|
|
|
|
LEVERAGED CAPITAL NEWSLETTER Leveraged Capital, is a free monthly newsletter that presents growth and strategy issues effecting entrepreneurs and owners of small to medium size enterprises (SME's). Leveraged Capital is published and delivered electronically to subscribers. Your privacy is strictly respected and we do not share or sell subscriber email addresses to anyone outside of Graham Financial Corporation. If you enjoy what we present, please forward a copy of Leveraged Capital to clients and associates. They can subscribe to Leveraged Capital, by clicking on this link: http://www.GrahamFinancial.com/newsLetter.htm and filling out the quick form.
Just two weeks ago, the US Labour department reported that US labour productivity rose at a heart-stopping 8.1% during the third quarter, up from 7% in the second quarter, up from an annual rate of 5% in 2001; which by the way was the fastest 2 year period of growth in more than 50 years. Even the venerable Chairman Greenspan described this as "startling large". In case you missed it from listening to doom and gloom nay-sayers, the economic recovery actually began in the forth quarter of 2001! Just last week, on average 65% of the S&P 500 companies had exceeded analysts estimates. As I finish this month's edition, I can't wait to get to the office tomorrow morning. Happy Capitalism! Much (long-term) success to you, DPG.
In This Months Issue: (Click on the Article Title To Go To The Full Story.)
Quote Of The Month: Investment Hindsight: DPG Note: Sticking to his faith and selling chicken only 6 days a week hasn't been so bad - in 1989, Mr. Cathy broke the $1billion revenue mark and has continued to grow since.
In
a recent visit to a friend, I poked my head into their teenager’s room to say
“hello”. Without moving there eyes from the computer monitor I
received a half hearted greeting of, “I can’t talk right now, I have four
chat sessions open.....oh, I mean - hi.”
There
is no question that this type of scenario is familiar, especially to the parents
of teenagers. It is how instant
messaging has been introduced to the marketplace.
How can this anonymous, cumbersome, text only communication, targeted at
teenagers, possibly be a valid tool for business?
Let me assure you, it is. Instant
Messaging is much more than sending typed messages back and forth or saving in
long distance. The true advantage
it holds over e-mail is not the fact that it is instant but rather it relies on
a network that is aware of its users, and shares that awareness in real time
with its users. This is known as Presence
Awareness. Presence
Awareness is the ability to see who or what (yes “what”) is online at this
moment. If this concept sounds
rudimentary, it's because it is. But
the implementation of the concept is not. It
requires careful planning and coordination of raw data, business processes,
technology and education. Presence
Awareness is the first step in real-time collaboration.
As businesses begin aligning the IT strategic plan with the business
plan, the importance of real-time collaboration (IBM calls it “On Demand”,
Microsoft calls it “Seamless Computing”) will increase dramatically.
Delphi Group analyst Nathaniel Palmer says Presence Awareness will lead
to “major cultural consequences as real-time collaboration becomes more
persistent”. Strong
Instant Messaging platforms such as Lotus Instant Messaging (the current market
leader - Formerly named “Sametime”) are built using a framework of industry
standards that enables companies to adapt the software to meet their business
needs. Not all Instant Messaging Vendors do this.
Don’t just look for person to person communication.
Demand person to person, person to machine, machine to machine. Instant
Messaging can benefit many areas of business, far too many to discuss in this
one article. However, First and
foremost; Will the new technology
bring value to the customer? Companies
must begin to look past email in their strategy for responding to customer
requests. How can they make it easy for the customer to do business
with them?
The following two scenarios demonstrate how automation using Instant Messaging can directly impact how you communicate with your customers. Call
Centre. A
customer calls a food product manufacturer with a very specific question
regarding allergy information for a specific ingredient (“Ingredient A”)
that is present in some products. The
Call Centre Representative uses Instant Messaging to search for
“Ingredient A, Allergy Information”.
When submitted, a “person to machine” event retrieves two items.
The document URL for the Allergen Sheet and the details of the people in
the company that have the expertise to assist the customer further if necessary.
