Corrections or additions?
Ideas are Golden
These articles were published in U.S. 1 Newspaper
on January 13, 1999. All rights reserved. For a complete list of business meetings, go to the events database at
https://www.princetoninfo.com/us1evts.html.
Paper and pen records reign supreme over computer files
in at least one area: intellectual property law. Scientists are supposed
to make journal-like notations in ink in bound notebooks, with numbered
pages, so no pages can be torn out. If a scientist tries to steal
trade secrets, these notebooks provide the almost infallible record
of “who did what when.” If those same records were only on
computer files, they could be manipulated six ways and would not hold
up in court.
Rick Pinto, a partner with Smith, Stratton, Wise, Heher & Brennan,
will discuss recordkeeping and other intellectual property strategies
on Thursday, January 14, at 6:45 p.m. at New Jersey Entrepreneurs
Forum at McAteers in Somerset. In a workshop entitled “Protecting
Your Intellectual Property: inventions, new technology processes,
computer software, and Internet-related issues,” he will be joined
attorneys from his own firm and A. Jared Silverman Esq. Cost:
$45. Call 908-789-3424.
An alumnus of Yale, Class of ’75, Pinto went to University of Virginia
law school and has spent 20 years at Smith Stratton, where he heads
the business and finance practice. “What I like doing is helping
companies get big, whether taking them public or doing joint venture
deals,” says Pinto. If intellectual property is the foundation
upon which you place your company, says Pinto, you need a table with
all four legs secure:
Insure the work product that belongs to the company. Haveappropriate systems and agreements to make sure the product and theagreements belong to the company, that what your employees inventactually belongs to you, and that your consultants don’t own whatthey do jointly with you.Confidentiality is the key here. Know how your scientist keep theirlab notebooks, where everything that is done is documented at thetime. “If there is a question as to who did what and when, youcan point to where you have documented things in a secure system ona daily basis,” says Pinto. In addition to biotech and pharmaceuticalscientists, lab notebooks are also kept in such industries as computersoftware, and electronics R&D.Protect the intellectual property with patents, copyrights,trademarks, or secrecy (trade secrets). The Coca Cola formula, forinstance, is kept as a trade secret. Yahoo, on the other hand, hastechnology known worldwide, but it has a trademark for its service.Secure your business relationships. “Negotiate anduse confidential disclosure agreements with business prospects,”says Pinto. “Make sure you don’t talk about things that they thenjust don’t go off and take. In certain contexts, trust is indeed thebest method,” he says. “In others a confidentiality agreementcan be put together so as to be presented as not silly or threateningto the recipient.””Once a prospect becomes a business partner, have detailed licensingagreements so you know who owns what and what they will pay for.”The most fatal mistake you can make, says Pinto, is to try to draftyour own joint venture agreements. “They appear simple to a nonspecialist,but if the nonwary do not insert adequate protections about when paymentsare to be made, and what alternate activities are open to a licensee,you could spend thousands of dollars on a software product and findthat someone is selling it and paying you very little.”Practice vigilance. Police former employees leaving thecompanies and trying to use trade secrets. “If they do, they areno longer trade secrets,” says Pinto.Particularly look for and police possible misappropriation by competitors.”A trademark loses its value or legal force unless the owner seeksto protect it,” says Pinto, referring to a case that was in thenews a few years back, where Gimbels Brothers store in Manhattan suedGimbels General Store in Maine. “It posed no threat to Gimbelsin New York, but under trademark law, if they had not policed thetrademark they would have lost the right to police it later.”The Entrepreneur University focuses on helping entrepreneursto develop skill sets to succeed, says Pinto, who serves on the organization’sboard. He expects 40 or 50 people to attend. ” As a result ofa delightful turn of events in our economy, there has been a definiteshift from large companies to small companies. A few are entrepreneursby default, but my experience is that most of those people cannotbe successful. As a lawyer who represents emerging businesses in NewJersey, nothing pleases me more than to help foster the creation ofnew ones.”