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You’re the Boss Blog: Can a Banker Think Like an Entrepreneur?

August 31, 2012 by Leave a Comment

She Owns It

Portraits of women entrepreneurs.

In a just-published New York Times article, I write about Jolyne Caruso, a Wall Street veteran who founded the Alberleen Group, a company that applies the incubator concept — ubiquitous in the world of tech start-ups — to investment banking. The Alberleen Group provides seasoned investment bankers with the infrastructure and working capital to start their own firms. In exchange, it takes a revenue share.

Ms. Caruso got the idea for her venture after observing that many bankers — and their clients — were disillusioned with the big banks. New regulations, altered compensation models, and (for clients) the potential for conflicts of interest contribute to the “misery factor,” she said. But for bankers looking to strike out on their own, the costs of starting a boutique investment bank can be prohibitively high and the connections needed to fund deals can be elusive. The Alberleen Group offers help with both. Every member of the incubator’s advisory board, which includes E. Stanley O’Neal, the former chief executive of Merrill Lynch, is also an investor in the company.

The incubator’s success will depend, in part, on its ability to field teams of bankers who think — and operate — like entrepreneurs despite having spent careers at the much larger institutions that have long dominated the industry. “The jury is still out on us,” Ms. Caruso said.

But she added that it’s clear that the old model is no longer viable for many clients and bankers — which could make investment banking incubators as plentiful as their technology counterparts.

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2012/08/14/can-a-banker-think-like-an-entrepreneur/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss: Buying Versus Renting: Owners Consider the Advantages

August 31, 2012 by Leave a Comment

She Owns It

Portraits of women entrepreneurs.

Deirdre Lord prefers renting.Suzanne DeChillo/The New York Times Deirdre Lord prefers renting.

At a recent She Owns It business group meeting, the conversation focused on real estate. The business owners also touched on the related subject of working remotely, a topic we’ll explore further in coming posts.

The Megawatt Hour, a start-up owned by Deirdre Lord, rents an office in shared space. To try to lower costs, the company has moved three times in the last two and a half years. When its lease on “really dumpy space” in Queens was up, Ms. Lord said she found more centrally located space in Manhattan that eased commutes for the staff. Ms. Lord does not foresee owning. “We rent, and we will only rent,” she said.

Considering the cost of office space, she wondered what the group thought about letting employees work remotely.

“I feel you really lose something,” said Beth Shaw, who owns YogaFit. In fact, she feels so strongly about the issue that she regrets installing separate offices in her current space. Even walls can render your employees too remote, she said.

“It’s really funny that you brought that up,” said Alexandra Mayzler, owner of Thinking Caps Tutoring. She said she approved employee requests to work from home once a week. But then it turned into twice a week. Although she says she believes that productivity can increase when employees work independently from home, she doesn’t think working remotely is good for the company culture. “Somebody’s out one day, the next person’s not there the next day, and there’s no structure,” she said.

“I had that same issue in my office,” said Ms. Shaw.

Susan Parker, who owns Bari Jay, a dress maker, returned to the issue of renting or owning commercial real estate. Her company rents space in Manhattan’s Garment District. When she and her sister took over the business, Bari Jay had two months left on its lease. “We ended up just getting a year extension, and it took us over six months to end up signing a lease for the same exact space,” she said. “When you have 11,000 square feet, you cannot find a lease.”

She said she considered moving to an identically priced, slightly smaller but nicer space with 24-hour access (her current building has limited hours, six days a week). But ultimately, the thought of moving and uprooting operations persuaded her to stay put. “I’m here for a long time,” she said.

Johnson Security Bureau, which is owned by Jessica Johnson, operates from a townhouse in the Bronx. The company bought the building in an estate sale almost 20 years ago. Before that, she said, Johnson Security rented space in the neighborhood. Ms. Johnson said she was happy that she did not have to worry about long-term leases and utilities, which would be more expensive if she rented.

Ms. Mayzler runs Thinking Caps Tutoring from a rented Manhattan apartment (not her residence). The company’s branches in Texas, in Austin and Houston, operate remotely with employees who work from home.

“Have you thought about incubator space for Texas?” Ms. Johnson asked.

