Start Updating! iOS5 Released!

Get started with the iOS 5.1 update today! Apple brings 200+ new features for an even more superb operating system. There are bigger and better ways to communicate, not only through its primary messaging app, but with Twitter, your e-mail, and any other messaging apps of your choice. I’m sure the app market will continue to expand as well in concert with the improvements in iOS5, including new and improved game options.

If you’re a gamer, like me, I can point out a few choice games I play with my “free time” like: Draw Something, Hanging with Friends, Scramble with Friends, Scrabble and many more. These are just a few of their popular games that are still growing in the Apple App Store marketplace, give them a try, tell your friends and compete or play for fun.  Whatever you do just remember to enjoy your new iOS 5 update!

Games aren’t the only new addition.  There are now much better and more effective ways to communicate socially. You have your Twitter, you have your e-mail, Facebook, Tumblr, Google+, Instagram, OovooFaceTime, Skype and plenty more. The market constantly grows with the demands of those social butterflies among us.

If you’re into the media, don’t worry, there’s something for you too.  The App Store has plenty of those apps as well.  YouTube is always there and Spotify is a newer music media player that you can connect and synch with from your Facebook account, share playlists with friends and play it virtually anywhere!

Apple is always surprising consumers with their innovative products and ideas. We look forward to the next big Apple product which should be coming soon!

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Checking Out the Bottom Line on Spanx: The Male Perspective

How did a former babysitter overcome the disappointment of a failed attempt at law school to turn $5,000 in seed money into the global enterprise we know as Spanx? It’s been impossible not to notice the buzz building around the world’s most compelling new mogul, Sara Blakely.  This week alone there were countless Blakely features spanning across every imaginable media outlet.  I personally saw two cable news shows featuring Blakely at the same time while simultaneously toggling two online articles on my mobile phone at a restaurant.

Along the road to building the modern garment empire she founded in her apartment, Blakely once harnessed the power of talk show media to help get the company’s products noticed.  In her most well-known example, she showed that Oprah Winfrey was a viable sales channel long before she built her eponymous broadcasting channel.  Now Blakely’s efforts have brought her full circle.  Her latest feat as the youngest self-made billionaire profiled in Forbes Magazine’s 2012 feature means another lap around the talk show circuit. But this time it’s less about promotion, it’s about recognition

Yes, that’s right Sara Blakely is a real “B”, as in billionaire.  Congratulations are in order.  But as some wise man somewhere once said, “the second billion dollars is the hardest.”  So if Blakely expects to repeat her success, she’s got to innovate further and expand the market.    Spanx reached this point by catering to its female clientele around the globe to the exclusion of ½ of potential customers, which places the company in the ironic but strangely logical step of positioning to get into the pockets and pants of men worldwide with products like Manx.   As Sara and Spanx pivot in their quest to tap those assets, I want to offer some male insights.  After all of the morning show coverage and fawning attention of the business media, we know it’s hard to keep perspective.  So for Sara, and any aspiring Saras out there, here comes the straight dope – the male psyche.

Now I don’t have any background in psychology, much less consumer behavior, but I am an authority on unsolicited advice.   I think Blakely’s own path to success presents the best vehicle to offer some insights into the male way of thinking.  Before we get into her bio, it’s important to note that we men possess very short attention spans, and might lack the patience to attentively take in the whole story of a woman’s decades-long struggle to the top of the business world.  So I’m here with the compressed tale of Blakely’s Spanx.   Beyond that, men can be stubborn and hard to impress.  So I’m going to take a critical, but honest, view of Spanx’ rise to show just how hard it is to earn our respect and loyalty.  Let’s take a look at Blakely’s career milestones.

*For you visual learners, I’m going to chart the level of Sara Blakely’s accomplishment in both narrative and graphical form using the metrics of the Man Scale provided below.

Hard Worker –  Our society pays lip service to hard work, but for most men that’s a baseline, a given.  Despite her description of her early work as a “humbling experience” that toughened her, Blakely’s time hustling and paying her dues selling fax machines door-to-door at the bottom rung of the business ladder barely registers on the male Respect-O-Meter.

Entrepreneur – One would also think that starting out on your own as an entrepreneur should earn points, but the male psyche is also programmed to pooh-pooh even this accomplishment.  Blakely’s comically skeptical reception with a patent attorney she first sought out to help launch her idea left him asking if he was on Candid Camera.

