be serious legal ramifications. It is important that companies make sure that they are buying open source software from organizations that will protect the integrity of their offerings. The combination of a true open source community that is dedicated to quality with a company that understands how to create true commercial software provides the best of both worlds.

There are situations where open source offers another valuable service. There are software products that are owned by companies that no longer have the interest or financial capability to keep the products moving forward. If there is a customer base and a developer base that still cares about the product, moving it into open source may save the technology."

From IT-Director.com: Open Source Unwrapped.

MS to License Technology to Startups

Reprinting a TECHtransfer101 post from which you may link to the computerworld article:

"As seen on computerworld.com: 'Expanding its efforts to capitalize from its intellectual property holdings, Microsoft Corp. has set up a group within its licensing business to sell its technologies to start-ups. Inrix Inc. and Ascender Corp., both of which were founded last year, are among the first takers. Inrix is building a traffic information service with exclusively licensed technologies from Microsoft Research, and Ascender has obtained rights to adapt and sell various Windows fonts developed by Microsoft, according to a Microsoft statement. ' "

SOXing It to Small Business

"It's now beyond dispute that Sarbanes-Oxley has imposed a much higher regulatory burden on US public corporations than the law's sponsors ever imagined. It's also beyond dispute that those costs are disproportionately borne by small business.

Although many SOX provisions impact small business, the worst offender appears to be Section 404, which requires inclusion of internal control disclosures in each public corporation's annual report. This disclosure statement must include:

(1) a written confirmation by which firm management acknowledges its responsibility for establishing and maintaining a system of internal controls and procedures for financial reporting;
(2) an assessment, as of the end of the most recent fiscal year, of the effectiveness of the firm's internal controls; and
(3) a written attestation by the firm's outside auditor confirming the adequacy and accuracy of those controls and procedures.

Study after study confirms that Section 404 has imposed huge costs on American business.."

Read more atTCS post by Professor Bainbridge who calls on the SEC to consider regulatory relief for smaller firms.


The Future of Software As a Service

"The trend to offer software as a service with payments over time and based on usage is emerging. The big spenders like Telcos, Banking and Financial Services, Healthcare, Transportation players may not find hosted solution a natural fit. The business drivers force them to get cutting edge solutions that would improve competitiveness and not necessarily something that looks to have good architecture and seems logical or fashionable.

It will take more time to see what percentage of customers will find the software as service offerings attractive, change their buying habits and move to annuity contracts.The application architecture, schema, the business model including dealing with channel partners and switching costs for existing customers are major impediments. Overwhelming organizational changes would have to be managed in the transition to on demand model- It is highly unlikely that existing software vendors could manage the transition smoothly."

Read more in this post from Sadagopan's weblog and related articles from SandHill.com.

On Improving Hiring Practices

"Companies can do five things to help win the competition for the best employees:

-Ensure that practices are people-centric.
-Flexibly define job requirements.
-Conduct high-quality interviews.
-Practice proactive sourcing techniques.
-Develop a reputation as a great place to work."

Learn more at this post from Management Craft.

Health Savings Accounts (HSAs) for Small Business

"Health care premiums will be facing the fifth year of double-digit growth while many small business owners prepare this year's budget. A new approach enacted by Congress last year called HSA or health savings accounts, provides new avenues for reducing current healthcare costs."

Learn how an HSA can benefit your small business by reading this article from About.com.

Software Escrow Basics

"A software escrow is a deposit of source code of software and other materials with a third party escrow agent. Generally, a party licensing the software (the "licensee" or "buyer") requests the software escrow from the owner of the software (the "software developer" or "developer") to ensure maintenance of the software and possibly performance of development obligations under a license....If...the software developer ceases operations or otherwise fails to provide support at a previously agreed upon level with the licensee, licensee will lose a vital part of its strategy regarding the licensed software and, absent a triggered source code escrow, may find itself unable to maintain and develop its products...

Basic Considerations...

Identify a software escrow agent...
Negotiate what goes into the software escrow...
Negotiate how often updates go into the software escrow...
Confirm what went into the software escrow...
Determine release conditions from the software escrow...
Determine who pays for the software escrow...