Ms. Mayzler said that, for now, she needed more space only when the company hosted pizza parties for its Texas tutors. So far, she has rented conference rooms for that purpose. But this year, there will be more tutors. Additionally, it would be nice to find inexpensive space as Thinking Caps begins to do more team-building activities.

YogaFit is seeking less space. Ms. Shaw has been trying to sell the company’s building in Torrance, Calif., on and off for a year. She said she bought it for $1.4 million in 2006 and did extensive renovations, including creating the offices she now wishes were gone.

“If everybody was in one place, there would be more communication and productivity,” she said — not to mention less texting and eating at desks. The office walls aren’t the only drawbacks to the space, which is in a rather isolated area 30 minutes from Ms. Shaw’s home on the west side of Los Angeles.

Even though she invested in renovations, Ms. Shaw said she would be happy to sell the building for the price she paid. She would then like to buy much less expensive loft space in downtown Los Angeles. But her building hasn’t come close to selling. She wondered if she is using the wrong agent.

She said there was a large Asian community in the surrounding area and that it’s a popular location for Japanese companies, including Honda, Nissan and Toyota, all of which have offices nearby. “Maybe I need a Realtor that will market the building to the Japanese or Chinese market,” Ms. Shaw said, adding that Chinese investors are buying in Los Angeles.

“Have you thought about having an event where you invite Asian fitness professionals in and then maybe that will help spread the word?” Ms. Johnson asked.

“I love that idea,” Ms. Shaw said.

“Who decided that you should buy the building?” Ms. Parker asked.

“I decided because I’m not a good renter,” Ms. Shaw said. “When YogaFit started, we were under a bar, and beer leaked into our yoga studio for seven years.” Unlike Ms. Parker, Ms. Shaw said she had not worked with a business coach or a group like Entrepreneurs’ Organization to help with such decisions.

How has your business handled the real estate decision?

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2012/08/15/buying-versus-renting-owners-consider-the-advantages/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

India Ink: India’s Economy Continues to Be Weak

August 31, 2012 by Leave a Comment

A bank employee counting currency notes in Mumbai, Maharashtra in this Feb. 27, 2007 file photo.Indranil Mukherjee/Agence France-Presse — Getty ImagesA bank employee counting currency notes in Mumbai, Maharashtra in this Feb. 27, 2007 file photo.

The Indian gross domestic product report released Friday for the April-June quarter showed that the economy was doing only marginally better than in the previous quarter. Growth was up 5.5 percent during the quarter from a year earlier, compared with 5.3 percent in the period ended in March, which was the weakest growth in nine years.

Analysts said high interest rates have dented investment, while the investor outlook continued to remain bleak. “High inflation, wide trade and current account deficits, bloated subsidies and a gaping fiscal deficit have all taken a toll on the real economy, while the rupee has plunged 25 percent since July 2011,” said Jyoti Narasimhan, senior principal economist at IHS Global Insight. “The investment environment remains toxic because of corruption scandals, policy inertia and fierce political opposition have stifled progress on reform.”

The report showed that the manufacturing output in the April-June quarter rose only 0.2 percent from a year prior, dashing prospects for growth. The growth in agriculture, forestry and fishing was 2.9 percent, while mining and quarrying remained nearly flat at 0.1 percent. The sectors that showed significant growth in the quarter were construction with 10.9 percent growth, financing, insurance, real estate and business services at 10.8 percent and community, social and personal services, which registered a 7.9 percent growth.

Forecasts for the coming year are less than rosy. “Weak growth is likely to remain a strong overhang on the corporate sector, and in the near-term raises chances of a sovereign downgrade, particularly in the light of the stalemate on the policy front,” said Tirthankar Patnaik, the director of institutional research at Religare Capital Markets.

A rebound of the economy is expected to be a gradual process. “The pickup in growth was encouraging, but growth still suffers due to external headwinds and supply constraints,” said Leif Lybecker Eskesen, chief economist for India and Asean at HSBC Global Research. “We expect a gradual recovery from here on the back of structural reform progress and global economic stabilization, although there is a risk that it could prove more protracted.”

All eyes are now on the Reserve Bank of India, the central bank, which meets Sept. 17 to review monetary policy. While there are expectations that a low growth rate would cause the R.B.I. to cut interest rates, just last week the central bank said that lower interest rates alone were not enough to jump-start the investment cycle. “Despite ever-worsening growth data, IHS Global Insight, expects the R.B.I. to wait until October to resume its rate cuts,” said Ms. Narasimhan. “We expect only a shallow recovery in manufacturing and investment, and only a mild upturn is expected by year-end.”