Innovator – Don’t think that you’re the first person with a cool idea.  Most men imagine and promptly forget a few potentially world changing innovations on any given day (it’s the unfortunate flip side of our short attention).  Consequently, Blakely’s early inspirations of cutting off the feet of her hosiery or improving control top pantyhose would likely earn a few shrugs from the typical male, who is bound to recall seeing Underalls or Slenderalls commercials back in the 1970s and 80s and wonder why Blakely should expect credit for Spanx’ novelty in the late 1990s.  Even Blakely’s innovative use of new materials like Lycra to help catapult the industry out of your grandmother’s era into the “Shapewear” age is also bound not to impress your typical male.  Some are even likely to want to take Blakely down a notch with some observation that “Lycra is a man-made fabric invented in the 1950s.”  Now that’s not me talking, but there is a little useless trivia buff (ala Cliff Clavin) lurking in the soul of every man.

Millionaire – Financial success is an expectation in the male brain, regardless of whether the subject has himself earned a million dollars or none in his life. That a woman has achieved this is really not the threat to men that some would have you believe.  It’s that the male psyche tells each of us, “I could have done that” about most anything.  I’d say it’s not a sexist ego that keeps us from recognizing Blakely’s million dollar milestone, it’s just our regular ego.  Blakely doesn’t gain as much respect among men for reaching this milestone as you would expect, but she does score some bonus points for celebrating her first million with the purchase of a flat screen TV at the suggestion of her brother.

Billionaire – Now here is where you start to see some minor blips on the male Respect-O-Meter.  Moguls like Buffett and Gates long ago conquered this plateau.  Unfortunately, even a proud owner of a Billionaire trophy is still likely to elicit “Ho-Hums” among the guys.   Some long-forgotten robber baron once sparked the male imagination of ultimate wealth as the first billionaire, but the generations of successful people who have followed have caused the “B” designation to lose its luster.  Consider this analogy: Is there anyone out there now who really thinks that reaching the pinnacle at Everest is really that great a feat now that tweens have it on their list of to-dos to check off in preparation for their college applications?  Ascent to the Billionaire Mountain has simply lost its mystique for modern men.

Self-Made Billionaire – Here’s where Blakely’s story begins to rack up points with men.  Even if they’ve never seen or heard of Sara Blakely, the average man finds the allure of her story pretty intoxicating.  Who says men aren’t romantic?  We just find different things to be romantic.  We want to feel that there’s some ultimate satisfaction and accomplishment that we can claim from creating unimaginable wealth from nothing with our own hands.   In some ways, a Forbes billionaire profile is little like a Harlequin romance novel for men.  But it’s a guilty pleasure we recognize as reader fantasy, even if the stories are true.

The Ultimate Respect – It might come as a surprise, but the ultimate feat that leaps off the charts of the male Respect-O-Meter has little to do with money, and Blakely might be on to this secret.  When asked about her success Sara Blakely offers up some kernels of wisdom that shoot straight to the male psyche, triggering subconscious feelings and emotions that incite passion among men.   Blakely once explained to Business Week how she got adept at failure:

“I failed the LSAT. Basically, if I had not failed, I’d have been a lawyer and there would be no Spanx. I think failure is nothing more than life’s way of nudging you that you are off course. My attitude to failure is not attached to outcome, but in not trying. It is liberating. Most people attach failure to something not working out or how people perceive you. This way, it is about answering to yourself.”

Sorry to get all male here, but technically you can’t really fail the LSAT.  However, I must give her credit for claiming that she did.  Bold pronouncements of how to succeed even when failing would earn the respect of any man.  As scripted and familiar as a comment like this sounds, men respond to it.  Proclaiming your failures as the secret to your success?  That’s practically man-poetry.  Perhaps she had a strong-willed and influential man in her life who taught her the value of braggadocio, or maybe she’s just watched her fair share of business media fluff features on CEOs.  No matter…That’s the kind of stuff that that will earn you some respect in the Man’s World.

Hey, Guys!  Let’s hear it for Sara!!!  Look for Manx, In Stores Now…

The Family Business – Planning for Success and Succession

In the United States we have a sometimes unhealthy obsession with things like competition or taxes, sometimes making bad business decisions based what we mistakenly believe are good reasons.  It should come as no surprise that our country has an enormous market for estate planning services that includes a number of interconnected niches, segments and industries spanning financial advisory, wealth management, estate planning and asset preservation, just to name a few.  Passing along assets is pretty simple, but passing along a working business is not just complex, it’s hard to do successfully.  When you’ve worked hard and long to build your business, profession and reputation, how do you “keep it in the family”?