The licensee should also watch for and monitor the escrow account activity, which should include a description of what was deposited and when. In addition, consider a technical verification service... Most escrow agreements allow the software developer to oppose the licensee’s release request when a release event allegedly occurs... Ensuring that escrowed source code is complete and useful does not guarantee that the licensee will be able to work with it...Bankruptcy is often the most complicated issues in structuring and enforcing an escrow agreement..."

Read more in this Fenwick & West article from Mondaq.

FTC Issues CAN-SPAM Act Guidanace

"If you send e-mail messages to customers and prospective customers, you should take note of the new Federal Trade Commission guidelines implementing the federal CAN-SPAM law which became effective on January 1, 2004. These guidelines attempt to clarify what is commercial e-mail, and therefore subject to the Act’s requirements, by defining when the "primary purpose" of an email is commercial. The regulations took effect on March 28, 2005...

CAN-SPAM (the "Act") regulates commercial electronic mail messages ("Commercial e-Mail") which the Act defines to mean any e-mail message whose "primary purpose" is the commercial advertisement or promotion of a commercial product or service. For e-mails falling within this category, the Act requires, among other things, that e-mail recipients be provided a clear and conspicuous notice of the opportunity to opt-out by return e-mail (or other Internet mechanism) of receiving further communications from the sender, and the sender must comply with this request within ten business days of receipt."

Read more in this Pillsbury Winthrop article from Mondaq.


Software Startups Should Focus on Customers Over Standards

"A panel of veteran design software entrepreneurs concluded Thursday (April 7) that while participation in the development of standards is a valuable activity for small companies, it is not nearly as important as providing technology that customers want.

Members of the panel, which took place Thursday (April 7) at the 15th Synopsys EDA Interoperability Developers' Forum in Santa Clara, Calif., recounted various experiences with standards development, but emphasized that standards development is not necessarily something that small companies have the luxury of focusing on - unless customers want them to. "

Read more in this article from EETimes.com.

When You Need a Small Business Attorney

"Growing businesses operate lean by necessity and intelligent business owners never spend money they don't have to spend. This frugality can be both a blessing and a curse. A spendthrift company quickly burns through its cash and disappears from the competitive landscape while the frugal company persists. The frugal business goes too far however when it ignores critical elements such as proper legal assistance. This critical legal work is a bit like insurance, the up front fees can seem daunting, but are far less so when compared to the long-term liability created by their absence.

When you need an attorney

There are a number of undertakings a business should not enter without consulting an attorney. These can include, but are not limited to:

Incorporating your business - you can choose the 'one-size fits all' pre-packed incorporation, but it will invariably come back to haunt you. Both an attorney and an accountant should help at this critical stage to ensure your business is structured properly. It will cost more at the outset but is the economical choice in the long-term.

Raising capital - both federal securities law and...banking law make raising money a task business should never enter without consulting an attorney skilled in securities law. The pitfalls are deep and expensive.

Intellectual property - Your competitive advantage is critical to your success and if that advantage is not properly protected your competition can walk away with your ideas. Many business owners are unfamiliar with what can and cannot be protected in their business yet need to understand the scope, value, and defensibility of their intellectual property. This property is more than just patents. It includes trademarks, trade secrets, and copyrights.

Employment law - Many growing businesses cut corners in the human human resources department and often only worry about this area of the business or contact an attorney when suddenly facing a lawsuit from a disgruntled ex-employee. It is important to understand your obligations as an employer and discuss these with an attorney prior to adding to your staff. It is absolutely essential to engage an attorney prior to firing an employee.
There are of course many other areas where an attorney may become necessary ranging from contracts with suppliers or alliance partners to negotiating lease or buy agreements for your new office. Attorneys should be involved in any business ownership issues, sales tax issues, and should help address any interface your business has with privacy laws."

Read more in this Invest Nebraska article.

Seven Habits for Business Success

"Plan Thoroughly...