Article source: http://india.blogs.nytimes.com/2012/08/31/indias-economy-continues-to-be-weak/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Media Decoder Blog: Roberts Leaves ‘Good Morning America’ for Medical Treatment

August 31, 2012 by Leave a Comment

Robin Roberts, second from left, on ABC's Good Morning America. Ms. Roberts signed off from the show on Thursday.Fred Lee/ABCRobin Roberts, second from left, on ABC’s “Good Morning America.” Ms. Roberts signed off from the show on Thursday.

Starting Friday, ABC’s “Good Morning America” — which has surged ahead of the “Today” show in recent weeks to become the No. 1 morning television show in America — will be without its biggest star, Robin Roberts.

Ms. Roberts, who received a diagnosis of a rare bone marrow disorder in April, is about to undergo a bone marrow transplant that will leave her hospitalized or homebound for four months or more. The break presents clear challenges, not just for Ms. Roberts, who must regain her health, but also for ABC, which earns huge profits from the morning show. It will have to find a way to maintain its nascent winning streak without her.

Ms. Roberts signed off from the show on Thursday, a day earlier than expected, because she needed to visit her 88-year-old mother, who is ill, in Pass Christian, Miss. “I love you and I’ll see you soon,” she told viewers, many of whom have gravitated to “Good Morning America” because of her.

There are few if any precedents in the television industry for an extended leave of absence by a host, even on an ensemble show like “Good Morning America.” ABC thus finds itself in an extraordinarily difficult position: it has to keep viewers informed about Ms. Roberts’s condition and encourage them to keep watching the program while she is away, but not appear to be exploitative or insensitive.

News coverage and public sympathy for Ms. Roberts could help “Good Morning America,” or her absence could lead viewers to try other morning shows. Ms. Roberts has been on the program for a decade, longer than any of her co-hosts; research by both ABC and NBC has indicated that she is widely admired by viewers.

“We are determined to maintain the momentum of the program, but we’re also very realistic about the challenge we face,” Ben Sherwood, the president of ABC News, said in an interview on Thursday. Since Ms. Roberts’s announcement in June, he has emphasized internally at ABC News that the co-host chair will remain hers. “Robin is irreplaceable,” he said.

In February, back when “Good Morning America” was No. 2, Ms. Roberts felt abnormally tired while covering the Academy Awards in Los Angeles. She followed up with doctors and, after some blood tests, underwent her first bone marrow test before a vacation at the end of March. (Katie Couric filled in for her, causing a media whirlwind.) When Ms. Roberts came home, the week of April 9, the doctors told her they suspected she had M.D.S., short for myelodysplastic syndromes, a rare blood and bone marrow disorder. She could barely pronounce it.

Further tests were done. On April 19, the same day the Nielsen ratings company confirmed that “Good Morning America” had defeated the NBC “Today” show for the first week in 17 years, Ms. Roberts’s doctors confirmed the diagnosis.

A photo taken of Ms. Roberts and her co-hosts celebrating the ratings victory on April 19 now sits, framed, in her dressing room.

“I look at that picture so differently than everybody else,” she said in an interview last month. “Because that is the day that it was like, ‘Yeah, it’s M.D.S. Yes, you’re going to have a bone marrow transplant. Yes, you’re going to be out for a chunk of time. We don’t know when.’ It was all this — it was such a gray area. It was just maddening.”

Ms. Roberts kept the disorder a secret for weeks. Almost no one at ABC knew that she had been at the doctor’s office when she was invited to interview President Obama in May — an interview that made international headlines for his changed view of gay marriage. On June 11, she told viewers of the diagnosis and said her older sister Sally-Ann, a television anchor in New Orleans, would be her bone marrow donor.

Morning television hosts have let viewers in on their personal struggles before. After her husband died in 1998, Ms. Couric, then at “Today,” drew attention to colorectal cancer and was credited by researchers with a nationwide increase in colonoscopies. (Ms. Roberts has similarly campaigned on behalf of Be The Match, a national marrow donation program.)