Is Estate Planning Enough for Family Business?

Estate planning is typically driven by the understandable wish to pass along wealth to future generations and to do so equitably among sons, daughters and even others who may be part of the extended family.   Those desires can come into conflict or even take on motivations that are deeply emotional, but not always rational.   A common example is the driving preoccupation to keep family wealth out of the hands of others, sometimes from your competitors, but just as often from the taxman.

Another example arises when deciding who is best suited to carry the mantle and maintain the family business.  Grooming someone into (or moving them out of) the family business doesn’t guarantee future success, and involves hard choices that can lead to difficult expectations, bruised feelings and even estrangement.  A well-planned estate does pass wealth to future generations in the form of assets, but also comes with its share of the, burdens, liabilities and responsibilities associated with that wealth, particularly when a family business is involved.  In today’s world it’s an unfortunate reality that many sons and daughters simply don’t want to do as their fathers and mothers have done, and have the choice (for better or worse) to go their own way – to leave the family business.

Nobody wants to see their life’s work come to an end.  There are many euphemisms to describe the myriad of ways a family business can decline if not properly transferred to the next generation (“A slow death”, “Being run into the ground”, “Died on the vine”).  No matter how poetic the phrase may sound, the risk of failing to pass along a family business is an outcome people desperately seek to avoid, and fears of that possibility drive the booming industry of estate planning and business succession.

However, there is a distinction between business success and business succession that’s worth considering.  Before seeking the guidance of outside professionals or advisors, talk within the family to be sure to take account of exactly what makes your family business successful.

Success and Succession

My father was in a visible and successful business that I romanticized.  He was well-known and widely respected in our community, so much so that it was hard to go places without people recognizing him and openly expressing their admiration.  At times we’d proudly bask in the attention of our father’s celebrity, and other times we’d get a little annoyed at having to share his time and attention with seemingly countless strangers, many of whom would recognize his familiar and popular persona in the faces, features or mannerisms of his kids, even when he wasn’t with us.

Our parents provided for us materially and with a sound education.  Not just the best available education, but the kind that makes us blush when we think of how much privilege and advantage we had over so many others less fortunate. Like most people, when I decided to go to college I didn’t exactly know what I wanted to do, but I expected to achieve the success that a good education offers.  That expectation of future opportunity is the one sense of entitlement that I’m not ashamed to admit to.  I think everyone should have it.

While I hadn’t found any particular calling by the time I finished college, I was free to make my own way and chart my own path, and chose graduate school.  Around the time that I was completing my studies, I approached my father about taking up the family business.  He had always been encouraging towards anything we pursued, so I was shocked when he told me that he didn’t want me to.  I remember that moment so vividly that I still feel the mix of disappointment, frustration and even anger that welled up to contort my face with what must have been a terrible expression.

My older sister had already become a doctor.  My younger brother had the intelligence and charisma that promised his future success.  Why wasn’t all my education and hard work enough?  I just couldn’t understand what my father was telling me.  At the time I felt resentful, and I wasn’t sure if I was hurt more by the thought that I wasn’t good enough for the family business or whether he thought it wasn’t good enough for me.  Either way, that moment had bruised both my ego and my pride.

My father was smart and sensitive, and knew that this blow affected me even more deeply than my pained face showed.  He was a nurturing type, but didn’t flinch at bluntly telling me his reasoning.  He told me that he wanted more for me.  He wasn’t putting down his path, but he tried to make me understand that in his generation they never had a choice of what to become.  He felt fortunate to have built a career at all, when most people he grew up with struggled to find the most basic jobs.  I didn’t understand the rejection or his guidance at the time, but I’ve gradually grown to appreciate his wisdom in that moment and the many others we’ve shared.

Deeds and Dreams

My father was in the teaching business, and he was a total success.  Besides being a gifted and accomplished instructor, he was virile, athletic and outgoing.  He was an exceptional leader, counselor, coach, mentor and role model to many generations of people who still remember and appreciate him for things he did 50 years ago and things he did 50 days ago.  I could never be him, but I’ve always wanted to be like him.  His active and giving spirit kept him busy with several jobs outside of the business of teaching, some for pay, but many done simply out of love for others.  Despite his great optimism he’d be the first to say that he’d never imagined all that he had done and seen in his life, let alone what his children and grandchildren would experience.

