Back to Basics For Media Companies
Can New Jersey Be Hollywood East?
Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the September 17, 2003 edition of U.S. 1 Newspaper. All rights reserved.
LLCs Gain in Popularity
B>Victor Elgort, a senior partner at law firm Norris
McLaughlin & Marcus, started out to be an engineer. But his timing
was off. “Astronauts had just landed on the moon,” he recalls.
The big excitement was over, a recession was beginning, and, he adds,
“I saw that students one and two years ahead of me were having
a hard time finding jobs.”
Using analytical skills, Elgort reasoned that the traits that make
a good engineer — including analytical skills — are the same
abilities that make a good attorney. “You have to break a project
down into its parts,” he points out. “There is a systematic
application of rules.”
So, leaving his new profession, Elgort, a 1973 Rutgers graduate, packed
up and headed to Cornell, where he obtained a law degree, which he
later followed up with an advanced degree in tax planning from New
York University.
Interesting, the successful practice of engineering or law is not
dissimilar to the successful set-up of a new business of any type
or size. Analytical skills are essential because there are important
choices to be made before a single piece of business takes place.
Yet Elgort, who spends many of his days helping to launch companies
— or to combine, separate, or expand them — sees that entrepreneurs
are often in too great a hurry to make careful choices.
“Everybody is so focused on the need to get up and running that
they don’t take the time to think about long term consequences,”
he laments. And when problems arise, he adds, “it’s often too
late to un-ring the bell.”
One of the first choices an entrepreneur has to make is that of the
legal form his business will take. Is it better to make the new venture
a corporation or a limited liability company (LLC), or maybe a sole
proprietorship? Or does it even matter? Elgort provides insight and
advice when he speaks on “Choice of Business Entity in New Jersey:
How to Do It Right,” on Thursday, September 18, at 8:30 a.m. at
the Best Western Palmer Inn. The cost for this program is $279. For
more information, call 800-930-6182.
Business formation is up. Fresh from lay-offs, IT professionals are
thinking of starting software development companies and former HR
directors are launching corporate training firms. Personal service
businesses are shooting up left and right as Boomers delay — or
come out of — retirement to put long-deferred entrepreneurial
dreams into play. Biotech remains active; restaurants continue to
open; and there is no dearth of attorneys and accountants ready to
hang their shingles.
No matter what the business, there is an urgency to pin that first
dollar to the wall — whether literally or figuratively. Slow down
just a little, is Elgort’s advice. Setting up the business properly
from the beginning can save untold dollars down the road.
While the possible permutations are endless — “No two businesses
are ever the same,” stresses Elgort — there are some guidelines
that apply across the board:
Check with your licensing board. Most entrepreneurs arefree to make their venture any type of entity they think best. Butsome are not.”Professionals are subject to regulations by state or federalagencies,” says Elgort. These agencies establish a list of permissibleforms of business entity. “There are 22 or more different regulatoryagencies governing licensed professionals,” he says. This situationis in flux, and Elgort sees less restriction in the future, but fornow, any professional needs to check with his licensing agency beforechoosing a business entity.Look past New Jersey. Elgort recently helped a real estatebroker form a business that will have offices in northern New Jersey,southern New York, and eastern Pennsylvania. Each state has differentregulations governing the establishment of a real estate company,and the entrepreneur has to conform to all of them.Think of where your customers are, says Elgort. Think of where yourmanufacturing facilities are. If your business has tentacles beyondthe boundaries of the Garden State, setting up a business entity mayinvolve conformity to more than one set of rules, and the advantagesof a particular form of New Jersey business entity may be lessened— or erased altogether.Take the long view. “When a person is thinking ofestablishing a business,” says Elgort, “he is focusing ontaxes, liability, and insurance.” That is all well and good, but,he asks, “what about asset protection, wealth transfer, bringingchildren into the business?” In setting up a business, think pastthe first year or two, and try to consider as many future scenariosas possible.Give the LLC a good look. The LLC is relatively new. Infact, the first one was formed in New Jersey just about 10 years ago— by Elgort. “It was part of Christie Whitman’s bid to makeNew