The Instant Messenger also indicates which Expert is online and available
(“machine to machine”). The
Call Centre Representative can initiate an Instant Message (“person to
person”) directly to the available Expert requesting their participation in
the customer call. The Call Centre Representative connects the customer with the
Expert. The Call Centre
Representative is now free to take another call. New Customer Opportunity. A web site Visitor is interested in speaking with a sales person regarding a product. From a web page the visitor selects “Contact The Sales Representative For Your Area”. They are greeted with an Instant Message Box that requests their Postal Code or Zip Code. The customer enters the Postal Code and the Sales Representative’s contact information is retrieved indicating the online status of the Sales Person. If the sales person is online, the Visitor can request a phone call by entering their phone number and sending the Instant Message directly to the Sale Person. The Sales Person is notified immediately of the prospect and can initiate the call. (“person to person”) If the sales person is not available, the message will be queued and the system will send the message the next time the Sales Person is online. (“machine to person”) In these two scenarios, the availability of the Expert and the Sales Person is not limited to times they are at their computer. They could be online using a SmartPhone, PDA or other mobile device that is supported by the Instant Messaging system. Additionally, there is no geographical boundary for the communication. That is to say, the call centre, expertise and customer could be in 3 different time zones. In both scenarios, the customer can engage the expertise they require quickly and efficiently. The expertise is not tied to a single point or disparate points of contact such as e-mail or voice mail making them more available to the people who require assistance. The customer’s needs are met in a felicitous manner because the business processes, raw data, technology and employee education worked as one. These scenarios are real solutions, available today. When Kenception Technologies introduces these concepts and solutions to our customers, they see the true value of Instant Messaging and the important role it will play in their overall Knowledge Management Strategy. Most will implement gradually, giving time to warm up to the concepts. Others don’t have that luxury and need to address critical business issues today. As
you evaluate Instant Messaging for your company, consider taking the start now,
plan now approach. Start saving now
on long distance costs and start planning to address the inevitable demands of
real-time collaboration.
As you may have heard, in May of 2003 the U.S. Department of Homeland Security (DHS) provided details as to the development and implementation of its US Visitor and Immigrant Status Indicator Technology (US VISIT) program. This ambitious program has been designed to provide the U.S. government with detailed information about those entering and exiting the U.S., which may ultimately cause some difficulties for many U.S.-bound travelers. US VISIT - Objectives and Backgrounder. The US VISIT program has its roots when, in 1996, Congress passed legislation ordering the (then) Immigration and Naturalization Service to develop an entry-exit tracking system[1]. This legislation was in part based on the knowledge that persons involved in the first World Trade Center bombing were not properly tracked and had gone undetected in the U.S. after their visas expired. The implementation of this legislation was hotly debated and postponed on the basis that trade and tourism was more important than security. That prevailing view led to the postponement of the development of an entry-exit system until the events of 2001 prompted a renewed sense of urgency. Citing national security concerns, the objective of the US VISIT program as it has been envisioned is to develop a system designed to collect, maintain and share information, including biometric data, relating to foreign nationals entering and departing the U.S. The biometrics that are to be captured are fingerprint and digital photographs, although there is also some discussion that facial recognition and iris scans may form part of a future US VISIT system. According to the DHS the US VISIT program is being implemented to determine whether individuals entering the US:
Clearly, in addition to catching potential terrorists or addressing valid security threats, the ambition of the U.S. VISIT program is to create a "virtual border" to effectively weed out those persons who have until now otherwise fallen through the cracks – that is, persons who continue to receive immigration benefits when in fact they are not entitled by law to do so. The implications of this program are substantial, and the implementation of the US VISIT technology could have serious impact on tens of thousands of persons who might be caught by this new information collection and sharing technology. The Entry-Exit Process. The exact process of the US VISIT program has not been finalized, but it is expected to be implemented so that upon admission to and exit from the U.S., personal data collected by the DHS is checked against lists of persons who should be denied entry, for a variety of reasons. It should work like this: DHS officials will place US VISIT entry systems at airport and border primary inspection stations, which will require each applicable traveler to submit to an electronic fingerprint and digital facial photo, a process that DHS officials assert will take no longer than 15 seconds. It seems fairly clear that even if it were possible to take a photo and fingerprint (assuming no technical glitches) in 15 seconds, the scale of such an undertaking will lead to significant delays at the land border ports of entry, US airports and at pre-flight inspections in various Canadian airports. While exit processes are not yet known, affected travelers will also likely be required to submit an electronic fingerprint when departing the U.S. Of course, this information will be freely