But the circumstances now are unique. Ms. Roberts’s leave of absence is taking place in the age of social media, when she can post updates to Twitter and Facebook. And it’s taking place at a time when “Good Morning America” has, for the first time in a generation, tasted victory over “Today.”

Since NBC removed Ann Curry from the co-host chair on “Today” at the end of June, that show has lost to “Good Morning America” every week with two big exceptions during the highly rated Summer Olympics, which were broadcast by NBC. Last week, “Good Morning America” had half a million viewers more than “Today,” one of its best performances to date. The two shows were effectively tied in the crucial demographic of viewers ages 25 to 54, with “Today” winning by just 5,000 last week. Two weeks ago, with Ms. Roberts on vacation, “Good Morning America” beat “Today” by about 200,000 viewers.

Neither Mr. Sherwood nor Tom Cibrowski, the senior executive producer of “Good Morning America,” would predict how the ratings race might change in the months to come. But Mr. Cibrowski said, “We feel that the show has a great amount of confidence and a great amount of buzz around it and that the viewers are going to keep coming.”

They have a detailed plan for fall and winter. Other female ABC News anchors will fill in for Ms. Roberts, one week at a time, beginning with Amy Robach on Friday and Elizabeth Vargas next week. Mr. Cibrowski said Diane Sawyer, Barbara Walters and Ms. Couric would also fill in.

Many days, they will be joined by celebrity co-hosts in the 8 a.m. hour, including Oprah Winfrey and the cast of the ABC sitcom “Modern Family.” When Ms. Roberts is ready — though they know there is a risk of death from M.D.S., people at ABC never say “if” — she will call into the show via Skype, Mr. Cibrowski said, in a nod to new technology.

Ms. Roberts is scheduled to enter the hospital on Tuesday; the transplant is likely to take place the week after.

Inside the “Good Morning America” studio on Thursday, some members of the staff teared up as the singer Martina McBride played “I’m Gonna Love You Through It” for Ms. Roberts, who remained remarkably composed. After the show ended, Ms. Roberts stood up and said to the staff, “God bless, God speed, and I’ll get back to you just as soon as I can,” emphasizing the word “soon.” Then she sought out Mr. Sherwood, who hugged her and wiped away a tear.

Article source: http://mediadecoder.blogs.nytimes.com/2012/08/30/roberts-leaves-good-morning-america-for-medical-treatment/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

DealBook: A Third Option for Regulators in the Money Market Fund Fight

August 31, 2012 by Leave a Comment

Timothy F. Geithner, the Treasury secretary, with Mary L. Schapiro, the Securities and Exchange Commission chairwoman.Alex Wong/Getty ImagesTimothy F. Geithner, the Treasury secretary, with Mary L. Schapiro, the Securities and Exchange Commission chairwoman.

The biggest battles are sometimes decided by the most arcane tactics.

That could turn out to be the case in a fierce fight between the mutual fund industry and top financial regulators.

At issue is whether to impose more regulations on the nation’s $2.6 trillion of money market funds.

Regulators think the funds pose a risk to the financial system. In the 2008 financial crisis, investors fled the funds in droves, which worsened the credit freeze that gripped the banking system. Money funds then received a big bailout.

In a bid to lessen the chances of such events reoccurring, the Securities and Exchange Commission proposed measures, including requiring the money funds to hold a capital buffer against losses. But the commission dropped the reforms last week, after it became clear that a majority of its commissioners weren’t going to vote for the reforms. This was a big win for the mutual fund industry, which says some reforms made in 2010 are sufficient. The industry also argues the latest reforms would needlessly damage a popular investment product.

The regulators, however, may be able to effectively override the S.E.C. They can do that by involving the Financial Stability Oversight Council, a special committee of senior regulators set up after the crisis by the Dodd-Frank financial overhaul legislation.

The council’s job is to spot big risks in the financial system and take action to address them, even if it means acting itself or pressuring individual regulators.

After the money fund reforms were blocked at the S.E.C., much speculation began on how the council might act. At first, there appeared to be two separate paths laid out in Dodd-Frank. But both had drawbacks for the regulators.

Now, a third option may exist. And it appears to get around the headaches involved in the other two.

The council, which is chaired by the Treasury secretary, Timothy F. Geithner, and has publicly backed the S.E.C.’s money fund reforms, is scheduled to meet toward the end of September.