Jersey business-friendly,” he says of the legislation thatbrought the LLC into being.The legislation passed in the summer of 1993 and went into effectin January of 1994. Elgort attended a ceremony in Trenton to celebratethe state’s first LLC. Elgort will not reveal the name of that firstLLC. The business is still his client, and, he says, “I don’twant to be mentioning clients’ names.” He does say, however, thatthe pioneer LLC is a family-owned business with sales of about $10to $15 million a year.In his view, the LLC, which has most of the advantages of a corporation,but is more flexible, and easier to administer, did, in fact, giveNew Jersey a business edge. In most respects, for most businesses,it is the way to go.Don’t worry about an LLC’s acceptance. A number of Internetsites that give advice about business formation — and that generallyprovide the service for a fee — state that an LLC is to be avoidedbecause it is not taken as seriously as a corporation. Banks may hesitateto lend money to an LLC, the online legal advice sites say, and othercompanies may hesitate to do business with them.Some of that may have been true years ago, says Elgort, but he isseeing that such fears have largely died down. “At first, bankswere worried,” he says. They feared that an LLC would free anentrepreneur of all liability, and that, therefore, they could beleft holding the bag in case of a default.Here again, the online advice sites seem to mislead, stating thatLLCs do, in fact, free their owners from liability. This is a commonperception among entrepreneurs, says Elgort. And it is wrong. Thereare a number of reasons for choosing an LLC, but counting on it toact as a shield against all liability is not one of them.The LLC’s owner is on the hook for any obligation for which he giveshis personal guarantee. In the real world, that covers just abouteverything. Certainly, says Elgort, “banks have the negotiatingpower to demand a guarantee.” In other words, if a kite shop ownerwants a bank loan, he is going to have to sign for it, perhaps pledginghis home or his stock account as collateral. Should the kite shopgo under, he would be responsible for making good on the loan.Letting banks know this, says Elgort, was all it took to make themcomfortable with LLCs.The LLC does offer some liability protection, though. Suppliers, saysElgort, may not have the clout to demand a personal guarantee. So,should a business go under, its owner might not be personally liablefor business supplies and the like.Choose a corporation when an IPO is in the future. Oneof the times when a corporation can be a better choice is the casewhere a new company is quite sure that it will be going public. Theoretically,an LLC can go public and can issue “units” rather than sharesof stock. But, at least for now, potential shareholders are much morecomfortable with stock.When in doubt, go with an LLC. It is easy to convert anLLC to a corporation, and the consequences generally are tax neutral.The converse is not true. When a corporation becomes an LLC, “thetax consequences can be dramatic,” says Elgort. “Essentially,”he says, “you are liquidating the corporation.”There are often ways to mitigate the tax bite, but doing so takestime and expert advice.LLCs are now the most popular business choice. Leavingcorporations in the dust, LLCs are now the top choice with new NewJersey companies. This is so, says Elgort, because they are so mucheasier to form and to administer, and because they carry substantialflexibility in taxation. A corporation, for instance, has to havea board of directors, officers, an annual meeting, and bylaws. LLCsneed none of these things.But LLCs are free to adopt any or all of these corporate trappings.They can mimic a corporation in almost any way.A company of any size can be an LLC. It used to be thatmany one-person businesses would operate as sole proprietorships,but now, even these very small businesses can reap the advantagesof an LLC. There have been a number of amendments to the originalLLC legislation. One, in 1998, declared that an individual can ownan LLC.At the other end of the spectrum, says Elgort, an LLC can be a largecompany with hundreds of millions of dollars in annual sales.Taxes cut both ways in an LLC. Owners of an LLC can chooseto pass-through their business’ net profits — or losses —and figure the tax as they would on personal income. Or, the ownersmay elect non-pass-through treatment, in which case the tax liabilitywould remain with the entity.Setting up a business entity is not, in and of itself, difficultor expensive, says Elgort. He cautions, however, that a new businessowner consider the choice in a broader context. This is particularlytrue when more than one person is going to be involved in the enterprise.Issues of management, succession, buy-out rights, and more are bestaddressed upfront.A little analytical thinking done in advance, as Elgort’s career pathamply