Thursday, May 28, 2009

Be a Job Creator

Another great quote from Yunus in speaking to children of mothers who received microloans from the Grameen Bank and educations because of that:

"And your pledge is: I shall never seek a job from anybody. I'll create jobs. This is my mission. So you are not job seekers. You are job givers. Think in those terms because your mother -- you're the first generation child -- your mother owns a bank. Not many children have that fortune. You have that fortune. Your mother's bank has an enormous amount of money. Money is not your problem. Your problem is what to do with your money."

What Are Microcredit and the Grameen Bank?

Muhammad Yunus, winner of the Nobel Peace Prize, gave the commencement address at Wharton this year. And Knowledge@Wharton interviewed him. Everyone interested in improving the state of the world or in microfinance should read this interview. It squashes a lot of misconceptions and explains how microcredit works with the Grameen Bank, which has nearly eight million borrowers.

Here is an excerpt from the interview:
"Another aspect that I want to draw attention to -- there are many microcredit programs going around advertising themselves saying, "Oh, this is a great opportunity to make money." And they encourage people who want to make money to join in and do that. Again, we say, "Look, our purpose is not to excite people about making money. Our purpose is to help people get out of poverty. The focus is not on profit making. The focus is on helping people to get out of poverty. Those who are seeing this as an opportunity to make money have to raise their interest rate to the extent that they make a lot of money. The interest rate issue becomes a sensitive one. We are saying interest rates should be kept as low as possible, preferably to cover costs. If you want to make a little profit on top of it, it should be a very modest profit, so that it doesn't look like this was your intention. Those who are doing that -- using microcredit, microfinance, to make a lot of money -- we keep saying that this is not microcredit in the sense that we do it. We came here to fight the loan sharks, not become loan sharks ourselves. This is their moving into the direction of loan sharks. We want to disassociate ourselves from them."

Please read the whole interview.

Learn about VC Funding Now

The Connecticut Venture Group is holding a luncheon for entrepreneurs about finding funding in the current market.

Entrepreneurs Association Workshop: Success Stories: Companies Are Being Funded
When: Thursday, June 4, 2009
Time: Noon - 2:00 pm
Where: Multipurpose Room
UConn Campus
Stamford, CT
Charge: For Entrepreneurs Only
Lunch Cost: $20.
Registration: Click here to Register

Saturday, May 23, 2009

Tip of the Week - Keep Taxes in Mind

It's really easy to forget or to be unaware of all the tax laws affecting your business. When one of my friends started his own business, he did not know that his bookkeeper had failed to pay the payroll taxes on time. He owed a penalty. Slip-ups like these are easy to make. When you have employees, you need to withhold payroll taxes and pay them to the IRS on a regular basis. You can't just trust your accountant or your bookkeeper to do it. You need to check up on what's going on. Be aware of the laws and their consequences. It's your business and your responsibility.

You need to have a Tax I.D. You need to pay quarterly estimated taxes on your income. It doesn't matter if you're a sole proprietor, LLC, C- or S-Corporation or partnership.

All this may seem like a pain in the neck, but it's part of being a responsible business owner. So go to, to and to your state's revenue services pages and find out what you need to do. Then, have a talk with your finance folks, your accountant and/or your bookkeeper.

And if you do it all yourself, keep good books with Excel or QuickBooks. And use Turbo Tax. Turbo Tax is terrific.

One final word. Stay honest, but make sure you don't pay more taxes than you need to. Learn the rules and play by them.

Friday, May 22, 2009

Homeland Security and the Squid

Yesterday's Wall Street Journal had a wonderful article on how Homeland Security is using inventions from their more creative staffers and is paying grants to entrepreneurs to commercialize inventions that protect us. The story highlighted an invention called the Squid. It can reach out tentacles to trap a fleeing car at the border. The idea came from a Spiderman fan.

I think it's great that there is government grant money going to inventors and entrepreneurs. It's American inventiveness that keeps us going. But will the bureaucrats drag us down and make it too hard to commercialize and use the inventions?

