Making Consulting Pay

Caveat Vendor, or Let Sellers Beware

Corrections or additions?

These articles by Bart Jackson and Michele Alperin were prepared

for the March 14, 2001

edition of U.S. 1 Newspaper. All rights reserved.

Home Buying for Beginners

And I’ll just tack on another $800 for my filling up

the oil tank," sagely nodded the seller of my potential dream

house at the closing.

Blanching only an instant, I shot back: "And which oil company

did you say performed that topping off?" He squirmed and mumbled

a name which I called immediately. Turned out not only was the tank

empty, but he owed the oil company $1,100, which he had planned to

leave on my doorstep. I called him on it, and saved a bundle. Score

one for the purchaser.

Alas, such home buying victories stand rare as free loans. More

typically,

the first time home buyer rushes in like a blind man running through

a tool shed and exits unnecessarily bloodied. To help buyers avoid

the sharp edges, real estate broker Margaret Rose speaks at

Mercer County College’s three-session course, "Home Buying For

Beginners," starting Thursday, March 15, at 7:10 p.m. Cost: $48.

Call 609-586-9446.

Over the last 15 years, from her Hamilton Square desk at Gloria

Nilson,

real estate veteran Rose has seen all the schemes and pitfalls. She

lives where she grew up, in Allentown, New Jersey.

To see her gently nursing a coffee at Teddy’s Cafe in Cranbury, you

might not guess that this casually chatting woman consistently makes

the Million Dollar Club — reserved for those who sell at least

15 properties totaling over $2 million annually.

"Probably the greatest wrong foot a buyer can start off on,"

she says, "is trusting the wrong people. Don’t believe your

friends.

Don’t believe the newspapers, or even one banker who claims to speak

for the whole industry. There is no such thing as a no-money down

loan and everyone does not necessarily have to pay points." Rose

sees home buying as a logical process:

Find out how large a loan you qualify for. Before you

go dreaming what you want, best to know what you can afford. The

average

buyer puts down a 5 to 20 percent down payment. Yet a substantial

group can float a mortgage with a mere 2 3/4 percent on the line.

The old mortgage rule of thumb limiting loans to three times the

household

income is being stretched beyond recognition. Individuals can now

include 401K reserves as mortgage considerations. "People with

good salaries, outstanding credit, and solid appearance are extended

credit far beyond the three times rule," says Rose. This puts

more of the personal money management on you, however. After buying

your stately mansion, orange crates may be the only furniture you

can afford.

Shop for a broker. The biggest news on this front is the

newly slanted "Buyer’s Agency Agreement," which gives the

buyer his own personal agent. Traditionally real estate sales people

are agents of the home sellers, and represent their interests, not

yours. This agreement changes the allegiance to the buyer.

Some home buyers choose an agent by her own sales figures. Others

opt for the one who most seems to understand their needs and taste.

Using whatever method, interview several agents before choosing, and

don’t enter into too long an agreement. You can always renew.

Draw up a dream list. Determine what features in your

dream house you would love, like, not care about, or won’t accept.

Be exacting, but sensible. "The amount of living space and

location

are the most helpful," Rose says, "and of course the price

range." Maybe the schools are not important, but neighbors, noise

level, or a swimming pool are. What are the commuting needs? How much

land do you want? Also, be aware that items such as a fireplace or

a back porch, "vanities," as Rose calls them, can always be

added later. View the list not as a lock, but as an agent’s guide.

Trust your government. Most municipalities in this area,

says Rose, hold very tough house inspections prior to awarding that

prized Certificate of Occupancy, required by the seller of a new home

before sale. Thus, the odds of your getting a structural lemon are

fairly slim. This gives you the freedom to take advantage of that

fixer upper. Nothing so lowers a house’s price as a shoddy appearance,

yet nothing is as cheaply repaired as a cosmetic flaw. So if you are

handy, or just willing to live with background repairmen, you often

can bargain yourself a real gem in the rough. At the same times, says

Rose, you will naturally want your own engineer to check the house

over structurally, inspect for termites and radon, and have the well,

septic, and furnace all gone over.

Visit the local planning board. Your location may seem

fine when you visit the house this Saturday, but what can it become?