shared with a variety of agencies including the DHS's Bureau of Citizenship and Immigration Services, which will be able to use the information collected to determine whether or not an individual qualifies for such benefits as extensions as well as changes to or adjustment of status. In addition, U.S. consulates worldwide will have access to and use of the technology when making the determination as to whether an individual qualifies for the issuance of a visa. In this regard, the non-immigrant section of the US Embassy in Ottawa has recently indicated that it would soon start using fingerprint technology, requiring personal interviews for all those applying for an entry visa, without the possibility of a waiver of this requirement. Other consulates across Canada are also expected to follow the Embassy's lead. For the time being, you should be aware that Canadian citizens and persons who are visa-exempt for business or tourism purposes under the Visa Waiver Program (including citizens of most western European nations, Japan, Australia, New Zealand) will not be subject to the US VISIT's fingerprinting process. Canadian permanent residents, however, unless they are visa-exempt, will be subject to the program's requirements. Implementation
Timelines and Other Concerns. US VISIT
is scheduled to be phased in at US airports and seaports by December 31, 2003 at
50 of the country's busiest land border ports by December 31, 2004 and at all
other ports of entry by December 31, 2005. Congress has allocated USD $380 million to the US VISIT program, which critics say is grossly under-funded and which will prohibit the American government from ensuring a timely implementation of the technology at its ports of entries and consulates. Total cost of the program over the first 10 year period is expected to be US $7.2 billion, although the U.S. General Accounting Office says that the final bill could be three times as high[2]. When one considers that approximately 279 million inspections of foreign nationals were made to the United States in 2002, and compared to the approximately CAD $1 billion that the Canadian government has spent on what would appear to be a less complicated gun registry system, the logistics and costs behind such an undertaking become breathtakingly clear. Indeed, the US General Accounting Office, in a recently issued report[3], criticized the program as being too ambitious and possessing too little financial and personnel resources to properly implement the legislated system in a timely fashion. However, an October 6, 2003 article in Federal Computer Week[4] quoted the US VISIT''s Director as saying that he remains confident that the rollout will take place as scheduled, by December 2003. But, questions remain as to the ability to roll out the US VISIT technology to the land border ports of entry by December 31, 2004. The American Immigration Lawyer's Association and other organizations have also voiced valid concerns regarding the appropriate use of the data collected by the system and possible misuse of the information received. U.S. government authorities remain resolute, however, that the data will be safely guarded and will not be misappropriated. Concluding
Remarks. It is likely that
with improved data collection, sharing of information and accessibility of
traveler's data at ports of entry, persons who could once travel freely to the
US may now find themselves in the position that they are denied entry or denied
benefits (including, for example, adjustment to 'green card' status) on the
basis of previous visa overstays, criminal violations, security concerns, and
other issues. As such, it is important that you advise your clients who may have previous criminal or immigration issues of the risks associated with traveling to the US after December 31 of this year. Remember, big brother is watching…. [1] Illegal Immigration Reform and Immigrant Responsibility Act of 1996. P.L. 104-208. [2] Homeland Security - Risks Facing Key Border and Transportation Security Program Need To be Addressed, U.S. General Accounting Office, September 2003, p. 4. [3] Ibid. [4] www.fcw.com/fcw/articles/2003/1006/news-usvisit=10-06-03.asp Alex Israel is a lawyer with Toronto based business immigration lawyers, Egan LLP who are allied with Ernst & Young LLP. Alex can be contacted at alex.d.israel@ca.eyi.com. See also www.EganLLP.com for more information.
After founding and building two companies, American Medical Optics and Chiron Vision, both under the auspices of major corporations, I became a venture capitalist working with companies to help them build profitable ventures. These experiences have led me to believe completely in identifying potential exit strategies at the onset of a business endeavor. Of course, this article is written with the understanding that many companies are founded and built as sustainable entities without an exit in sight. An example is a traditional family enterprise that focuses on generating positive cash flow and maintaining a consistent business. These companies are often built to sustain a single owner and to operate in their own right, and do not require an exit strategy. However, many entrepreneurs want to build a high-growth business and then realize a major financial gain from their investment and that of their shareholders. This process, as all entrepreneurs know, involves endless time, substantial money and a strong vision. These entrepreneurs are people who might even want to do it all over again once they have taken their company public or sold it to another entity. It is for these types of enterprises that an exit strategy is essential. Based on my 23 years of experience before entering venture capital, I have learned that building a business for a smooth exit involves four stages. The initial step is to reverse the plan, think exit first and then plan and organize accordingly. Next, place the exit strategy on the shelf and focus on building the business. Then, garner visibility through marketing, a process that I call "getting in the path of progress." Finally, execute on the exit. What follows is an examination of each of these