To read the entire article, go to:

In the Spirit of Spider-Man, the Border Patrol Casts Its Web - Science News | Science

In the Spirit of Spider-Man, the Border Patrol Casts Its Web - Science News | Science & Technology | Technology News -

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Wednesday, May 20, 2009

Great Sauce

We were just in Los Angeles, where we ate in Chinatown for two nights - once in a Chinese place and the other time in a Vietnamese restaurant. (We had Pho in the Vietnamese restaurant - terrific!) Both places had a hot sauce on the table. It was delicious, and we wondered about it. It seemed to be an all-purpose Asian hot sauce.

The day after we got back from L.A., we picked up the New York Times food section and saw an article about the sauce -- sriracha sauce, also known as "rooster sauce." See synopsis and link below.

This is a story of true entrepreneurship. A family makes hot sauce in Vietnam, comes to the U.S. and finds that there is a need for such a sauce in the Asian communities here. They start making it here, and the family hot sauce becomes an amazing success. It's stories like this that show how creativity and hard work can really be rewarded in our country, where free enterprise is prized. Read the article.

A Chili Sauce to Crow About
Published: May 20, 2009
Some American consumers believe sriracha to be a Thai sauce. Others think it is Vietnamese. The truth is that sriracha may be best understood as an American sauce, a polyglot purée.

Tuesday, May 12, 2009

KFC - How Not to Run a Promotion

Everybody wants to be on Oprah. The problem is when you plan a promotion using Oprah as your promotional spokesperson and then cannot or will not deliver on what Oprah promises. Read all about KFC's promotional fiasco at Ad Age. This is a really important article to read because it's a case study in what not to do.

Monday, May 11, 2009

Recessions and Invention

Great article on invention and recessions....

Deb Riechmann
Associated Press

WASHINGTON – Got a bright business idea? Take a number.

Americans haven't stopped dreaming up newfangled gizmos or sketching engineering marvels on the back of cocktail napkins. But tight credit and business cutbacks have slowed the pace of getting the latest U.S. innovations to market.

Venture capital investments have plummeted. Lenders aren't lining up to fund business startups. New patent applications are down at the U.S. Patent and Trademark Office, creating a budget crisis at the agency, which depends on money from fees to keep operating.

If patent fee revenue continues at its current rate, the office will end the budget year collecting roughly $100 million below projections.

That puts the patent office in a catch-22. After several years of hiring more than 1,200 patent examiners a year, the office has suspended hiring, trimmed overtime and made other cutbacks. This comes as the office and its 6,000 examiners are struggling to whittle down a backlog of 770,000 new, unexamined applications.

"Innovation is the way America generally gets out of downturns," said Robert Budens, president of the Patent Office Professional Association. The group represents 4,000 examiners and other patent professionals, many of whom worry the recession will mean layoffs before the end of the year.

"At the Patent Office, we're one of the key drivers of stimulating innovation and for us to get to the point where we might have to furlough or have a reduction in force would just be horrible," he said.

So far, companies that spend the most on innovation have resisted the temptation to raid their research and development budgets. They're opting to ride out the recession with an eye to future sales, according to Booz & Co., which surveys the world's 1,000 largest publicly traded, corporate research and development spenders.

Although those budgets often are set months in advance, recent data that Booz collected on about 400 of the companies shows that research spending rose 2 percent from the first quarter of 2008 to the fourth quarter.

"The recession has caused us to be very conservative in a lot of areas, but research and development is not one of them," said James Norrod, president and chief executive officer of Segway Inc., the Bedford, N.H.-based maker of two-wheeled, stand-up vehicles. "We think that R&D is really the life blood of the company. We haven't cut back. We have actually added people in that area."

Matthew Sampson, an intellectual property lawyer at McDonnell Boehnen Hulbert & Berghoff in Chicago, says business hasn't slowed yet, but that patent work usually lags during economic downturns.

"I'm actually a little bit nervous about next year," Sampson said.

Businesses, however, have begun cherry-picking the ideas they want to shepherd through the expensive patent process. Seed money to nurture innovation also is drying up.

Venture capitalists invested just $3 billion in the first quarter of the year – down 47 percent from the fourth quarter of 2008 and the lowest level since 1997, according to the National Venture Capital Association. Bank loans and "angel capital" – money that friends and families and wealthy individuals cough up to support innovation they personally believe in – also are contracting.

"If banks stop lending in general, lending for small, innovative technologies dries up completely," said Jere Glover, a Washington business attorney who directs the National Small Business Association'

s technology council. "Banks are more likely to make loans to a company that has bricks and mortar, land and property."