Initially, one of the council’s perceived options was to designate fund companies or individual money funds as systemically significant, and give them to the Federal Reserve to regulate. The problem: This approach would remove money fund regulation from the S.E.C., a potentially wrenching move that could undermine the standing of that agency. This option could also lead to a two-tier, unevenly regulated money fund sector, where larger funds might come under Fed oversight and smaller ones wouldn’t.

The second option was to declare the general activity of money market funds as risky to the system. But if this route were taken, Dodd-Frank lays out a series of steps that puts the issue back to the S.E.C., where the majority of commissioners may still oppose reform. If that happened, Dodd-Frank then appears to move the issue to Congress, but it doesn’t define how the stalemate would be broken.

Enter option three.

With this, the council would use a part of Dodd-Frank, called Title VIII, that addresses regulation of the plumbing of the financial system. It refers to “utility” activities like organizing financial payments and processing transactions.

Using Title VIII, the council could take a two-step approach. It could designate a single activity or feature of money funds as a systemically important utility function. Next, it could then require reforms to buttress that function.

For instance, money funds have a special feature called a fixed net asset value, which allows them to say each share in a fund is worth $1 when in reality it may be worth slightly less. Regulators fear the stable net asset value could mask the risks of money funds from investors, who tend to use the funds like bank accounts.

The council could designate the stable net asset value as systemic and require that the funds hold capital.

The big apparent advantage for the regulators is that it avoids the pitfalls of the other options. It would keep money fund regulation at the S.E.C. And, unlike option two, this part of Dodd-Frank doesn’t map out steps that could lead to stalemate. Instead, it allows the council to require the S.E.C. to introduce the sort of reforms that the council favors.

But there is a weakness with this approach. While this part of Dodd-Frank does give the council a lot of leeway in determining a systemically important activity, opponents of reform may argue that money funds simply aren’t part of the payment functions of the financial system, which is what title VIII was written for.

“On the face of it, this is not what Title VIII was designed to regulate,” said Jay G. Baris, a lawyer at Morrison Foerster. “To me, it’s a last resort.”

Article source: http://dealbook.nytimes.com/2012/08/30/a-third-option-for-regulators-in-the-money-market-fund-fight/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Gadgetwise: A Tablet That Moves Closer to Becoming a Laptop

August 31, 2012 by Leave a Comment

The Archos 101XS tablet features a magnetic keyboard that doubles as a cover.The Archos 101XS tablet features a magnetic keyboard that doubles as a cover.

The French electronics company Archos is hoping to bolster its presence in the United States with a new line of Android tablets that include an integrated keyboard.

Arriving in November, the first offering is the $400 101XS, a 10.1-inch tablet that weighs 21 ounces and is 0.31 inches thick. Two more tablets, a 9.7-inch and an 8-inch, will follow.

The tablet’s innovative feature is the Coverboard, a keyboard that doubles as a cover. Secured to the tablet with magnets, the Coverboard slides off easily. The tablet can then be docked in the Coverboard for typing.

This seems like a great advancement, unless you don’t need to type. Then what do you do with the Coverboard? Unfortunately, it doesn’t secure to the back of the tablet the way it does to the front, which makes it tricky to use, say, when you’re commuting on the subway. You have to find someplace to stash the cover. Once you do, however, the tablet is easy to hold and use.

The tablet is powered by the Android 4.0 operating system, Ice Cream Sandwich, but will be upgradable to Android’s next OS, Jelly Bean. Being an Android device, it comes with the full Google family of services and apps. But sometimes, family members are not on speaking terms. I had problems with several Google apps like Gmail and YouTube.

Included with the tablet is the OfficeSuite Pro 6 app, which allows users to view, edit and share Word, Excel and PowerPoint files. I tried to use the app’s word processor to type this post, but the keyboard was too small for my hands. After spending much time hunting and pecking, I decided to save the file to Google Docs and finish it on my laptop.

Navigating the media center was easy, and the screen’s display was decent, but the sound from the speakers was tinny and small. I’d get better sound if I opened my window and listened to the TV playing in my neighbor’s apartment downstairs.

