January 24, 2022

Bucks Blog: Damage From Falling Satellites? Insurance Will Cover It

Rendering of the German satellite ROSATAssociated PressRendering of the German satellite ROSAT

Just last month, an old NASA satellite plummeted to Earth and disintegrated. Now space buffs are keeping an eye on the retired German scientific satellite ROSAT, which is expected to crash and burn sometime this weekend.

The odds of a fragment hitting your little patch of earth are extremely low. But not to worry: if you are unlucky enough to have some space shrapnel fall on your house or car, standard insurance policies will most likely cover the damage, says the Insurance Information Institute, an industry group.

“Damages caused by falling objects,” including falling satellites, are generally covered, the institute says.

The Web site space.com has an animated simulation of the satellite’s demise — or “de-orbit,” in space lingo — here.

Article source: http://feeds.nytimes.com/click.phdo?i=7f7de9d8789c529842c989840b2f13f0

You’re the Boss: When Words Get in the Way of Selling a Business

Transaction

Putting a price on business.

I’ve been in love, some might say obsessed, with the written word for as long as I can remember. That’s why, as an undergraduate, I declared my English major as early as I could. At the time I believed that such decisions should be based entirely on what you love to do. I loved to read and write, so it never occurred to me that I would be anything but an English major.

A handful of people warned me that my English major might not be very marketable. “Marketable,” I remember saying, wrinkling my nose in distaste, “how can you talk about your personal interests in terms of sales jargon? Furthermore, why should I care?” Three years, countless interviews and two crumby jobs after graduation, the reason why I should have cared about the marketability of my degree became clear.

There is a similar disconnect between the language of entrepreneurship and the reality of selling a business. Let’s face it, there’s a lot of happy talk associated with starting your own business. We’re told to pursue our passion and follow our dreams. Employees start to feel like family, and you refer to the business as your baby. When you are immersed in the frenzy of the start-up phase, the business can become your life. After years of working in the business, the line between your own identity and that of what you’ve built becomes blurred, leading to the common belief that “I am the business, and the business is me.”

No one is ever discouraged from using this type of language to describe their entrepreneurial endeavors. In fact, it is celebrated on the covers of business books and magazines, and we are collectively buoyed by the triumphant messages. Then it comes time to sell the business, and the nomenclature of entrepreneurship collides with a new vocabulary — one with which it is completely at odds. What kind of people sell their dream? Who exits their passion, or cashes out their baby?

Last week I gave a presentation on exit planning to a networking group of 14 fellow small-business owners. While they were receptive to the ideas, the entire room agreed that I needed to call it something — anything! — other than exit planning. For better or worse, the term “exit” is synonymous with one of two things in a business owner’s mind: selling or dying. There I was — in a situation that has become all too familiar since I got into the business of selling businesses — engaged in a battle of words.

I’ve seen two different approaches used for dealing with these unfortunate semantics. One is to soften the language, presumably to remove some of the sting. A sale becomes a “business transfer,” while the more comprehensive exit process is referred to as “transition planning.” But this presents a marketing dilemma for those who offer these types of services. Even though not that many people know what an exit plan is or what a business broker does, coming up with new, friendlier labels just makes these niche services that much more obscure.

The other option I’ve seen borrows heavily from the language of the investment and financial planning community. For example: the business must be viewed as an “asset.” Business owners need to realize that these types of assets are “illiquid,” that the bulk of their “net worth” is tied up in one “stock” — the “equity” in the business — and they need to develop a plan to “diversify.” While we are all relatively familiar with the terminology, few of us have applied it to business ownership. It can be a long and difficult process to stop thinking in terms of dreams and start thinking in terms of liquidity.

Regardless of the language you use, it’s never too early to begin the process of mentally preparing for the day when you will leave your business. If indeed thoughts become words and words become actions, then perhaps it is useful to try thinking, and speaking, of your business in terms of a financial investment, rather than the air you breath. You cannot live without air, but if you’ve planned and prepared for it, you and your family may be able to live quite comfortably some day without your business.

