Estate Planning in Family Businesses

USAToday offers an interesting case study of the challenges family businesses face in estate planning.
“The Mauns face a challenge shared by many owners of family businesses: how to manage their estate. They want to leave the gas stations to the son who manages them, and divide the remaining assets among their seven surviving children and the daughter of their oldest son, who is deceased.”
A separate article offers some creative advice for this family from an expert estate planner.
(Thanks to Law & Entrepreneurship for their link to this story.)

More Evidence that Web-based Sales Helping Smaller Businesses

I wrote about the strong web-based sales reported for the opening of this year’s Holiday shopping season in a recent post. Inc.com cites a new study of small businesses that found that four of five small businesses report web-based sales are now an important source of sales.
“Of small business owners who said they have a business website, 77% claimed their business is healthier–defined as having a better competitive advantage or stronger economic footing–as the result of the website, while 81% reported that their websites generate business leads.
The Holiday season is becoming particularly important for these trends.
“Forty-five percent of respondents said that they anticipated online holiday sales to improve this year, while 42% said they expected similar sales to last year. When asked how they planned to prepare for the holiday shopping season, 58% said that they would update their website, while about a third said they would offer special promotions, engage in direct-marketing efforts or increase the number of items or services they sell.”
The long awaited emergence of on-line channels of distribution is finally occurring for small businesses.

Corporate Identity Theft

The international marketplace has a new danger for small businesses to be aware of as reported in this story about AbroIndustries (a small seller of glues, tapes and epoxies that employs 24) in StartupJournal.
“Abro’s two-year fight with Hunan Magic Power Industrial Co. (a Chinese Company) marks a new twist in the annals of international trademark piracy. Hunan Magic isn’t just knocking off a few of Abro’s products. It’s acting as though it is AbroIndustries. ‘This is attempted identity theft at a corporate level.'”
Fighting the bad guys in this case does not come easy–or cheap.
“AbroIndustries…has hired dozens of lawyers and investigators, sued Hunan Magic, and gotten raids conducted in the United Arab Emirates and other countries, at a cost to Abro so far this year of more than $600,000….”
And the battle will not end if they prevail against Hunan Magic. There is now a South American company gearing up operations to produce and market fake Abro products.

A Perilous Journey

Opportunities seem everywhere when looking at global markets. Technologies, products and services can be introduced into markets that are hungry for such offerings. However, Harvard Business School’s Working Knowledge offers a story that highlights the risks of business formation in developing countries.
“When Liberia-born Monique Maddy (HBS MBA ’93) started Adesemi to offer users throughout Africa a wireless system of pagers and public pay phones, she believed that tremendous pent-up demand would launch her company to success. But in fact, the company eventually had to be liquidated, a casualty not only of internal miscalculations but also of the bureaucracy, corruption, and environmental factors faced by start-ups in Africa and other developing countries.”
This article offers a candid Q&A about this would-be global entrepreneur’s perilous journey.
Thanks to my colleague Howard Cochran for passing this story along.

Christmas Reading List

The National Dialogue on Entrepreneurship offers its annual Holiday Book List for those whose passion is entrepreneurship and free enterprise.
Here are three from their list that I’ve added to my list to Santa:
Harold Evans, They Made America: Two Centuries of Innovators from the Steam Engine to the Search Engine (Little Brown, 2004).
“Historians are beginning to understand the central role that entrepreneurs have played in building the US and affecting its economic, political, and cultural outlook. Two new histories will help bring this message to a popular audience. Harold Evans’ They Made America has received a great deal of publicity, and has even spawned an accompanying television series on PBS. This work is something of a coffee table book about entrepreneurship, chock full of interesting illustrated portraits of fascinating entrepreneurs and innovators like Thomas Edison, George Doriot (a venture capital pioneer), and Ida Rosenthal (inventor of the Maidenform bra).”
John Steele Gordon, Empire of Wealth: The Epic History of American Economic Power (HarperCollins, 2004).
“John Steele Gordon is well known for his regular columns in American Heritage and other journals. An Empire of Wealth offers a popular and easy-to-read history of America’s economic growth. Like Evans, Gordon opts to tell this history via interesting biographies and stories. You’ll get the expected portraits of Gates, Carnegie, Rockefeller, and other entrepreneurs, but you’ll also learn about the origins of the Great Depression, the early 19th century debates over a national banking system, and the development of innovative technologies like the computer and electricity.”
Douglas Holtz-Eakin and Harvey Rosen (eds.), Public Policy and Economics of Entrepreneurship (MIT Press, 2004).
“This edited volume collects papers from a distinguished group of economists who participated in a 2001 conference sponsored by Syracuse University. Contributors tackle a host of issues, including how public policy can stimulate entrepreneurship, the role of entrepreneurship in promoting upward mobility, and what Holtz-Eakin calls ‘entrepreneurship in unexpected places’ (i.e. large corporations and non-profit organizations). The wide range of contributions means that the volume has no one single theme, but it does offer some of the latest academic thinking on the links between public policy and entrepreneurship.”

A Blizzard of IPOs as Winter Approaches

Red Herring reports that there is an unusual flurry of IPO activity late in 2004.
“Almost 30 IPOs are on December’s new-issues calendar. That’s right – 30 deals. Bankers hope to raise about $4.2 billion. This projected volume is even more significant when placed against the seasonal backdrop. The December IPO production line traditionally closes down by mid-month.”
And how has this year’s class of IPOs been doing so far? Quite well, according to Wall Street.
“…80 percent of 2004’s IPOs were selling above their initial offering prices.”
This is and indicator of continued good news for the economy for the next year.

Employment Up Again

job growth through 11-04.gif
From the Congressional Joint Economic Committee:
The Bureau of Labor Statistics (BLS) reported today that 112,000 new payroll jobs were created in November, while the unemployment rate fell to 5.4 percent. November’s payroll jobs gains followed gains of 303,000 in October and 119,000 in September. Including the benchmark revision of the payroll survey that was released in October, 2.4 million new payroll jobs have been created since August 2003. Over 2 million new payroll jobs have been created thus far in 2004.

Another Disaster to Plan for…

In my last year in business we faced Hurricane Fran that knocked out power for about a week and an ice storm that closed down most of the state for over a week. Disasters can be particularly tough on smaller businesses. Such disruptions hurt sales, as we found out as revenues fell by about 15% in September and then about 20% in January. It also slowed down cash flow for the next several weeks, as many of our customers had to recover from the same events, as well.
In addition to the natural disasters that small businesses can still face, they now have to worry about disasters that are man-made. In addition to terrorism, the NFIB has issued a report that focuses on another man-made disaster that is causing significant economic havoc: computer viruses.
“According to the NFIB Research Foundation’s recent small-business poll, more than one third (34 percent) of small-business owners polled cited computer viruses as a type of ‘man-made disaster’ that had caused harm to their business. Sixty percent of those business owners were forced to pay for professional assistance to exterminate the bugs and restore their systems. The destruction was so severe for 29 percent that they had no alternative but to buy new computer equipment. And more than one-fourth claimed virus attacks destroyed some of their documents.”
A couple of good sources to learn what steps to take as a small business journal can be found in a piece at in the San Antonio Business Journal and at a site called staysafeonline.info.