demonstrates, can pay outsize dividends for the new entity —whatever its form — for decades to come.Top Of PageBack to Basics For Media CompaniesMedia is pulling out from under a tech-induced haze.”For the last five or six years, people got very excited abouttechnology and its promise,” says Rod Ammon, president ofStonehouse Media. “It put a spanking on all of us.”There is paradox here. Some of the fancy tech-enabled stuff is gone.Stonehouse Media’s web page, for example, no longer opens with anelaborate show of sound and motion. “We used to have a 60-secondintro to the website,” says Ammon. “Now it’s a straightforwardapproach.” But at the same time, technology’s reach into all kindsof media messages is multiplying.The market for the creation of these messages, meanwhile, is slowlybuilding after a long drought. At the same time that technology wasconfusing some clients, and disappointing others, their receipts,hurt by the recession, were dropping. Media spending was cut fromany number of corporate budgets.”No question,” says Ammon, “it’s been a difficult timein the media business.” He does see signs of a turnaround, though.Clients have some dollars to spend once again, and are ready to learnabout all of the new ways in which they can reach customers, trainstaff, and educate the public.Ammon joins a panel discussion on “Where the Work Is: SellingYourself Creatively and Finding Your Niche” at the Princeton MediaCommunications Association on Wednesday, September 24, at 6:30 p.m.at the Sarnoff Corporation. Also speaking are Tom Sullivan,president of Princeton Partners, and Debra Newton, presidentof Newton Gravity Shift. The event, which includes a light supper,is free for PMCA members, and $15 for others. Call 609-818-0025, ext.146, for more information.Ammon founded Stonehouse Media, which has offices at 989 Lenox Drive,eight years ago with James Paulus. They had been working at Videosmith,a media company with offices in Philadelphia and Princeton. When adecision was made to close the Princeton location, Ammon and Paulusdecided to open their own shop.Ammon, who grew up in Summit, studied communications at Northern MichiganUniversity (Class of 1987), and then went to work for PBS in Michigan,where he was vice president of marketing and sales.When Ammon and his partner started Stonehouse Media, he says, “weknew technology was coming.” And come it has. Where print onceled the parade, with television following, there is now an explosionof options, and each requires a special expertise. The way you delivera message over a cell phone, Ammon points out, can be very differentfrom the way you deliver it over the Internet.Nevertheless, for media companies, he is convinced, it is time to”get back to basics.” Here are some suggestions for winningbusiness by doing so:Know the client. Forget the technology for a moment, andconcentrate on just exactly what it is that the client does, and whoexactly it is that he needs to reach.Mine your expertise. “We’ve been expanding our markets,”says Ammon. “We looked at what we knew. We looked at what relationshipswere successful, and what relationships were a waste of time. Then,we zeroed in on all the things that had been worth the time.”As an example, the shop had done some work for fire investigationcompanies, producing some large-scale training tools. After terrorismexploded into everyone’s consciousness, Ammon’s company realized thatmany kinds of organizations would need the same type of training programs.Using the types of materials it had already prepared, it added a numberof new clients, including the Secret Service and the Department ofEducation.Dig into your verticals. Another specialty of StonehouseMedia had long been the medical field. Looking around, Ammon and hisstaff realized that pharmaceutical companies had a need to communicatewith both their over-the-counter customers and their prescriptiondrug customers. At the same time, both pharmaceutical companies andhealthcare providers had a growing need to train their people.The lesson for Stonehouse, and for every other media company, saysAmmon is “take advantage of what you claim to have expertise in.”Focus on your core competencies, is his advice. “The really goodagencies,” in his opinion, “really learn about a product orservice.”Never stop marketing. Stonehouse Media, like most mediashops, uses a number of freelancers. “On some days, we have fivepeople working on a project,” says Ammon. “Other days, it’s50. We’ve had as many as 90.” These freelancers, at least thosewho have been offering their services for any length of time, areintimately familiar with boom and bust cycles. They’re either workinglike crazy, or not working at all. The same can be true for agencies,says Ammon, and the answer is the same: “Keep marketing.”No matter how much work there is today, it is imperative to keep aneye on keeping the work flowing tomorrow.Build solid relationships. Yes, it’s