Through my decades of study and work building my profession and a series of businesses, I’ve taken pride in discovering that I have at least some of his thoughtfulness, ingenuity,  talent, insight, and to a lesser extent his magic.  While that inheritance doesn’t earn a penny more for me or my family, all of it makes me a better lawyer, entrepreneur and provider.  I like to think that in my work I always deliver more than I’m paid for.  Sometimes I do a good job at giving something valuable for nothing at all.  That is vintage Pop.

My father never formed a company, but he had many partnerships.  He never cared to accumulate  capital investments or tangible assets, but he grew very rich.  He never turned a profit, but he created immeasurable wealth.

While he never had a succession plan for any of us to step into the family business, either with him or in his footsteps, he certainly had a plan for success.  I’m still learning from so many of his earlier lessons.  I know that those lessons have been multiplied many times over for the thousands of others he affected with the same wisdom and touch I’ve gotten from him every day.  That is what I find most impressive and awe-inspiring.  Maybe one day, if I’m lucky, I can find my way back into the family business.

Paul – SMBMatters Blog Team

Global Economics and SMBs – Other Macroeconomic Indicators (Part 3 of 3 Part Serieas)

3rd of 3 part series

In the first two parts of the series, we discussed Europe’s well documented woes and what many economists predict will happen with the North American growth in 2012.  Now, let’s look at other variables that could further help to shape public sentiments as well as policy making decisions in the New Year.

  • The market itself – We had unprecedented volatility in 2012 as many investors went to brink and back.  It seemed only high frequency traders made money.  And you may ask, all that drama only to have DJIA up less than 6%?  The equities market is important since it helps to formulate strategy for many corporations when it comes to keeping additional “dry powder” for rainy days or investing in the infrastructure and the future.  And that has trickle-down effects on the job market and beyond.  The good news – many predict that it can only go up in 2012.                               Image
  • Inflation and CPI – Slowing inflation means your dollar goes further.  It’s as simple as that.  While many business leaders are reluctant to give too much credence to positive, much needed trend of lower raw material costs and modest, more manageable rise in CPI vis-à-vis rise in private –sector wages, even the most outspoken inflation hawks in the economics circle claim that inflation will be in check in 2012.

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  • Fed’s actions to further spur and continue the growth – dubbed QE3, two tried and true ideas are on the table.  Keep the short term rate low throughout 2012 and even into 2013 and re-start government bond purchase program to further increase liquidity in the market.
  • Growth in emerging markets – depending on how you define emerging market, overall growth will slow to below 5%, sharp decline from7%+ growth in 2010.  Nonetheless, it will still outpace the forecasted growth in the North America.

While these indicators point to incremental upside for SMBs in 2012 as far as positive business conditions are concerned, it is anything but a sure bet.  Again especially in today’s intertwined global economy, only time will tell….

Does Miserable Weather Lead to Miserable Business?

 

It doesn’t take a scientist to confirm that weather has an effect on many things, from people’s mood to business activity.  As this Fox Business report notes, businesses both large and small fluctuate wildly along with uncertain weather.  In that spirit, we’ve included some news on local and global weather that could be affecting small and medium businesses in the near future.

Groundhog Day! This animal determines whether or not we have six more weeks of winter or is spring is here. Some say it’s a myth, some call it a legend, and the others just say it’s an animal. I’d agree it’s just an animal, but hasn’t it always been right? The “Hollywoodgossip” site says that the groundhog is right 100% of the time. It has been said that the groundhog “Punxsutawney Phil” has seen his shadow 99 times and missed it 16 times with only 9 years missing from the records.

So six more weeks of winter there will be, dress for success or dress to impress. I’m sure you will do both, it’s a 50/50 chance to get sick or look good. This weather has been crazy enough already. Instead of the cold front flowing downward as usual, it’s pushing forward through the U.S and toward Canada.

 

and in other weather news…..

 

Cold snaps hit hard across European in the past few weeks. Forecasters have been warned that this cold will tighten its grip. Temperatures have dropped as low as minus 36.5 Fahrenheit (minus 38.1 degrees Celsius) just overnight just in the southwest. These new lows have taken over 200 lives.

There were people found dead on the streets, trapped in mountain villages and checked in hospitals for hypothermia and frostbite. The freezing temperatures are killing from Serbia to Lithuania. Rescuers were plowing through snowdrifts to get supplies, food and aid local residents. This must be really hard for the families that aren’t local and can’t be with their family during these hard times.