stages. Stage One: Reverse the Plan, Think Exit First. When I founded Chiron Vision, a company focusing on ophthalmic surgical products primarily for cataract and refractive surgery, in 1986, my team and I wrote a plan that included all of the steps we intended to take, including research and development, product development, FDA approval processes and marketing strategies. Having already been involved in numerous other entrepreneurial efforts, we also knew that we should research and plan exit strategies. After careful due diligence, we determined two roads of exit for Chiron Vision. One was for us to be acquired by one of about five corporate leaders we had identified, and the other for us to sell stock to the public in an initial public offering. Either option gave us a clear objective for the business and established, in writing, the financial rewards we hoped to accomplish by following all the proper steps in building a viable company. Why did we build two exit strategies for Chiron Vision? The reason we chose to plan for both options in our business plan is because a single exit strategy is risky - you can't control where the market will be in five or 10 years. You can only control the quality of your product or service. Options are what can make or break a successful exit strategy, so we made sure that our options, and therefore opportunities, were solid and robust. Stage Two: Place Exit on the Shelf, Focus on Filling a
Market Gap. With the exit strategy in place, I put it on the shelf and focused on building the best company I could for the first eight years of operation. You don't want to go out to potential buyers before you have demonstrated the value of your product. Sometimes moving too quickly can actually diminish your chances of acquisition because the potential buyers get nervous about your haste in contacting them. To make sure we had something they would like to buy when we were ready to offer the business, we focused on product development, FDA approvals to prove market viability, and growing a strong sales and marketing team to make Chiron Vision profitable and well positioned for the future. Stage Three: Get in the Path of Progress Via Marketing. To continue along the path of acquisition, I carefully researched the corporate leaders in the market and began to make Chiron Vision even more visible by attending trade shows and conferences. I also contacted them directly to introduce our business strategy and the success Chiron Vision had already achieved in the market. I also nurtured relationships with the industry's investment bankers, who not only take companies public, but also often act as an intermediary between the two parties involved in an acquisition: entrepreneur and buyer. Building these relationships involves personal meetings and participating in investment conferences sponsored by leading banks. Stage Four: Execute on the Exit Plan. When considering the possibility of being acquired, aside from looking at the monetary price of acquisition, it is important to find a good home for the company, its customers and employees. Selling a carefully built enterprise involves more than purely financial decisions - it involves finding a company where your business has a good chance of being successful. When considering buyers for Chiron Vision, I reviewed the companies' underlying cultures, because if there had been a dramatic clash after the acquisition, the perceived value of our work would have been diminished. In the end, Bausch & Lomb, a global eye care company that had made a strategic decision to enter the ophthalmic surgical field and saw the potential for the products we developed, acquired Chiron Vision. Bausch & Lomb had annual revenues of about $2 billion, and we were a good fit for their needs, both on business and cultural levels. This was an ideal outcome for my management team, my corporate partner, Chiron Corporation, and me. It also inspired me to pursue my current passion for working in venture capital to build more companies in the eye care and medical device industry that will truly make a difference in people's lives. Now, at Versant Ventures, a venture capital firm that I founded with several partners in 1999 and that focuses exclusively on early-stage healthcare companies, I work with entrepreneurs every day to help them build better businesses with an end in sight and tangible goals to focus on along the way. By ensuring they all have an exit strategy I not only protect Versant Ventures' share of the companies but also help the entrepreneurs realize their greatest financial goals. William J. ("Bill") Link, 56, co-founded Versant Ventures, a venture capital firm based in Newport Beach, California, in 1999. Versant Ventures currently manages over $650M in committed capital. They have fully committed over $250M dedicated to their first fund, Versant Ventures I, and are currently investing the $400M dedicated to their second fund, Versant Ventures II. This article originally appeared Kauffman Foundation's Entreworld . Visit www.emkf.org and www.entreworld.org. The Kauffman Foundation works to accelerate entrepreneurial in America by reaching individuals of all ages through the delivery of education, development, and the promotion of an entrepreneurial environment.
The Internal Revenue Service (IRS) reports that they received some 24.8 million business tax returns for the year 1999 in the United States. BUT, it has been reported that of that total, there are approximately 18 million non-employee businesses. BizStats reported that there were 5.547 million businesses with at least one employee. Here is how BizStat's quantifies these businesses:4,467,900 (80.5%) of the total have sales under $1
million;
Feel free to forward a copy of Leveraged Capital to clients and associates. It is free to subscribe by clicking on this link: Click Here For Your Free Subscription To Leveraged Capital.
To Unsubscribe from Leveraged Capital: If you wish to removed from our mailing list, send an email to us at: ezine@GrahamFinancial.com with the word "Unsubscribe" in the subject field. © 2003 Graham Financial Corporation, All Rights Reserved. |
|
|