Article source: http://gadgetwise.blogs.nytimes.com/2012/08/30/a-tablet-that-moves-closer-to-becoming-a-laptop/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

DealBook: Before Romney’s Big Speech, a Focus on Bain

August 31, 2012 by Leave a Comment

As Mitt Romney prepares to take the stage at the Republican National Convention on Thursday night to make his case for the presidency, his record at Bain Capital continues to be a focus — some might say the focus — of both his supporters and detractors.

Just hours before Mr. Romney’s speech, his campaign started a Web site on Thursday — business.mittromney.com — devoted almost entirely on his years at the investment firm Bain Capital. “Governor Romney’s work at Bain Capital was about fixing companies that were broken and giving new companies a shot at success,” reads the Web site’s home page.

The site features nine one- to two-minute videos, each highlighting a successful Bain deal. Two videos focus on the office-supplies retailer Staples, one of Mr. Romney’s most successful investments during his tenure at Bain. Both show Mr. Romney roaming the aisles at a Staples store wearing that a blue dress shirt with a contrasting white collar, a de rigueur uniform of 1980s Wall Street.

The Staples videos are featured under the “building businesses” category. Two other categories — “fixing businesses” and “growing business” — highlight other money-making Bain deals, including a revival of the gadget chain Brookstone and a venture investment in the mountain bike maker GT Bicycles. There is also a clip chronicling Mr. Romney’s rescue of Bain Company, the management consulting firm where he started his career. Mr. Romney came back to the firm and led a turnaround. (Bain Company spun off the private equity arm, Bain Capital, in 1984.)

But outside of Bain’s New York headquarters on Thursday, no one was focused on the private equity firm’s successes. Instead, all of the attention was on Bane, an imposing 10-foot-tall monster who lurched around the sun-kissed Manhattan sidewalks lambasting Bain’s business practices. Bane is the villain who faced off against Batman in this summer’s blockbuster movie “The Dark Knight Rises.” It will be “a long dark night you’ll be facing if Romney gets elected,” said Bane, according to a Bloomberg News report.

The protest was organized by United NY, a coalition of labor unions and community organizations that has staged a number of demonstrations against Bain. Accompanying Bane was a woman from the Bronx who was recently laid off from her job at Burlington Coat Factory, a Bain-owned company.

United NY protested outside of Bain Capital,  using the character of Bane, the villain who faced off against Batman in The Dark Knight Rises.United NYUnited NY protested outside of Bain Capital,  using the character of Bane, the villain who faced off against Batman in “The Dark Knight Rises.”

Cara Noel, a United NY spokeswoman, said that it staged the protest because “we wanted to send a clear message that a Romney economy would not work for the middle class and for low-wage earners.”

Media outlets also continue to center on Mr. Romney’s Bain years. Matt Taibbi, a writer who has made headlines for his screeds against Goldman Sachs and other Wall Street players, has now taken aim at Bain. In a new Rolling Stone article, Mr. Taibbi calls Mr. Romney “the hard-charging, chameleonic champion of a disgraced-yet-defiant Wall Street.”

Article source: http://dealbook.nytimes.com/2012/08/30/on-eve-of-romneys-big-speech-a-focus-on-bain/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

You’re the Boss Blog: Would You Take a Private Equity Investment?

August 31, 2012 by Leave a Comment

Puneet Mehta has ruled out taking private equity for his latest company.Josh Weiss for The New York Times Puneet Mehta has ruled out taking private equity for his latest company.

Today’s Question

What small-business owners think.

In a small-business guide we’ve just published, Puneet Mehta talks about feeling “razzle-dazzled” when private equity investors approached him about buying into the online marketing business he had founded in 2006 in Atlanta.

“Our goal was to expand rapidly with private equity, put in a bunch of sales teams, get some distribution networks going,” Mr. Mehta explained. He ended up with $1.5 million in private equity growth investments and venture capital. “But I realized after we had raised the money that there were so many clauses that came with it that I had lost complete control of the company.”

You can read the guide, which was written by Jessica Bruder, to see how that turned out and to hear what business owners suggest you should consider before accepting private equity. As for Mr. Mehta, he has sworn off outside financing altogether in his current endeavor, a start-up called Local Marketing Inc., which he said was profitable and generating several million dollars a year in revenue. “Now we basically get approached by a bank or a company every month to give us money,” he told Ms. Bruder, “but we don’t need it.”

Of course, there can also be compelling reasons to take the investment capital. Right now, there happen to be a lot of investors looking for deals and a lot of businesses looking to sell.