– Barbara FoxTop Of PageBankruptcy:Nasty MedicineBankruptcy is nasty medicine, but small business ownersin particular need to think about the possibility of bankruptcy fromthe moment they get started. This is not so obvious, considering thatfew people want to think about losing it all amid the excitement ofa new venture.Downer maybe, but it’s nowhere near as depressing as when you’re staringbankruptcy in the eye, says attorney David Raven of BusinessAlliance Capital Corporation on Alexander Road. He will speak on “WhenThere Are Stars in Your Eyes, Why Prepare for Chapter 11?” withTed Koppa, also of Business Alliance Capital, and Fred Riceof Nauset Business Evaluation, on Tuesday, January 19, at 11:30 a.m.at the Venture Association of New Jersey meeting at the Westin inMorristown. Cost: $55. Call 973-631-5680.It’s essential to realize the sobering truth that a large number ofnew businesses will fail, claims Raven. According to a yearly surveyby the American Insurance Group, he says, 86,500 businesses failedin 1997, resulting in 316 shareholder suits. An average of $5.2 millionwas paid per lawsuit.With such high legal costs, it’s not surprising that bankruptcy isoften a luxury that small businesses can’t afford. “Chapter 11bankruptcy is rather expensive. It’s a question of whether it’s economicallyworthwhile. The cure can kill you. Paying lawyers and accountantscan cost from $300,000 to $500,000 — and the creditors haven’tseen a button yet,” says Raven.After graduating with a BS from the University of Tennessee in 1949,Raven earned his law degree from Rutgers University. He has been practicinglaw for 47 years, 37 of them predominantly in creditor and debtorwork.”These days, there may be fewer business Chapter 11s filed thanin the rah-rah days in 1989 and ’90,” Raven says. The existingsuits have a bigger impact on the economy, but, because of costs,most people are relying on other options.One possibility is to see an asset-based lender like Koppa. At theVANJ meeting, Koppa will explain his criteria for making loans, whichinclude ensuring that “for every $10, he makes sure there’s atleast $20 to $25 of equipment to back it up and a personal guarantee,”says Raven.Or a concerned business owner can speak with Fred Rice, turnaroundbusiness workout consultant. He will evaluate a business’s alternativesand steer it in the right direction. He attempts out-of-court solutionsand deals with creditors, helping his clients refinance their debts,working on lesser payments or longer payment time, or persuading businessesto sell excess inventory to pay off creditors — something ownersare often loathe to do.”People want to hold on to inventory, but it’s best to sell anduse the money to pay the creditors,” advises Rice.While panicked responses may be short-sighted, they are easy to understand.No one wants to let go of their dream, and often they will try anythingto keep it alive. One trap that Rice sees many small business peoplefalling into is “robbing Peter to pay Paul.” Small businessesoften find cash by not paying withholding taxes, he says, “whichhas immense consequences, since the government considers you a trusteefor other people’s money.”It can end up with some near-tragic situations. After borrowing fromeveryone they know, people come into a financing office demoralizedand devastated. “You’re doing triage — dealing with peoplewho are under tremendous strain,” says Raven. One client was soagitated that Raven had to literally dance the man around the officeuntil he could stand between the client and a suddenly sinister openwindow.Thankfully, there are compromises between letting the dream go andholding on when you shouldn’t, and Raven wants you to consider thosebefore you even get started. Consider, too, if you should be in businessin the first place: Speak with a business counselor or lawyer. Ravensuggests asking yourself these critical questions from the first:Take stock in yourself. Do you have what it takes to bein business? A dreamer, inventor, or a lucky person who comes up witha fantastic idea while walking the dog may not know what is reallyinvolved in going into business. Can you write a business plan, andone that banks will understand? A bank will ask you to write a projection– are you able to do that?Research the market “to see whether there’s a cryingneed for your product,” says Raven. “Your product may be agood one, but there are other ways to clean windows.” Will ittake too much R&D before the product even materializes?Evaluate your bank account. You may simply not have enoughmoney. If you have a viable idea but not enough capital, Raven cautionsagainst taking money out of relationships with people, from your creditcards, or from the bank. “What happens when you get