To plan better, develop the habit of asking and answering the following questions:

What exactly is my product or service?
Who exactly is my customer?
Why does my customer buy?
What does my customer consider value?
What is it that makes my product or service superior to that of my competitors?
Why is it that my prospective customer does not buy?
Why does my prospective customer buy from my competitor?
What value does he/she perceive in buying from my competitor?
How can I offset that perception and get my competitor's customers to buy from me?
What one thing must my customer be convinced of to buy from me, rather than from someone else?...
Get Organized Before You Get Started...
Find the Right People...
Delegate Wisely...
Inspect What You Expect...
Measure What Gets Done...
Keep People Informed..."

Read more in this entrepreneur.com article.

IRS Targets Small Businesses on Self-Employment Tax

"The Internal Revenue Service is targeting small businesses. Concerned about widespread noncompliance with employment tax rules, the IRS in February unveiled a new form for filing employment taxes, it hopes will simplify payroll tax reporting and reduce errors.

The IRS also hopes the new form will make it easier for auditors to spot inappropriate transactions and questionable reporting as they step up their auditing efforts of small businesses. According to Financial-Planning.com, among the specific targets on the audit list are:

S Corporations. Some taxpayers appear to be structuring businesses as S corporations so they can pay themselves low salaries, which are subject to payroll taxes, and pay out the company's remaining profits as corporate dividends, which are not subject to payroll taxes. According to the IRS this is inappropriate tax avoidance because the low salary does not reflect the economic reality of the worker's contribution to the business. Under the tax code, the IRS has the power to re-allocate income to better reflect the economic reality and to collect related payroll taxes, penalties and interest."
Read more in this accountingweb.com post found via this ESD post.


How Limited Liability Companies (LLCs) are Taxed

"An LLC is not a separate tax entity like a corporation; instead, it is what the IRS calls a 'pass-through entity,' like a partnership or sole proprietorship. All of the profits and losses of the LLC 'pass through' the business to the LLC owners (called members), who report this information on their personal tax returns. The LLC itself does not pay federal income taxes, but some states do charge the LLC itself an annual state tax."

From more details, see this summary from nolo.com.


Adam's Advice for High Tech Startup Entrepeneurs

"1. Before getting too excited about your latest idea, ask yourself if it's a project, a product or a company…

2. Outsource HR. HR scales up but does not "scale down," and therefore it's a great candidate for outsourcing...

3. Recruit for skills, not titles. For the first couple of years…you want to recruit people with many skills and who are comfortable wearing many hats…A tech person who can only "do software" is a classic disaster-- she also needs to know how to raise money…Power politics is destructive…you want to be careful not to "hire your friends"...

4. When you first get going, the order in which you hire people is a critical success factor…my preferred order of hiring is:

1) prototype product engineer. You need someone who can bang out a prototype, suitable for raising money…

2) early stage product manager. Next, you need someone (or a team) who knows how to design a prototype. Almost invariably, this is one of the founders.

3) general business manager with startup experience....

4) legal. You need this early on, and it should be outsourced. If you have a good idea, there are terrific lawyers...who specialize in representing startups…

5) business development. As soon as the prototype is fleshed-out enough to sell, you need a busdev person to get some customers, if only to get feedback about the product. Revenue also helps to close financing…

5... Turnover should be absolutely minimized. First, it makes for a crappy culture-- a revolving door reminds people of the impermanence of a startup and it makes people feel personally at risk. Second, recruiting takes a lot of time; turnover doubles that. Third, it means that your intellectual property and/or business ideas/lessons are walking out the door, possibly to competitors.
That said, the turnover paradox is that double-digit percent turnover (per year) is healthy... turnover is critical for attracting, retaining and motivating top talent and reducing politics. When underperformers are coddled, the overachievers start whispering in the halls and whining in private. This is no fun for anyone...

6. early VC fundraising. Fundraising is a form of sales...It pays to learn the dynamics inside VC firms. For example, VC firms typically require two senior partners to drive a deal through. Junior partners don't count, for example. Thus, once you woo a senior partner, expect to have to get a second one excited before the partner meeting.

7. angel fundraising…Avoid putting in your own money. A certain amount is healthy, but...you want as many people rooting for your success as possible. Outside investors also provide a more objective view on your company, and act as a measure of success. Having many "smart money" outside investors looks great; having a CEO self-fund the company buys you nothing. Finally, outside investors help with leads-- sales, fundraising and recruiting.