What do you think? Would you take private equity?

Article source: http://boss.blogs.nytimes.com/2012/08/15/would-you-take-a-private-equity-investment/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: When Looking for a Loan, You Can’t Fight Gravity

August 31, 2012 by Leave a Comment

Searching for Capital

A broker assesses the small-business lending market.

Getting a loan for your business is not a simple proposition. There are many types of loans, and many criteria that go into evaluating how much you can borrow and what you can expect to pay. There are thousands of lenders to pick from, and each one may have a slightly different proposition to suggest.

When you’re in the market for a loan, it’s smart to do some homework and figure out where you fit. It’s also smart to hear several opinions. That said, once you’ve heard the same thing several times, you probably have a pretty good idea what your prospects are. At that point, you have a decision to make.

At MultiFunding, this is where we often see small-business owners get stuck. This is particularly true if the owners don’t love the terms of the financing they are being offered. In this situation, there are several important points to consider.

First, despite the general sense that the loan market has been all over the place, it’s actually pretty competitive. Lenders fight with one another to get different types of loans. But once you’ve figured out where your company fits into the ecosystem, you really can’t fight gravity. If you are eligible for a certain type of loan, it’s unlikely that you are going to be able to twist a lender’s arm into offering you a more favorable type of loan. The first loan you are offered will have certain pricing and conditions that are associated with the risk the lender is taking. Once the bank has made this calculation, it rarely changes.

That said, it’s important to remember that the type of loan your company is eligible for today could well change six months or a year from now. Companies change and evolve, and so do loan markets. It’s important to review your loans on an annual basis. Some small-business owners get stuck because they think the loan they pick will last forever. This is not the case.

Once you’ve nailed down your loan type and pricing, you should step back and ask yourself questions like, “Will this loan allow me to focus on growing my business and making it more profitable?” and “Will I stop lying awake at night worrying about cash flow?” If so, it’s probably worth taking the loan.

Right now, we have two clients who are trying to fight gravity. One of them is an electronics distributor. Because the business shrunk by 50 percent during the recession, its bank — even though the business stayed profitable — decided to call the line of credit. Since then, the distributor has been slowly paying down the credit line and holding on for dear life. In the last three months it has twice needed to take emergency financing in the form of expensive merchant cash advance loans.

What the company desperately needs to do is to pay off the line of credit — and move to a factor. While the factor will be more expensive, it will lend the distributor all of the working capital it needs. As a result, the owner will be able to sleep at night and focus on getting the company back to pre-recession levels. At that point, there will be no problem going back to a bank and getting a new line of credit.

We have another client who has a high-end used car business that owns its own real estate. It has been banking with the same bank for seven years where it has a floor-plan line of credit (against retail inventory) and a real estate loan. But the bank was sold and the new parent company won’t do floor-plan lines anymore. In today’s loan market, finding a floor-plan lender for used cars can be all but impossible. We actually managed to find our client one, but he wouldn’t accept the terms. He is trying to fight gravity, and it will catch up with him eventually.

It’s not enough to understand your own business — you also have to understand credit markets and where you fit into them. And most of all, you have to understand that they keep changing.

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

Article source: http://boss.blogs.nytimes.com/2012/08/16/when-looking-for-a-loan-you-cant-fight-gravity/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

On Social Media: When Social Media Marketing Doesn’t Work for You

August 31, 2012 by Leave a Comment

On Social Media

Generating revenue along with the buzz.

John Edgar Lacher owns the J.Edgar Investigation Agency and is an avid reader of this blog. Recently, he left the following comment on one of my posts,  “Using Social Media to Test Your Idea Before You Try to Sell It.”

The social media thing such as Twitter, Facebook, Google, and others have done nothing for me. Personally, I think it is all just another money trap. I have spent thousands of dollars on marketing such as SEO, adwords, etc with little or no results. Everyone has got their hand out but no one has the ability or the experience much less the interest to help someone. Everyone is wrapped up in their own little world tweeting and facebooking. I have better luck with face-to-face meetings and referrals from people that know me. I would much rather spend the time and money with a face-to-face meeting than anything else.

In part because I think there are a lot of people who feel the same way Mr. Lacher does, I decided to contact him to discuss his experiences.