in trouble?There are so many terribles.”Such soul-searching may lead you to decide to license the ideaout instead. You may only get a quarter of the profits, but you won’thave bet the farm.Rice agrees with Raven that the best medicine is preventative. “Thereare all kinds of Band-Aid remedies. Business people tend to procrastinateand hope things work out, but hope isn’t good enough.”He suggests knowing and looking for the symptoms of trouble, suchas cash-flow problems (a classic sign), loan defaults, or inabilityto supply customers because of low inventory. Small businesses canlook for the same signs banks do to keep an eye on their progress:current ratios, working capital, equity, and losses. Swallowing somepreventative medicine is better than facing down bankruptcy any day.– Vickie SchlegelTop Of PageShuttling to BuffaloShuttle America, the Connecticut-based airline, beginsoperations at Trenton-Mercer Airport on Wednesday, February 10. Theairline will be offering three flights daily from Trenton to Buffalo,New York, at 7:20 a.m., 10:55 a.m., and 5:05 p.m. The flights fromBuffalo to Trenton are scheduled for 9:10 a.m., 3:15 p.m., and 7:05p.m. To make reservations, call 888-999-FARE. With a 14-day advancereservation the cost one-way is $39, $69 with a seven-day advancereservation, and $99 for walk-ups.”What we like are small cities that are between two mega-markets,”says Mark Cestari, Shuttle America’s vice president for marketingcommunication. “Trenton is a perfect place for us because it isbetween New York, Newark, and Philadelphia. There are a lot of peoplewho don’t want to have to drive to either of these airports.”The airline is focusing on business travelers.Shuttle America, which started flying in November, is adding one newdestination a month and plans to offer more destinations from Trenton.Currently the only airline from Trenton-Mercer airport, Eastwind Airlines,offers jet services to Boston, Greensboro, and Orlando.Top Of PageFamily Business:Endangered Species?Family businesses today face challenges such as globalizationand a complexity that were largely unknown a generation ago. Learnabout these and other threats to family business from Bill Trainer,who has led a six-generation family-owned business through a changingcompetitive environment. He speaks at the Rutgers Family BusinessForum on Friday, January 15, from 8:30 to 11 a.m. Cost: $45. Call732-445-7504.”A family business is designed to fail because it has more goingagainst it than any other type of business,” says Trainer. “Anybusiness has to struggle to survive today, and smaller businesseshave a double struggle because of globalization; they don’t have accessto international sources of supply or funding, and they lack resiliencyin a downturn.” Family businesses, Trainer feels, have a specialset of problems stemming from what he terms the “gene pool”and the “in breeding of ideas:”Finding competent management talent is a challenge for any business,and imposing on the candidate the requirement of having the same lastname puts another hurdle on the pathway to success. “You’ve justalmost eliminated the possibility of consistently finding good mangers,”says Trainer.One solution is to have the family own the business, but have someoneelse run it.Keeping a company current is a key ingredient for smallfamily business success. Trainer refers to “Future Shock”by Alvin Toffler. Among the tenets is the notion that the key to understandingthe world of the future is that more changes are coming through societytoday than ever before, and they are coming through in a rapidly increasingrate.Trainer cites the example in the book of a grandfather, a father anda grandson sitting on the 15th century equivalent to the back porch.”All of them could talk about anything and they could all understandeach other. The problems the grandson would run into would be theones the grandfather had run into. Society changed so little,”says Trainer. “Consider today where your 17-year old daughtercan’t understand what her 13-year-old sister is up to.”Avoiding complacency. Trainer feels strongly about thevalue of ongoing professional training. Too many people land jobsonly to coast through their careers with no real thought about professionaldevelopment. “Would you take your tax work to a CPA who has notkept up to speed on the tax laws in the last 20 years or visit a doctorwho hasn’t opened a medical journal in the past 15 years,” Trainerasks.Inbreeding of bad ideas is another problem area particularto small family businesses. Since there is little turnover in mostfamily businesses, there is little infusion of new ideas. Fatherswho teach their offspring what they learned may be unwittingly settingthe stage for