Basement inventors are really feeling the pinch.

"A lot of independent inventors get their start by floating their expenses on charge cards, and of course charge card credit lines have been greatly restricted," said Ronald Riley, the man behind numerous patents including those related to the automated industrial monorail and the treadmill.

"For independent inventors, at least until they achieve some commercial success, the money for patenting comes out of discretionary income. It doesn't mean they're not inventing, it just means they're just not going to file until things improves," said Riley, founder of the Professional Inventors Alliance.

It costs roughly $10,000 to obtain and hold a patent, although fees vary depending on the type of application.

A $1,090 fee is paid when an application is filed and $1,510 more is due when a patent is granted. Maintenance fees of $980, $2,480 and $4,110, which maintain a patent holder's legal protection for the life ½ ½ years and 11 ½ years, 7 of a patent, are due at 3 years, respectively.

Some penny-pinching patent holders have stopped paying their maintenance fees, choosing to let their rights to a patent expire early on innovations not critical to profits down the road. In addition, fewer patent seekers are paying fees to obtain more extra time to respond to questions from the patent office.

Some companies are in such dire straits that innovation is just not an option for them, but more and more companies are recognizing how critical innovation is, said Scott Anthony, president of Innosight, a management and innovation consulting company in Watertown, Mass., and author of several books on the subject.

"Some people say `I cannot afford to innovate.' What they are really doing is sowing the seeds of their own destruction," he said.

Anthony notes that many innovative companies were started during economic downturns.

Hewlett-Packard formed in a California garage at the end of the Great Depression. Digital Equipment was born during a recession in the 1950s. During an economic downturn in the 1970s, 23-year-old Carol Wior started a garment business with $77 and three sewing machines in her parents' garage.

Thirty-seven years later, the maker of the patented "Slimsuit" and her company's 200 employees in Bell Gardens, Calif., are working through the recession on a new undergarment and swimsuit concept. "I think you'd be a fool if you didn't tighten up a little bit," Wior said. "We're being more careful, but I'm not tightening up when it really comes to marketing and product development."


Inventors Thomas Edison, left, and Charles Steinmetz work in Steinmetz's laboratory during the Great Depression. "Innovation is the way America generally gets out of downturns," says Robert Budens, president of the Patent Office Professional Association.
(Full-size photo)

(All photos)

Patent costs
It costs roughly $10,000 to obtain and hold a patent, although fees vary depending on the type of application and are adjusted downward for individual inventors, small business and nonprofits.


Friday, May 8, 2009

Tip of the Week: Align Business and Personal Goals

What happens when your business fails? Your personal life? A few years ago, I heard a highly successful entrepreneur speak about the ups and downs of owning a business and how he got a second chance.

This man had so much success that he thought he was invincible. So he took all his profits and bought another company. He paid himself royally -- several houses, a yacht.... But he never saw his kids or his wife. He was too busy making money. I know this sounds like a trite story, but while the entrepreneur told it, it did not sound trite. Well, soon he was over-extended financially and emotionally, and when the last recession turned against him, he lost everything, including his family.

Somehow, he managed to start another business and remarry. But this time, he said that he first sat down and figured out what he wanted out of his life and what the business could do to help him realize his personal goals. He realized that he did want two houses, but he also wanted to go to his kids' soccer and Little League games. He wanted to have his wife involved in his business. He also wanted to be a good employer that would help his employees to lead good, productive, full lives, too.

The business, by-the-way, is a simple one -- securely storing paper files for other businesses. There is a huge demand for this, and this saw the need and met it.

He told the audience that it's really important for you to run your business to support your life goals, not let the business run your life. He is very happy now that he had a second chance to get things right.

If you own a business or want to start one, first make sure you've aligned your personal and your business goals.

Tuesday, May 5, 2009

Family-Owned Business Offers Best Service

Saturday, my husband and I had the chance to compare the service of a big box store and a family-owned business. I've been wanting to switch to an energy- and water-saving washer and dryer for a couple of years. I read Consumer Reports, shopped around, perused ads and finally decided to take the plunge. (Hey, I could help the economy at the same time.)