8...Recruiting is the single biggest determinant for success, with the people you hire literally being the DNA of the company... Here's some basic tips: (1) strategize: list reasons why people would join your venture instead of others, including reasons they wouldn't. Then, use this to source candidates…(2) treat hiring like a project, including realistic schedules, budgets, risk analysis, contingency plans, etc…(3) use pipeline management-- an ordered set of steps, with tracking of how candidates are getting through the process… (4) respect legal and ethical guidelines…The world is a small place, so be careful of your reputation in the hiring process…

9. corporate structure and cap table…Beyond under-capitalization, you have to keep a clean cap table-- you can't issue tons of shares to everybody. More subtly, preferred shares have to have reasonable preferences-- anti-dilution clauses, participation rights, etc. all need to be managed carefully. If you expect to raise money at ever-increasing valuations, don't expect the preferences to get gentler with later rounds of financing. Down-rounds and dilutive stock splits are morale-killers, if only because employees never have as large a stake as they want ("deserve").

10. It's true that lots of other things can be fixed-- so my last piece of advice is to get good corporate attorneys. One veteran's advice: your lead attorney should be at least 40 years old, because it's mathematically impossible to have enough experience otherwise. You also want attorneys who believe in you and your business, and will give you attention and priority. Treat your attorneys like board members, making sure to reinforce the future potential of the business-- but also take steps to make them look good (to friends, colleagues and family members) for representing you…Don't be afraid to ask questions, and check the answers with information on the internet."

For more great advice for technology startups, see this post by Adam Sah from which the foregoing was taken.


Ten Franchise Purchase Red Flags

"Thinking about buying a franchise? Nolo has ten franchise red flags that should cause you to potentially consider investing your time and money elsewhere:

1. Questionable profitability.
2. High start-up costs.
3. Encroachment.
4. Lack of legal recourse.
5. Limited independence.
6. Royalty payments.
7. Inflated pricing on supplies.
8. Restrictions on post-term competition.
9. Advertising fees.
10. Unfair termination."

See this Business Opportunities Weblog post for the link to the Nolo article.

GEP Assists US Entrepreneurs to Set Up in the UK

The Global Entrepreneurs Programme (GEP) has appointed Toby Wilson Waterworth as a Dealmaker to provide guidance to U.S. entrepreneurs in setting up early stage companies in the United Kingdom. Wilson Waterworth is the fourth Dealmaker appointed by the GEP and the first with entrepreneurial expertise in the life sciences.

The GEP, a division of the U.K. Trade & Investment office, champions new business ideas by bringing together entrepreneurs and those who can best guide them towards success in the U.K. A unique and valuable aspect of the program is the "Dealmaker" model for mentoring life science- and technology-oriented start-ups. The Dealmakers are experienced, serial entrepreneurs who assist U.S. entrepreneurs by connecting them to a range of resources in the U.K. - notably, introductions to business, technology and financial networks. Often, the Dealmakers find entrepreneurs that are underserved by the U.S. venture capital market - and in so doing fill an important niche in the market.

The Dealmakers are the "bridge" between the government and entrepreneurs. For more information, please visit the Global Entrepreneurs Programme website.


Stock Options for Board Members

"Several people have recently asked me variants on the question 'How should I compensate a board member in my young private company?'...

In general, I have a set of simple rules for board member compensation:

-0.25% to 1.00% vesting annually over four years
-Single trigger acceleration on change of control
-Clear understanding as to how the vesting will work if the board member leaves the board
-No direct cash compensation
-Reimbursements for reasonable expenses
-Opportunity to invest in the most recent financing"

See this post from Brad Feld for a detailed explanation of each item.

How an Investor Views a Patent

"When in investor considers a patent, he sees it as a venture filled with uncertainties. The uncertainties include: Is the patent valid? Can it be proven invalid? Can it be designed around? Will the device sell? What will it cost to make the device? What will people pay for the device? What is the best way to make the device? What sources are the best for parts and materials for the device? What kind of people will buy the device? How many people will buy the device? The more uncertainties there are, the more risk there is for an investor, and the less they are likely to pay for an invention, or to license the patent."