failure. “What made sense for Daddy back in the’50s is disaster today,” says Trainer.The Trainer family business, now national in scope, originallystarted as a group of bars in Philadelphia. It was founded in 1863by Edward Trainer, who went to sea at age 13 as a cabin boy and returnedwith enough money at age 22 to open a bar and stake some of his relativesto bars. The next step was a distillery to supply the bars. By thetime Edward Trainer was nearing the end of his life in 1914, Prohibitionwas drawing near, and Edward’s son Joseph diversified the companyby buying pharmacies, non-alcoholic beverages, dairy products andmachining companies. All these enterprises were turnaround ventures;the family would buy rundown businesses and build them up.The advent of the Depression saw all the Trainer businesses fail,except the dairy, which later became part of the Foremost McKessonCorporation, and the machine business, which became the main familybusiness. The Roller Bearing Company of America had been purchasedby Bill Trainer’s grandfather and moved from Newark to the old MercerAutomobile factory near the present location of the Amtrak stationin Trenton.”Then a miracle happened,” says Trainer, “called PearlHarbor.” The outbreak of war was a boon to the business sincebearings were part of the bedrock of the war industry. “The Navywalked into the plant and said, `You still own the plant, but fromhere on in we’re running it’,” says Trainer. In 1952 Trainer’s fatherand uncles relocated the plant to its present location, adjacent tothe SEPTA Regional Rail Line West Trenton Station. The dawning ofthe ’80s brought an end to the small ($25-$30 million) family ownedbearing business. During this time the bearing business was consolidatinginto what Trainer terms “bearing behemoths, multi-billion dollara year, multi-national global firms.”The family elected to sell the business in 1987. During the ’80s thefamily had been developing side businesses in industrial distributionsuch as fluid power (hydraulics), pneumatics, and light manufacturing.The Trainer family’s current parent corporation, General SullivanGroup Inc., is owned by the family, but most of the family membersdo not participate in the business.During the past four years, when Bill Trainer was president of thefirm, he changed the focus of the company to “value-added industrialdistribution.” Trainer defines this as, “buying a productfrom someone else and then doing something to it: assemble it, fabricateit, design it, machine it. We add value before we redistribute thatproduct.”Trainer brings a unique perspective since over 30 years of his professionalexperience was with publicly held firms. At 59 he has two grown children,recently retired from the business, and lives with his wife in NewHope. Trainer has one brother and four sisters; they are not involvedin the family business.– Jeff LippincottTop Of PageBusiness on the ‘NetIt will become evident in 1999, says Charlie Levinof the Pathfinder Consulting Group LLC, that the Internet has beenunderhyped all along. “Business opportunities will exceed one’simagination.”Levin gives two half-day workshops, starting with an introduction,”Doing Business on the Internet,” on Tuesday, February 19,at 8:30 a.m. at the New Jersey Technology Council headquarters at500 College Road. Part I will cover what works and what doesn’t inselling products and services over the Internet. The second session,with a “how-to” emphasis and involving panelists telling successstories, can be taken separately, and is Tuesday, February 2. Cost:$175 or $300 for both sessions. Call 609-452-1010.Levin teaches this class in a five-session format at Fairleigh Dickinson’sRothman Institute for Entrepreneurial Studies starting Thursday, March4, at 6:30 p.m. in Madison. Call 973-443-8842.Levin majored in philosophy and Greek at the University of Rochester,Class of ’73, and has 20 years as president of a retail and commercialbusiness, president. His six-person consulting firm, founded in Annandalein 1994, includes two web designers and two programmers (E-mail:clevin@outofchaos.com.).He suggests that web users are surfing less and choosing favoritesites. “People are finding a few sites that are important to them,whether it is a travel site, a news site, or a stock transaction site.”Things that Levin says don’t work:Using your current materials and porting them over tothe Internet. “The paper models of product catalogs and brochuresdo not translate well to the Internet.” Take advantage of thetechnology to provide something — information or an interactivepresentation — that visitors can’t get anywhere else.”Amazon and Yahoo recognized a different business paradigm andbuilt a business approach around