There have been no signs that these freezing temperatures will reach the U.S.  This cold front has somehow completely skipped the U.S. and has become a huge problem for the countries that are suffering; they didn’t even have a warning to prepare for these conditions.  Some have no power, no food, no transportation and some have no homes.

Let’s all hope for some sunnier skies, and a better climate…

So You Want to Start a Business?

Aside from my stint in the military (6 years, 2 months and 15 days to be exact), I’ve had the good fortune of being involved with both early-stage companies (3) and starting one from scratch (5 so far).  For the most part, I was extremely fortunate to have good partners – only one failed due to poor planning and execution.  Every experience builds on itself and teaches you a lesson or two.  Failure taught me the biggest lessons in being an entrepreneur.  Below are my five rules to live by, developed as my must-haves through the years of school of hard knocks…

  1. Passion – let’s face it, everyone wants to be rich.  We don’t start companies to be poor.  But you have to have passion and vision for your products and services.  And it has to be beyond just making money.  PARR’s mission is simple – we provide world-class back office support to small and mid-sized companies so that owners can focus on what they do best, grow their business – and my partners and I are passionate about this.
  2. Trustworthy partner(s) – speaking of which, there’s only so much you can do as a sole proprietor.  Having that partner(s) whom you can trust is worth its weight in gold.  I ask myself three questions:  Do I like you?  Do I trust you?  Can you do your job?  If the answer is not yes to all three, the partnership is probably not going to work.
  3. Total commitment – no military training has ever prepared me for two things in life, marriage and becoming an entrepreneur.  If the Corps and the Army is hardest thing I’ve ever done physically, being an entrepreneur is the hardest thing I’ve ever done mentally.  Highs are so high; lows are so unbelievably low.  Without commitment, nothing else matters.
  4. Reserve capital – a good friend of mine (former founder of FreeMarkets and a lifelong entrepreneur) used to discuss run-way capital.  Don’t count on grants, line of credit or any other form of outside capital.  Unless you are bringing ready-made customers, you will need at least 12 months of run-way capital to make it.
  5. Focus on sales – nothing else matters…  One endeavor that failed, we had a decent idea, nice office space, business cards, desks, printers that can pump out pages of pristine documents, laminated business plan that we paid consultants to put together for soliciting outside capital (in violation of rule #3).  One problem – no prototype and no customers and in time, no money.  There were a few more hiccups, but that’s for another post.

Notice nothing technical such as business name, business plan, legal structure, zoning and licenses is listed above.  Not that they aren’t important, but I believe these tasks will get completed in due time once your business gets going.  Last but not least, go for it.  Once you have all your ducks in order, have faith and jump in head first.  No doubt you will be successful.

The Art and Science of Valuation for SMBs

A good friend of mine who owns a successful franchise territory in lawn care products and services, called the other day to discuss business valuations.  He wanted purchase additional territories to expand his empire.  Basically, there are two ways to grow a business – organically or through a transaction, e.g. acquisition, partnerships, carve-out, etc…  He chose the latter route and wanted to make sure he did not overpay for future growth opportunities.

There is an old saying among bankers – “price is what you pay, value is what you get.”  You want to make sure that value is built into the price you pay for.  Business valuation is as much art as science.  The numbers alone do not tell the entire story, as the risks inherent in any business situation are not static.  While there are countless methods, the three generally accepted approaches to business valuation are: asset, market and income.

Regardless of the method chosen, sound valuation depends on the clear identification of cash flow, future growth potential and inherent risks.  For bigger firms, like public companies, fair market value also takes into consideration marketplace perception, investment value, and investor’s intrinsic value.  However, for smaller, privately-owned firms identification of relevant, often idiosyncratic variables that go into valuation calculations becomes even more crucial.

After a lengthy discussion over a couple of cups of coffee, we identified the following variables as the most relevant for valuation for his scenario: historical revenue trend; type and duration of customer contracts; gross and net margins; EBITDA vs. OIBA metric; number of competing businesses in the area; short- and long-term and potential liabilities on B/S; and other critical drivers of future revenue and growth.  Art is in the identification of these variables, proper weighing of each and understanding how they fit into the big picture.  Science is in the application of the formulae and metrics to arrive at a tangible figure, and also includes the creation of a forecast to predict the future.

I may be a geek, but these are fun projects.  Business valuation is a strategic exercise, and there’s nothing like war-gaming potential scenarios for optimal results.

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