From this Patent Pending post.

Entrepreneur: Know Thyself

"To want, to desire to be an entrepreneur is like a thirst you can’t quench, a fire in your belly you need to tap into…you need to have your eyes wide open for the entrepreneurial path, a path of courage, a path of seeing what you’re made of, seeing what you can do."

--- Kaleil Isaza Tuzman, lead figure in the widely acclaimed documentary, Startup.com

Quoted in this Odyssey of the Mind post.


Sub-S vs LLC: Self-Employment Tax Issues

This post from About.com addresses one of many issues involved in deciding between an S-Corp and an LLC as an organizational structure for an owner-operated small business:

"With an S-corp, you have to pay people - at least on paper - a fair market salary for the job they're doing. If the money's not there, you generally defer the salary. With an LLC, though, the owners are essentially self-employed.

So, if you make more money than fair market salary, in an LLC, you'll be paying extra employment taxes, because all of your income will come as "self-employment" income, whereas in the S-corp, anything over fair market salary is a profit distribution, not "wages", and only subject to your normal income tax, not employment taxes.

But paying more in employment taxes isn't necessarily a bad thing. Tracking and filing quarterly payroll taxes is a lot of recordkeeping, and it costs you time, and perhaps money, to do. On the other hand, with an LLC, you'll have to make your personal quarterly estimates, but you only have to actually calculate and file your self-employment tax with your personal tax return.

So purely based on taxation considerations, if you're expecting to make about fair market salary or less, you're probably better off with the LLC. If you expect profits to be enough higher than fair market salary to justify the additional payroll record-keeping costs, then S-corp makes more sense."

I was in prison and you visited me

Originally uploaded by TigerTigerTiger.

"One of Jesus' most essential teachings is that of forgiving "seventy times seven," and the Pope preached this message tirelessly. He also practiced it, and taught millions by his example.

On May 13, 1981, he was surprised by a gunman in St. Peter's Square and shot twice at near point-blank range. Narrowly surviving, he later visited his would-be assassin, Mehmet Ali Agca, in prison and personally assured him that he had forgiven him."

From this tribute -- Remembering Pope John Paul II -- from the Bruderhoff Community.

Myths About Doing Business

"There are a lot of misconceptions, myths, bad advice and outright lies about what it takes to be successful in business. And most of those are continually spread by people who have never gone into business for themselves. Unfortunately, some of them are spread by people who went into business, failed at their business, and then were looking for an excuse to shift the blame away from themselves. Regardless of where you heard them, you will no doubt be familiar with some of the following myths. You may even have been guilty of passing them along to someone else with the best of intentions. I used to believe several of these myself, but my own experience, and better yet, learning from others' experiences, I found that they were false. Let me share with you 15 of the most common myths about doing business.

In no particular order, they are:

1. To be successful you have to be first...
2. To be successful, you have to be cheaper...
3. I'm a good cook so I should start a restaurant...
4. The customer is always right...
5. If you build it, they will come...
6. It's a cool idea. Everyone will love this. That may be true, but will they be willing to spend any money on it?...
7. Ours is better so we'll be successful...
8. Adding more people to the project will make it go faster...
9. We're good friends. We will work well together / We should form a partnership...
10. Failure is bad. / Failure is the opposite of success...
11. Knowledge is Power...
12. Every customer is equally valuable...
13. Profit is all that matters in business...
14. Having more customers is better than having fewer customers...
15. Venture Capital and IPOs are good..."

Read more in this post from Ajarn's SQL Corner.

Patent Application Monitoring Service

According to the site, the US Patent and Trademark Office can take many months or years to act on an application. Rather than wait for the decision, you can subscribe for free to rss feeds at Freshpatents.com that feature the latest published US patent applications each week before the USPTO decision to grant/deny the application. You can then use this information for your business and technology intelligence needs.


VCs are from No; Entrepreneurs are from Yes

"Bill Burnham has a great series (1, 2 & 3) on the Art of the VC No. Saying No is their business (from thousands of business plans to a handful of investments), and Bill explains how it's hard to say No, common ways of doing it and his reasonable approach. As an entrepreneur who has heard the word as much as anyone over the years, I thought I would chime in from the other side of the table....