that. Those with a traditional mindsetmust figure out what could make their business exciting and new,”says LevinToo much text. Make it easy to read.Big, fat, slow-loading graphics. Make it easy to browse.”Unless you engage people immediately, deliver your message, andallow them to act in some way — to give you a lead or give youa sale — you won’t succeed.”Levin will demonstrate with examples of good and bad websites,and for the latter he refers to https://www.webpagesthatsuck.com.Bad web sites are not necessarily the cheap ones. Says Levin: “Thereare multimillion dollar bad web sites.”Top Of PageChoosing ChildcareWhen choosing a child care center or care provider,look for one that does not insist that children share, says ConnieDanser, director of the University-N.O.W. Day Nursery at 171 Broadmeadin Princeton.Though the “no forced-sharing” rule may surprise parents whocope daily with sibling fights, it is well grounded in early childhoodeducation theory. “Sharing doesn’t mean that if another childwants it, you give it to them,” says Danser. “You can findsomething else for the other child to play with, or negotiate withthe first child on when he or she will be ready to give it up.”Just as Governor Christie Whitman is insisting on full-day opportunitiesfor preschoolers in some school districts, Danser will discuss childcare alternatives on a panel for the Princeton Business & ProfessionalWomen on Monday, January 18, at 6 p.m. at the Holiday Inn. Also speakingare Sandy Feldman of the state Division of Youth & Family Servicesand Kathy Challendes, a family-centered child-care providerand former school teacher. Cost: $28. Call 908-359-2034 or E-mail:charoj@msn.comThe University-N.O.W. Day Nursery will also have a parents’ open houseon Saturday, January 23, from 10 to 12 a.m. Call 609-924-4214. Thefull-day nursery, founded in 1970, is supported by Princeton University(the space is rent-free). With a staff of 23 (and ratios higher thanthe state requires) it cares for 81 children, from infants to pre-kindergarten.Special subjects include tumbling, movement, science, story-telling,and nature. Preschool tuition is $800 per month, and for infants,$1,100. Also sharing the Broadmead building is the University LeagueNursery School, a half-day and full-day cooperative nursery school.More widely known than the sharing philosophy is the non-sexist stereotypingphilosophy upon which Danser’s school was founded. The founders were,after all, women from N.O.W. and Princeton University. “We arebias-free in all ways,” says Danser, a graduate of Rutgers’ DouglassCollege, Class of 1959, who has certification in elementary educationand early childhood from College of New Jersey.”We encourage lots of freedom and autonomy for both children andstaff members,” says Danser. “Children are supposed to haveexperiences through play that expose them to books and letters andnumbers and on their own they develop school readiness. We don’t drillthem on anything. We encourage their thinking skills and innate creativityby open-ended questioning and allowing them to work out things ontheir own.”Since Whitman wants to improve the cognitive skills of children inthe poorest school districts, you might think she would emphasizedrills, but no. Whitman says that three and four-year-olds shouldbe playing, not cramming for kindergarten: “What children needmost at this age is nurturing, stimulating, creative adults who interactwith them in an age-appropriate way. They’ll do educational and developmentalactivities, but a large part of that is play.”Danser gives these tips for parents trying to choose:”Spend time in the environment and get a feel for thecenter ,” she says. “See if the adults are respecting eachother and the children. Is there a sense of warmth and joy?”Ask What if? questions. What if the child sheds tears?Teachers should not say “That doesn’t hurt, don’t cry about that,”but acknowledge their feelings: “You were upset about that, weren’tyou?”Look for better than the state ratio of teachers to children,”so the teachers don’t get stressed out and over tired.”Ask how the staff is treated. Low turnover is a tell-talesign of excellence. “You want stability for the children,”she says. Because her school operates rent free, she can pay salariescomparable to the norm, but offer more benefits than usual, includingliberal break time and vacation time. “But,” says Danser,”no one is in this field for the money.”The watchword used to be “She who takes the child by the handtakes the mother by the heart.” For the non-sexist standard, thatneeds to be translated: “Those who take the children by the handtake the parents by the heart.”– Barbara FoxNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