basic. But nothingis more important. Networking? Well, it’s not a total waste of time,opines Ammon. But getting out and schmoozing pales in importance nextto the daily imperative of turning out exceptionally good work —again, and again, and again.Mix it up with technology. Don’t let technology call thetune, but play it for all it’s worth. There are so many new toolsavailable, and mixing them up can be effective — and great fun,too.Stonehouse has a client, Avecia, a pool and spa company, with a newproduct. “It’s a chlorine alternative,” explains Ammon. Toteach salespeople in pool companies all across the land about thenew pool-cleaning option, Stonehouse created a training program ona CD-ROM. Despite the proliferation of the Internet, CDs are stillimportant, he points out, because so many people still do not haveaccess to fast connections. But, while a dial-up connection doesn’twork well for video-intensive presentations, it works wonderfullyfor testing.So salespeople learned about chlorine-free pool maintenance througha CD-ROM, and then logged onto the Internet to test their new knowledge— and to gain certification. An added benefit of putting the Internetin the mix was that Avecia could know exactly how effective its campaignwas.”It’s like watching the stock market!” exclaims Ammon, clearlythrilled with the hybrid technique. “You can watch the results.You can tell which store is using the training.”The hybrid approach also works well in other settings. “Companiesin the medical industry would love to do broadband online training,”Ammon finds, but the bandwidth is still not there. It’s coming —probably soon — but in the meantime, putting the training on aCD, a DVD, or even a reel of videotape, and then putting the testingonline, is a good solution.Top Of PageCan New Jersey Be Hollywood East?The Garden State’s image isn’t tied too closely withtruck farming anymore. It’s more of a technology kind of place. Well-knownas the birthplace of television, and as fertile ground for telecomand pharma, it is not often linked with movies. Tinsel town? Nah,no one thinks of New Jersey that way.At least not yet. But at this very moment, scores of movies, televisiondramas, and commercials are being filmed from Bergen County rightdown to the shore. “It relates nicely to the technology industry,”says Michael Glass, director of Statewide Training Programsfor Mercer County Community College. “There is a whole new aspectof the kinds of things that people can do with computers.”This convergence is one reason that MCCC decided to hold the area’sfirst Entertainment Technology Conference. Subtitled “Exploringthe New Frontiers of Entertainment Technology,” the event, whichGlass is busy organizing, takes place on Thursday and on Friday, September25 and 26, at the Conference Center at Mercer County Community College.The cost is $295, but $99 with a college ID. Call 609-586-9446 toregister.”We were looking for topical conference topics to help with economicdevelopment,” says Glass, “and entertainment came to the forefront.”A further impetus for holding the conference now isthe news that Hollywood special effects studio Manex has firmed upplans to locate a facility in Trenton, in the Roebling Center. Glasssays that exact plans are still being worked out. But MIX, an industrypublication, wrote in July that Manex has purchased seven buildingson which to develop the Trenton Studios Development Project. Plansinclude converting 89,000 square feet of existing floor space intoproduction offices, post-production, visual effect, sound, rendering,and classroom facilities.Manex has entered into a redevelopment agreement with the Mercer CountyImprovement Authority (MCIA) and the City of Trenton for assistancein the development of its new facilities. The agreement includes capitalimprovements of approximately $25 million by the end of phase two.Both the City of Trenton and the MCIA have approved the company’sconceptual plans.Two weeks before the conference kick-off, Glass says that it is notyet certain whether representatives from Manex will attend the conference.Many other speakers have signed on, however, and, says Glass, “we’readding speakers every day.”Michael Uslan, New Jersey resident and executive producer ofthe Batman movies, gives the keynote. In addition to his Batman fame,Uslan is an Emmy Award-winning producer of many television shows andmovies, a cartoonist, an author, a lawyer, and a noted authority oncomic books.Acknowledging the convergence Glass sees in technology and entertainment,the conference offers three tracks: Movies, including special effects,digital cinema, and production; Video, including streaming video,animation, broadcast TV, and production; and Desktop, including streamingvideo, DVD creation, multimedia, and video games.Topics include “Design Direction and Zen,” “Go Shoot Yourself:One Day Movie Making,” “Making Corporate Videos,” “Blurringthe Line Between Gaming and