Entrepreneurs are in the Yes business. The more you hear that word while cultivating relationships, the greater the valuation of your company. Same thing holds for hiring and selling your product. More critically, the enemy of the entrepreneur is time; and an increase in your Yes volume, provided you can make efficient decisions, the more time saved.

When you first start your business, all you hear is No. Accordingly you become conditioned to never accept it as an answer. As your business grows, Yes volume increases and eventually you start dealing with the sell-side in a delightful turn of the table...

So generally, how do I want people to say No to me?

Before you take the meeting -- for competitive, portfolio, structural, thesis, geography and other good reasons let's save each other time. Don't bring me in to educate you.

The "It's Not Me" No -- communicate if there is a barrier. VCs work in partnerships, and it's reasonable for a VC to say that he wants to do the deal (even when he is not entirely convinced), but needs to persuade his partnership -- when the VC works with you to do it...

The Constructive No -- I appreciate when VCs believe it is worth their time to learn what they don't know while making me a better entrepreneur... VCs have a keen eye for risk factors and can help you refine your pitch. To work through risk factors, the best VCs will introduce you to potential customers and partners. Not only can this help your business, but you get an understanding of what it is like to work with the VC."

From this Ross Mayfield's Weblog post.

Entrepreneurial Mistakes and How to Avoid Them

"John Osher has developed hundreds of consumer products...and came up with an informal list of "16 Mistakes Start-Ups Make"—since expanded to 17—that has been used in a Harvard Business School case study, has been cited in many publications, and has become a part of what he teaches budding entrepreneurs in his frequent university lectures..."

To home in on what lies behind the 17 mistakes, Osher explained in this Entrepreneur.com article what they are and how you can learn from them to achieve your own level of perfection.

Mistake 1: Failing to spend enough time researching the business idea to see if it's viable.
Mistake 2: Miscalculating market size, timing, ease of entry and potential market share.
Mistake 3: Underestimating financial requirements and timing Mistake 4: Overprojecting sales volume and timing.
Mistake 5: Making cost projections that are too low.
Mistake 6: Hiring too many people and spending too much on offices and facilities.
Mistake 7: Lacking a contingency plan for a shortfall in expectations.
Mistake 8: Bringing in unnecessary partners.
Mistake 9: Hiring for convenience rather than skill requirements.
Mistake 10: Neglecting to manage the entire company as a whole.
Mistake 11: Accepting that it's "not possible" too easily rather than finding a way.
Mistake 12: Focusing too much on sales volume and company size rather than profit.
Mistake 13: Seeking confirmation of your actions rather than seeking the truth
Mistake 14: Lacking simplicity in your vision
Mistake 15: Lacking clarity of your long-term aim and business purpose.
Mistake 16: Lacking focus and identity.
Mistake 17: Lacking an exit strategy.

5 Tips to Get You on the Right Track
Here are Russo's five things start-ups should do:

1. Know your goals for the venture.
2. Recruit and hire the best people.
3. Develop a forgiving strategy.
4. Be honest with yourself
5. Commit to the business.


Negotiating a Franchise Agreement

"When it comes to making changes to their franchise agreement certain franchisors will negotiate terms of their franchise agreement while others will not...

Franchisors are not able to simply change provisions in a franchise agreement but rather are guided by franchise regulations, state statutes and sound business practice. However, certain provisions can be negotiated and changed...

Before you even arrive at the point of actually negotiating your franchise agreement there is a process that you’ll need to follow.

1. Engage An Experienced Franchise Attorney To Review The Agreement...

2. Confirm That The Franchisor Will Negotiate Terms Of The Agreement...

3. Recognize That Certain Terms Are Non-Negotiable
Items such as royalty fees, territory size, termination provisions, length of the agreement, non-competes and legal venue are examples of what are considered the “untouchable” provisions...

4. Focus On The Important Points In The Agreement...

Examples of these provisions include:

A. Restrictions on products and services that you wish to sell.
B. Marketing or selling in “open” territories.
C. Indemnification Provisions.
D. Advertising.
E. The Transfer and Assignment Section.

From this franchisetrade.com article.