Is there a better word for exit? I, for one, would welcome any suggestions.

Barbara Taylor is co-owner of a business brokerage, Synergy Business Services, in Bentonville, Ark. Here is her guide to selling a business.

Article source: http://feeds.nytimes.com/click.phdo?i=3512b3236f2be49f319b2b2ae4b9409a

Economix: Bin Laden and Inefficient Markets

Someone else could have made a killing yesterday. Here’s a look at the odds on Intrade, the prediction markets site, on whether Osama bin Laden would be “captured/neutralised before midnight ET on 30 Sep 2011″:

DESCRIPTION

If you were among the tiny minority of Intrade bettors who believed Bin Laden would be caught by or around the 10-year anniversary of 9/11 (or perhaps by this June or this December), you did very well.

An Intrade market is a place where you can buy a contract — a sort of bet — on the probability of an event happening. Contracts trade between prices of 0 points and 100 points, and the point value at any time is what the market considers the percentage probability of that event occurring to be.  Each “point” of an Intrade point price goes for 10 cents in real money.

If the market “thinks” the probability of an event happening is low, and you disagree, you would buy a contract and then wait for the event to happen. If you’re right, you cash in.

Let’s say you saw Bin Laden/September 2011 contracts trading on April 22 at 3.8 points, which means the markets thought that there was about a 3.8 percent chance that he’d be caught by this coming September. You might have bought the contract because you thought the market was underestimating this chance. By late last night you would have found out you were right, and the contract would have closed, or settled, at 100 points.

The settlement point price minus your purchase point prices, then multiplied 10 cents, equals your profit. So when the contract traded from 3.8 to 100, you gained 100-3.9 = 96.2 points. Multiply that by 10 cents, and you get a $9.62 profit for each contract you’d purchased.

If you’d been wise enough to buy these contracts in bulk, as you might for a stock — and alas, the volume traded on this particular Intrade market was quite low, so few were thinking along these lines — you could have made a pretty penny.

Just goes to show that with imperfect information it’s hard for markets to be terribly efficient.

Article source: http://feeds.nytimes.com/click.phdo?i=8d6545d4b04b5647bcc99e241b0ce799

Economix: Better Chance of Parole Early in a Day

A new paper finds that experienced parole judges in Israel granted freedom about 65 percent of the time to the first prisoner who appeared before them on a given day. By the end of a morning session, the chance of release had dropped almost to zero.

After the same judge returned from a lunch break, the first prisoner once again had about a 65 percent chance at freedom. And once again the odds declined steadily.

DESCRIPTIONSource:Shai Danzigera, Jonathan Levav, and Liora Avnaim-Pessoa

The reason offered by the authors suggests the broader significance. They write that making successive decisions depletes a limited mental facility, just like curling a dumbbell wears out your arms. As people get tired, they look for shortcuts, and one of the easiest shortcuts is to uphold the status quo –- in this case, denying parole.

This suggests that college admissions committees are more likely to accept the first applicants they consider after a lunch break. Or that quality-control officers may be more likely to ignore possible flaws in products as a long day drags toward its close.

“I don’t think this is at all unique to judges,” one of the authors, Jonathan Levav of Columbia University, said in a radio interview with the PRI program “The World.” “I think you would find the same thing with doctors or with admissions officers or with funding decisions. In fact the interesting thing is that pilots have all these checks and balances, they have all these checklists that they use exactly in order to overcome fatigue. So some fields have a sensitivity to the fact that people can get tired on the job, whereas in other fields it seems like the expert is just there, you know, in a room for 12 hours in a row and break be damned.”

Food and rest are an imperfect solution. The odds of a prisoner’s gaining freedom deteriorate gradually through the morning. The food-and-rest cure would seem to require judges (or other decision makers) to take lunch breaks after each decision.

The research on the use of checklists as a prop against fatigue and the other dangers that confront decision-makers is its own fascinating genre. See, for example, “The Checklist Manifesto,” by Atul Gawande.

Article source: http://feeds.nytimes.com/click.phdo?i=2d7fe96a70690ddb64031ce4e0c885d0