Reality,” “Adobe Encore DVD,”and “Career Opportunities in Multimedia and How to Position Yourselfto Get Them.”Entertainment is big business in New Jersey. Steve Gorelick,associate director of the state’s Motion Picture and Television Commission,says that last year the state hosted 801 projects. Among them were70 features, two telefilms, and 153 TV series and specials.A Rutgers graduate (Class of 1979), who studied film at New York University,Gorelick has worked for the Motion Picture and Television Commissionsince 1980. In the intervening years, he has seen a tremendous growthin filming activity in the state. In 1980, there were 17 featuresand 19 TV series. The numbers rose to 31 features and 90 TV seriesin 1990, and really took off in the late 1990s.Reasons for New Jersey’s budding film career include the tremendouspopularity of the state’s most famous crime family, the Sopranos.So obviously of New Jersey — with its Turnpike intro and mix ofgritty old industrial streets and McMansion suburbs, the series helpedput the state on the entertainment map.Upon getting Hollywood’s — and New York’s — attention, NewJersey was more than able to follow through. “We have a wealthof talent here,” says Gorelick. “Crews don’t have to be flownin.” Then there is the state’s proximity to New York City. Addgenerally cooperative towns, and New Jersey makes it easy for filmmakers to operate efficiently here.Gorelick’s commission works ceaselessly to make this so. He spendsa good part of his time scouting locations and even more of his timetalking to multiple officials in towns that would make for good filmlocations. “Helping to pave the way,” he speaks with mayors,city councils, and police departments. “It’s everybody,” hesays, “county agencies, Port Authority, NJ Transit.” Filmingcan be disruptive, so he lets everyone involved know what to expect.Most towns are enthusiastic, and welcome the film crews. It is partof Gorelick’s job to make sure that the welcome mat stays out. So,in addition to prepping the towns, he works with the film companiesto make sure that they “work responsibly so that the towns willwelcome them back.”Gorelick enjoys going on location, and has even been drafted as anextra from time to time. But, as anyone who spent any time watchingthe filming of IQ or of A Beautiful Mind in Princeton knows, beingan extra often is not as much fun as it would seem. Filming is slowbusiness. “I’m impatient,” says Gorelick. People are alwaystelling him that they want to get their kids into films. “Well,”he says, “I tell them they have to be patient children.”An upcoming movie that Gorelick is eager to drop in on has a workingtitle of “Cookout.” A Queen Latifah project, it is about thedrafting of a young basketball phenom. “Jason Kidd is going tomake an appearance,” reveals Gorelick.Movies are fun, but as Trenton’s near-obsession with Manex’s movedemonstrates, they are also big business. Last year, says Gorelick,the entertainment industry pumped $70 million into the state. Andwhile everyone thinks of that money going to actors, directors, keygrips, and all the other delightfully enigmatic professions that rollquickly by in movie credits, there are a huge number of industriesinvolved.The Movie and Television Commission keeps a list of state resourcesfor movie makers, and the number of jobs represented is nothing shortof staggering. There are categories for day care providers, animals,tutors, dry ice, portable toilets, water trucks, parking attendants,paging companies, gift companies, music composition, mural artists,insurance, hot air balloons, air freight, art dealers, and dozensand dozens of others.To encourage the activity that adds to the revenues of companies inall of these categories, the state recently agreed to provide loanguarantees of up to $1.5 million through the NJEDA to film makersworking in the state. This is a per-project guarantee, and is meant,says Gorelick, to encourage small film makers, perhaps those with$6 million projects who need a bit more money to make a project areality. “Many Sundance winners have been shot here in New Jersey,”Gorelick points out, citing Two Family House, Clerks, and The StationAgent. “Throughout the country,” he says, “people areworried about films going to Canada, Eastern Europe, Mexico, thisis a way to level the playing field.”Top Of PageCorporate AngelsMajor supporters of the American Red Cross of CentralJersey’s benefit performance of the Music Man include DeVry Collegeof Technology, Franklin’s Printing in Edison, SovereignBank, WCTC Talk Radio, Englehard Corporation, IBEWLocal Union 456, and Johnson & Johnson. The performance takesplace on Saturday, October 18, at 8 p.m. at the State Theater in NewBrunswick.Culture Club, the new dance club located in the WestinPrinceton at Forrestal Village, is giving free admission cards onSaturday, September 20, to all enlisted walkers in the Mercer CountyHeart Walk, which took place on September 13.The hotel also will donate money to the Heart Association on behalfof all the walkers who attend the Culture Club on the 20th.Bear Creek Assisted Living in West Windsor has set upa hearing aid drop to benefit Help the Children Hear, a project thatalleviates the plight of lower-income hearing-impaired children.Donations of new or used hearing aids, or of cash, are being acceptedat Bear Creek’s facility, at 291 Village Road East. For more information,call 631-427-1713.The United Way of Greater Mercer County held a Back-to-Schoolparty for underprivileged children on Friday, August 22. Boomer, theTrenton Thunder’s mascot, was the star attraction.At the event, children were given book bags full of school suppliesdonated by employees of Pfizer, Bristol-Myers Squibb,Sarnoff, and The United Way.Top Of PageGrants AwardedB>Stony Brook Millstone Watershed Association hasannounced $100,000 in grants to 14 watershed groups throughout thestate. Funded by the Geraldine R. Dodge Foundation, the associationestablished the program to help strengthen the capacity of grassrootswatershed organizations to protect environmental resources in theircommunities.Awards ranging from $2,200 to $20,000 fund projects ranging from membershipdevelopment to volunteer monitoring patrols for watershed organizations.Funding will enable organizations to teach environmental programsin schools, offer guidance for municipalities on the upcoming stormwaterregulations, and to increase volunteer water quality monitoring efforts.Raritan Valley Community College has received a $315,575 grantfrom the National Science Foundation under the computer science,engineering, and mathematics scholarship program.The four-year grant will enable the college to award 20 to 25 fullscholarships to academically talented, financially needy studentspursuing studies in the fields of computer science, engineering, mathematics,and related technologies.The college plans to combine these resources with the privately raisedfunds for the Galileo Scholarships, which was launched last spring,and build a community of learners supported by online integration,faculty mentors, internship opportunities, and other learning activities.For information contact Janet Thompson at 908-526-1200, ext. 8271.Top Of PageParticipate PleaseThe Leadership Trenton program is continuing to acceptnominations for the Class of 2004. The program is based on the beliefthat a city’s greatest resource is the quality and commitment of itscivic leaders. It aims to expand and improve the network of civicand community leaders who care about the city’s future and who arecommitted to working together to make that future brighter.Leadership Trenton seeks applicants who live or work in Trenton. Successfulapplicants display evidence of professional accomplishments with indicationsthat advancement is in their future, clear potential to exercise civicleadership, and a commitment to positive change for Trenton and thesurrounding region.The program is a collaboration of Thomas Edison College, the JohnS. Watson Institute for Public Policy, and the Partnership for NewJersey.The application deadline is Tuesday, September 30. For more information,contact Nelida Valentin at 609-777-4351, ext. 4255.Top Of PageDonate PleaseThe Princeton Regional Chamber of Commerce is sponsoringa blood drive on Tuesday, October 28, from 11 a.m. to 3 p.m. at aBloodmobile adjacent to the Forrestal Village Food Court. The chamberreminds donors to eat within four hours of giving blood and to bringa picture ID.Call 609-520-1776 to schedule an appointment.G.O.A.L. Project, and international non-profit addictionleadership and learning training project with offices in Princeton,plans its first Benefit Evening on Saturday, September 27. The eventis entitled “Healing the Nations with Music.” It kicks offat 6 p.m. with a reception and seated dinner in the main dining loungeat McKay Hall, Princeton Theological Seminary, followed by an eveningof choral music with the Choral Scholars in Miller Chapel.A reception follows the concert.According to organizers, 85 percent of all money raised will go directlytoward in-country projects and training scholarships. Tickets rangein price from $25 to $150. Call 609-921-8298 for more information.Top Of PageCompute in Nine LanguagesThe East Brunswick Public Library now offers computingin nine different alphabets on the Windows 2000 computers in the referencedepartment. Accessible languages include Arabic, Chinese, Greek, Hebrew,Hindi, Japanese, Korean, Russian, and Urdu.The capability may be used with such Microsoft programs as Word, Excel,Access, PowerPoint, and Outlook. It is also possible to send multilingualE-mail in Hotmail, Yahoo Mail, or any other Web-based E-mail account.A PowerPoint guide on using the language features is available onthe library’s computers. For more information, call 732-390-6767.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