It turns out he is a licensed private investigator with an office in San Diego. In business since 2008, Mr. Lacher, 64, started the agency after being laid off by American International Group at the start of the Great Recession. He specializes in insurance claims investigations, but he also investigates fraud, theft, property damage, or elder abuse. And if you think your spouse has been cheating, he can look into that, too.

Private clients have been his biggest source of revenue, but things are rough right now (he has been supporting himself with his Social Security checks). He knows he started his business at a difficult time, and he says the competition in California for P.I. work is intense. “There’s a lot of retired law enforcement, ex-military and former F.B.I. agents who have come to this area,” he said, “and it’s hard to compete with their credentials.”

So far, he hasn’t found social media to be of much help. He canceled his Facebook page, because he felt it was more personal than business, and he didn’t think he needed to be there. “I had a lot of people who would ask questions about how I do private investigations, but I never got a single client from it,” Mr. Lacher said. “I got a bunch of stupid comments from people, which was really annoying.”

He is on Twitter but has only tweeted a few times. He has had the most success with LinkedIn, where he has a premium account that costs $24.95 a month. He says he invested in it because business has become global. “I started using LinkedIn a year or so ago, I am a premium member so I can see the profile of people that I would not have access to. I have 650 connections to date. It’s a great asset for me to be able to do business intelligence. I have not been getting any business from LinkedIn yet, but I am hopeful.”

A year ago, he invested $94 a month in a Web site he got through Web.com. Disappointed, he pulled it down after six months. Then he decided to build his own site, which is still up. Six weeks ago, he gave a webinar on GotoMeeting.com, offering a session on Investigation 101. He was thrilled with the attendance but didn’t win any business from that, either.

He has thought about trying Google AdWords, but some of his colleagues in the business cooled him on the idea. “I was concerned about doing Google AdWords because people were commenting on an industry listserv that competitors were clicking on the ads from other private investigators to drive up the budget.” So he hasn’t tried that yet.

After discussing his frustrations, he asked me. “Where do you start first? Where do I put the money at?”

There are five steps that I think everyone should take if they are serious about using social media as a marketing strategy, but there are always a few things to consider. Social media marketing is a long tail strategy for a small business — it can take a lot longer than six months to see results. And it starts with a strong Web site.

Even once you have connected with someone, social-media-networking takes considerably more time than face-to-face networking. I believe it takes seven quality contacts before you can start talking commerce, but I’ve read industry estimates as high as 21 meaningful contacts before you can close business. Here are the five steps I suggested for Mr. Lacher.

Invest in a real Web site: Mr. Lacher’s site is not helping his brand. Just as you would never call a plumber to do a carpenter’s job, you have no business developing your own Web site (unless that is your business). Hire a professional. For $500 to $1,500, you can get a basic WordPress Web site or blog site that will represent your business well. Your site should have helpful content and at least three to five ways to engage potential customers, including offering an e-book download, newsletter sign-ups and free webinar sign-ups.

Know your keywords: No search-engine optimization campaign will work if you don’t have the right keywords. You need to know how your target customers search for services online. Free tools like Wordtrakker and Google Keyword Tool can help.

Use a listening strategy: As a small-business owner, you can’t be everywhere in social media, but where you should be is where your target customers are hanging out. LinkedIn is the right place for Mr. Lacher. Keep spending time there, start using the Answers area to demonstrate expertise. Join groups where target customers belong, and share helpful information. Post your webinar materials through SlideShare to amplify your content.

Start blogging: Once you get your site fixed, start blogging. The best way to demonstrate your expertise is to share techniques and success stories. Be sure to use your keywords in your blog posts.

Share helpful content: One of the best ways to attract clients with social media is to position yourself as a resource. And don’t just share your own content — be generous and share the information of others in your industry. It’s a great way to build strategic alliances and make friends.

Mr. Lacher wants to grow his agency to the point where he could hire two people full-time who would be licensed under him. Right now, he is looking for a bilingual woman to help him with marketing.

What have you found difficult to do in getting started in social media? Have you been able to figure it out?

Melinda Emerson is founder and chief executive of Quintessence Multimedia, a social media strategy and content development firm. You can follow her on Twitter.

Article source: http://boss.blogs.nytimes.com/2012/08/17/when-social-media-doesnt-work-for-you/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,
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