We went to Best Buy and had to wait for a sales person to be free. To complete the sale, we had to hear the pitch for the extra warranty. But the trouble started as soon as we said we needed to vent the dryer on the side -- not the back. Our sales person had no idea how to put that request into the system. She had to call the head of the department. He had to call Samsung (the manufacturer). They had to sell us a special part, and we would have pay extra for it to be installed by the person would would install the dryer at our house. (They had to go hunt for the part.) But they still weren't sure exactly how all this was going to happen or if this was the right course of action. They called in former sales people who had been promoted to flat-screen TVs. They did Google searches on the computer while we stood there. Soon, four sales people were standing around discussing what they should do.

My husband and I just looked at each other and said, "Forget it." We walked out of the store empty-handed. After a bit of calming down and going shoe shopping, we decided to go to a local family-owned store where we had purchased appliances in the past. It's called Aitoro. I hadn't gone there for because their Web site isn't very useful or informative, and they had remodeled the store during the boom to look very upscale. The formerly modest store now featured very fancy new kitchens designed to cater to the hedge-fund employees who live in our area. I was scared that Aitoro was now just catering to the wealthy extreme.

We walked in five minutes before closing. The saleswoman who greeted us as we entered helped us immediately. She saw I had Consumer Reports and encouraged me to look up the ratings as she showed us the various models they had. She questioned us on our needs.

Then she showed us a G.E. washer and dryer at a sale price plus rebates. The washer was Consumer Reports' top pick. Side venting of the dryer? NO PROBLEM! They service the machines themselves and had someone on-site who would install the needed part and get the dryer ready to go within the week. "We'll take the pair," we said.

By now, it was well after closing time. But our saleswoman didn't rush us. "We close when we stop making sales," said one of the other sales people, who was selling a new kitchen to another person.

As we walked out of the store, I realized what a key component superior customer service is to the sales process. Personal attention, care, knowledge all go into closing a sale. Family-owned businesses can just do this better, in my opinion.

What are your thoughts?

Friday, May 1, 2009

Tip of the Week - Take a Look at Your Finances

I once had a client who had no idea what his bank balance was. He had an approximate idea what the company was spending or taking in each month, but no detailed knowledge. He was too busy selling. And he was a great salesman. Driving everywhere, never tiring, always looking for opportunities. But how can you run a business without understanding your numbers?

Recently, I've been hearing people say that they don't even want to look at their investment reports or their bank statements. With the recession hurting everyone, that's an understandable reaction. It can just seem easier to hide or to ignore the bad news.

But a business owner cannot afford to do this. If you're a start-up or a going concern, it's time to look at your books. This is a time when you should really ask yourself how you can save money and send more to the bottom line. If you're starting out, can you bootstrap and grow organically? Do you really need a loan or even an angel investor? You can only know this by looking at your finances.

The simplest action you can take is to get our your checkbook -- or go online and look at your bank statements -- and see how much you are spending and taking in each month. Then, create a spreadsheet on your computer with Excel, using those numbers. Put your expenses into the usual financial reporting categories - sales, cost of good sold, overhead, interest, operating profit, net income, etc. If you have an accountant or bookkeeper, get them to show you the books and explain things to you.

A lot of entrepreneurs are not that great with numbers or even using Excel or QuickBooks. But Excel provides a great way to keep track of your finances. Once you've put in the formulas, and copied numbers out of your checkbook, you can see where you've been and forecast the future. You can see how changes in your assumptions about the future will affect the bottom line. You can see how much cash you'll have to cover your operations and how much you might need to borrow. Understand your cash flow. Look at the timing of the revenues and expenses. How can you handle the gaps?

If your credit card companies are killing you with higher interest rates, you can see the effect and maybe try to talk them out of it or switch to another company that will give you better terms. If your bank is cutting your line of credit or raising your interest rates, you'd better be able to understand the impact. But look at the effect on your spreadsheets first. Knowledge is power. And your numbers tell your business's story.

If you don't want to use Excel, for Pete's sake, just sit down and do some figuring with pencil and paper. Think about holidays, seasonality and other things than can affect your revenue and your costs. If you need help, "Excel for Dummies" is a good book for explaining what to do. The SBA's Web site also has a lot of great information on how to do financial forecasting. It can help you understand the difference between an income statement and a balance sheet.

I can offer help, too. One hour of consulting for less than a lawyer or accountant would charge. Contact me at or at Twitter: