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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 electronically and delivered 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. =============================================================== SCOR a million, processes to to make a million, a man worth many millions, and a site to find out if you should be paid a million. With US tax day here and Canadian tax day around the corner, we have found "million's" of reasons to read this months edition of Leveraged Capital. Much
success to you. ===============================================================
14 Years of Exceptional Service Contact Nikki Barnett (416) 367 - 1055 =============================================================== In This Months Issue: (Click on the Article Title To Go To The Full Story.)
=============================================================== Quote Of The Month: Investment Hindsight: ===============================================================
Many entrepreneurs that I meet have a dream of IPO
riches. Quite often, as owners of
small to medium sized companies, they have a lot of work to do before they can
even think about raising public money through listed securities.
There is however an option available for both American and Canadian
companies who want to raise public money. The Small Company Offering Registration, or SCOR,
was established to help such companies raise capital to expand their businesses
through small stock offerings. SCOR
offerings are limited up to $1 million but companies can offer a SCOR every
twelve months. The shares issued by
the company are not listed on stock exchanges, and the issuer acts as it’s own
transfer agent. Information that must be filed to meet the
requirements of a SCOR are found in what is referred to as “Form U-7”.
Form U-7 was designed for use by companies seeking to raise capital
through a public offering of securities exempt from registration with the U.S.
Securities and Exchange Commission (SEC) under SEC Regulation A, Rule 504 of SEC
Regulation D (referred to as Rule 504) or Section 3(a)(11) of the Securities Act
of 1933. Form U-7 can be used as the main disclosure
document for an offering registered in states that allow SCOR’s.
For each state that the offering is to be sold, a state examiner will
review and ultimately approve a company’s proposed SCOR.
If you were to offer your securities in two or more States within a
geographic region, a regional review is undertaken with a lead state
jurisdiction coordinating review, comments, and approval.
Form U-7 is extensive and must be made with full disclosure.
If any answer requiring significant information is materially inaccurate,
incomplete, or misleading, your company, management, principle shareholders, and
salespersons selling your SCOR will be held liable to investors. Be sure to
check with the jurisdiction that you intend to sell your SCOR to ensure that you
are in compliance with any unique securities law. Proceeds from your SCOR, can be used for working
capital, research and development, plant and equipment, retiring existing
indebtedness, and/or expanding or diversifying company operations. Any type of
investor or any number of investors may purchase stock.
There is no limit on the invested amount - any one investor may invest up
to $1,000,000. The offering can be promoted through public advertising. General
Requirements. Your company must:
Activities That May Be Prohibited Until Your SCOR is Registered.
Any action taking by a regulator in one jurisdiction may prevent the offering from being registered in another jurisdiction so be sure to check with the jurisdiction you plan to register in to ensure procedural compliance. Further
Considerations.
A SCOR is one type of corporate finance option
available to you. State regulators
have streamlined and improved the program to such an extent that a SCOR can help
you raise public capital to expand your business with, in comparison to an IPO
or a private placement, less costs and regulatory hurdles. That being said, the process is time consuming and you should
be aware that experienced legal and financial council will be invaluable to you
. Readers are advised to seek out
advisors for your particular situation if you are considering a SCOR.
This article was intended to be an overview and does not address all
issues concerning a SCOR. For further information, visit the NASAA web site at www.nasaa.org
or research specific information from the securities commission of the relevant
jurisdiction that you intend to file. ===============================================================
So you want to buy a Lean Manufacturing Software application (LMS) or go whole hog and buy a Lean Enterprise Software (LES) system. Wouldn’t that be nice? Even after you went through that ever so painful Enterprise Resources Planning (ERP) systems implementation not so long ago. Even though you swore “Never again!”. You are ready to bite the bullet and implement one of those “Lean Manufacturing Software” systems. What is the acronym for that “LMS”? Well there’s good and bad news. First the good news is that there is no such thing as Lean Manufacturing Software. Since back in 1997 when in "The Machine That Changed the World," Womack & Jones coined the term "lean production" as a synonym of "JIT," it has caught on and given the earlier label an obsolete connotation. The term “Lean” is also no longer limited to manufacturing organizations and has expanded to encompass the entire enterprise. Even though many software applications (such as your ERP), can contribute to the operation of a “Lean” organization some can greatly impede the implementation of “Lean” principles in an enterprise. That’s the bad news. What is Lean? In its most basic of concepts, Lean is the relentless removal of wasteful activities. Jim Womack, in his book "Lean Thinking," states it is determining what is of value and then making it flow. Determining what is of value is simple; the customer makes that decision. Making it flow is quite another thing. The term "Lean Manufacturing" is the prosecution of lean activities including each process from taking the order to collecting the cash. If the organization conducts design activities, then it begins with concept through design, launch, production, shipment, and service. The entire path consists of processes, some connected and some not. Each becomes the subject for the exhaustive reduction of waste. However I prefer the definition
used by Kodak Canada Inc.’s Norman Nauumoff
“ The concept of lean is predicated on a way of thinking. To be successful at it demands that you be
relentless in taking out any form of waste in order to achieve the business
result that you want.” “It is
much more than a business tool, it is a philosophy.” The key points are that it is a philosophy, a way of thinking, a culture and an on-going program of reducing waste in each and every step of the processes required from taking an order to collecting the cash. In order to reduce waste you must be able to document and measure each process regardless of how small. Some ERP systems have Process or Work Flow applications that allow you to document each process. However not all of them have the ability to measure the flow and subsequent improvements in them. Some ERP systems have databases that can be used to “model” the processes allowing for accurate measurement of both current and proposed. There are independent third party products that can be used to document your processes but again not all of them allow for accurate or meaningful measurement. Most allow for a cost measurement but not necessarily a time measure. Not all third party products have the ability to measure in the small increments that “lean” requires. In order to actually identify the waste you must be able to think and measure in seconds. Therefore it is important to make sure that you can measure in an accurate and meaningful way. Before you embark on your relentless pursuit of “lean” it is critical that you assess the current state of your technology. If you do not you will greatly jeopardize your chances of successfully becoming a lean enterprise. Some of the questions that you
should ask are: If you answered “No”, “I don’t Know” or even just hesitated in answering any of the above, you are not ready to start an implementation of the “lean” philosophy in your organization. It is important to address those issues first. If you have answered yes to each of the above then I suggest you spend the time to prove it, to document and make sure that all areas are completely covered. In summary “Lean Manufacturing” or “Lean Enterprises” are not software applications. They are terms that represent a philosophy that demands that you be relentless in taking out any form of waste in order to achieve the business result that you want. Your current technology or application will either contribute to or greatly impede the introduction of this lean philosophy. So you might not have to purchase new technology. But you have to make sure that you have it completely and properly implemented. You might have to purchase new technology as your current technology will not contribute but may in fact impede the implementation of the lean philosophy. Make sure that you get one that does. Although the implementation of
the lean philosophy in your organization will require much more effort than
implementing a Software application it will be very much more rewarding, when
done right. ===============================================================
Dan Rottenberg has written the very first biography
of Anthony J. Drexel (1826-1893). Rottenberg, who is the editor of _Family
Business_ magazine, depicts Drexel as a great American hero who has been
forgotten with the passage of time. Not only was Drexel "the most
influential financier of the 19th century," it was he who transformed a
"confused and underachieving" JP Morgan into a wizard of high finance.
On March 8, 1871, JP Morgan met Anthony Drexel at the initiative of JP's father,
Junius Morgan. From that day forward, these three men formed a unique
partnership, which played a leading role in financing governments, railroads and
corporations. Although JP Morgan was known as an autocratic leader (and
deservedly so), he learned to respect Drexel's business acumen; as long as
Drexel was alive, Morgan refused to make any move that that failed to meet with
his approval. This book is the culmination of more than twenty
years of research by the author. Anthony Drexel makes for a difficult subject;
he was always reticent about his private life, and even went so far as to
destroy his personal papers. Several of the major Morgan biographers (Edwin
Hoyt, Jean Strouse and Vincent Carosso), as well as historian/archivist D.W.
Wright, recognized Drexel's contributions. Yet (with the exception of Carosso),
their research on Drexel remains in the form of private, uncirculated drafts.
Readers of Ron Chernow's _The House of Morgan_ are led to believe that Morgan
and Drexel fought constantly (Rottenberg shows the reader how Chernow reached
this erroneous conclusion). In published works, Drexel appears as "Rosencrantz
or Guildenstern to someone else's Hamlet." Rottenberg's goal is to rectify this serious
omission, and he succeeds admirably. With much effort, he has located 150 cables
and letters written by Drexel himself, as well as several archives that contain
materials relevant to his subject. Although the letters and cables date from the
latter twenty-four years of Drexel's life, they help to draw at least a partial
picture of the man and his personality. Among his key traits were decency and
respectability; a knack for mentoring young associates (JP Morgan was just one
of several); devotion to family (but without favoring family members who worked
for him); deep aversion to politics; and a strong interest in philanthropy and
religion. The narrative begins in Austria, with the
adventures of Anthony's father, Francis Drexel. In his youth, Francis wandered
Europe to escape Napoleon's compulsory draft. After trying out various jobs, he
became an itinerant painter of decent ability. While visiting his hometown in
1815, he realized there were few opportunities there and in 1817, he sailed for
Philadelphia. He was accepted into Philadelphia society and married in 1821. He
traveled in South America for three and a half years, selling his portraits of
South American political leaders. After several attempts to enter non-artistic
business ventures, Francis opened a currency brokerage in 1837. As the Second
Bank of the United States lost its influence, the task of issuing currency fell
to hundreds of state-chartered banks. Many of these banks lacked sufficient
specie to fully back their notes. Brokers such as Francis sustained a liquid
market for bank notes, even during the Panic of 1837. When the U.S. economy
recovered, Francis's brokerage became increasingly prosperous, and expanded its
activities to become a private bank. It entered the emerging field of railroad
financing, at a time when many saw this line of business as risky and even
disreputable. Anthony and his brother Frank (b. 1824) worked
alongside Francis as teenagers, and became partners in (the renamed) Drexel
& Co. in 1847. Unlike many other businessmen, Francis made sure his sons
received training in art, literature and music as well. Of the two brothers,
Anthony emerged as the leader in soliciting new clients; Frank specialized in
office management. In 1851, Francis yielded effective leadership of
the firm to Anthony, and, taking advantage of the Gold Rush, opened a highly
profitable branch in San Francisco. Meanwhile, Anthony (recently married) was
occupied with large and increasing demands for railroad funds. To meet these
needs, Drexel and Co. expanded to Chicago and New York. Later, it allied itself
with George Peabody and his London firm. As the Civil War approached, Anthony became active
in financing the Union, along with his new partner, the flamboyant Jay Cooke.
Their efforts were pivotal in the war effort. Cooke made emotional appeals to
the public's patriotism, while Anthony provided sound business judgment behind
the scenes. (This relationship would later rupture, however.) At the same time,
Anthony helped his friend George Childs to purchase and rehabilitate the
Philadelphia Public Ledger. Through his dealings in government bonds, Anthony
established a branch in Paris and also became close with Junius Morgan. Before his meeting with Anthony Drexel in 1871, JP
Morgan had lost interest in a banking career and was on the verge of early
retirement. But Drexel made JP an offer he could not refuse. Drexel's New York
branch became Drexel, Morgan and Co., with JP as the senior partner. Junius and
JP Morgan joined Anthony Drexel to create an alliance with superior contacts
throughout the U.S. and Europe. But, as the author stresses repeatedly, personal
chemistry was their greatest asset. In situations with potential for conflict,
all three placed the survival of the alliance above their personal interests. By working with Drexel, JP Morgan gained invaluable
experience in railroad reorganization, including the replacement of reckless and
irresponsible managers. This would serve him well in the 1890's, when JP Morgan
& Co. became the acknowledged leader in this area. Public utility financing
was another field in which Drexel, Morgan and Co. made their mark. The final chapters of the book focus our attention
on Drexel's children and family, and on his best-known philanthropic venture --
the founding of the Drexel Institute (now Drexel University) in December 1891.
Anthony also encouraged the work of his niece Katherine, who dedicated her life
to educating African-American and Indian children and later became a saint. I find Rottenberg's prose to be very readable, and
I believe he has documented his main points quite well. The story demonstrates
the importance of personality, chemistry and management style in the success of
an enterprise. Rottenberg devotes much space to Drexel's handling of employees,
successful and unsuccessful, family members and strangers. He credits Drexel
with inventing many business practices that are common today, such as giving
shares of stock to deserving employees. Rottenberg's
book is primarily a biography of Drexel the man, not a business history of
Drexel & Co. Nevertheless, I would have liked to see (in addition to the
photographs) some figures or graphs relating to the events described in the
text. For example, annual data on new bond issues by the Union, or new bond
issues (and capital investment) by Drexel-associated railroads would further
help the reader to place Drexel's activities in context. But this is a minor
quibble with an otherwise excellent work, which I recommend to all students of
nineteenth-century financial history. Daniel A. Schiffman teaches in the
Department Economics at Bar Ilan University, Ramat Gan, Israel. One of his major
research interests is the history of U.S. railroads and their financing. He can
be reached by email at schiffd@mail.biu.ac.il Copyright Ó 2002 by EH.Net. All rights reserved. Published by EH.Net (January 2002). All EH.Net reviews are archived at http://www.eh.net/BookReview ===============================================================
We found a great site that at the very least will get you thinking about how much you are paid and how much you are paying your key employees. Check out www.Salary.com to find some great free information about establishing salary levels. The SalaryWizard database calculates salaries based on job title and geographic location. Salary Advice offers substantive and practical articles on a variety of aspects related to salary including negotiation, base salary, benefits, and stock options. A professional compensation consultant provides answers to frequently asked questions in Salary Talk, and Salary News will keep you abreast of the latest events happening in the labor market. Although information is American, it provides some interesting comparatives to the Canadian marketplace. ===============================================================
Join more than 100,000 other business leaders for an international seminar LIVE via satellite. This seminar will be presented by best-selling author John C. Maxwell, Coach Lou Holtz, and master motivator Denis Waitley. Saturday April 27th 9:00 am - 12:30 pm Click Here for more details. www.bachurch.cam/mi2002/index.htm To Advertise in Leveraged Capital: If you are interested in advertising in Leveraged Capital, email us at: ads@GrahamFinancial.com and we will contact you. 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. © 2002 Graham Financial Corporation, All Rights Reserved.
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