Does your quiet country lane become a thoroughfare at rush hour? What

about the land behind you? "The folks over in Georgetown, just

outside of Hightstown, had a lovely development two years ago,"

recalls Rose, "They had a long farmland vista. Today they stare

at a Shop Rite and the Route 33 extension. These structures’ plans

were all on the books, you just had to look before buying."

Yet even if you are wary and watchful, buying a sweet home is

still fraught with land mines. One of the largest bombs is buried

in the homeowners’ association agreement. The development house is

often the swiftest and easiest abode to pick up for the relocating

couple hastening to move on company bidding. But most of these demand

your signing a contract that binds you to all present and future fiats

of the homeowners’ association. Most associations forbid your old

auto or new trailer be parked in your driveway. You can’t even string

a clothesline. And just try planting one shrub or painting your

shutters

blue without the association’s approval.

If you’re buying your house strictly for its resale value, then you

won’t mind the enforced homogeneity. But if you are an

independent-minded

sort, the restrictions may chafe.

And if you are considering a townhome, says Rose, realize that even

townhouses, a type of home that lagged in the market throughout the

1990s, have now soared in cost. So in the end, should you jump in

and grab or even bid up that offering price? Or is the best hunter

the one who waits for the right game? Probably the best answer is

to glean awareness from a professional, then to make your decision

with your heart. After all, you are buying more than a shelter from

taxes, you’re buying your home.

— Bart Jackson

Top Of Page
Making Consulting Pay

Bet your shirt on it: Whenever Acme Mega-Tentacle merges

with UniHostile Inc., thousands of consulting firms are born. Made

redundant by a large corporation, many strike out on their own,

turning

knowledge acquired over 10 or 20 or 30 years into the basis for a

business. Over 6,500 private consulting companies already exist in

New Jersey. For those seeking to add one more business to that number,

Joel Haness speaks on "Building a Profitable Consulting

Practice" on Friday, March 16, at 8:30 a.m. at Mercer County

Community

College. Cost: $20. Call 609-586-9446.

Haness has probably considered every angle for launching a new venture

that has crossed your mind, and has adopted a fair number of them.

After growing up in Brooklyn and doing a stint in the service, Haness

received a bachelor’s in mathematics from New York University. Turning

his electronics hobby into a trade, he became an engineer with several

New York area firms. But a cornucopia of ideas and an iron

independence

soon led him to form Joel Haness Consulting, which he ran for 20

years.

Today, trying desperately to retire, he heads the Palmyra-based

October

Group, which supplies clients with creative marketing and financial

factoring services.

"The first advice I give any person starting out on her own is

to visit the Small Business Development Center," says Haness.

This center, which recently moved from Mercer to Rutgers, is part

of the government’s Small Business Administration program and offers

contacts, tax and financial advice, loan opportunities and more.

For the consultant, novice or veteran, Harness says that finding that

exact niche is the prime directive. It’s more than a matter of your

greatest expertise. That expertise must be honed to a marketable

package,

fitting a current need. "There is definitely room for the

generalist,"

he says, "provided he has the renowned name, a PhD, or some

recognizable

attraction. Otherwise, narrow into a specialty. Peter Drucker,

one of the best consultants in the business, deals strictly with CEOs

and CFOs — that’s his niche."

Flexibility is key, says Haness. He shifted from his private firm

to the October Group to take advantage of the need for financial

factoring.

With cash flow falling so far behind outstanding invoices, many

businesses,

particularly hospitals and E-commerce firms, teeter on the brink of

bankruptcy despite black ink. The October Group buys up the invoices

and provides the needed funds so the company can move forward. Haness

says this is a timely and profitable niche.

While setting up your consulting firm may seem fairly simple at first,

it’s a highway littered with an over 90 percent failure rate. Haness

insists on a checklist of absolute mandates to keep your new company

in the running:

Look beyond your first client. Most folks decide to take

the leap into consulting because they have one sure client in the

bag. The problem comes when you work yourself out of that job —

as consultants are ever doing. "Many were the folks, right along

U.S. 1," says Haness, "who remembered Cobol computer language,

made a killing on Y2K, then returned happily to their old jobs."

But if this is going to be a career, you had best be networking and

scrounging contracts long before the end of job number one.

Produce a product. Frankly, your precious pearls of spoken

wisdom just are not enough. It may be only a report or a model or

a video, but your client needs something tangible for his dollars.

Also, you will find yourself working better, more punctually, with

a greater focus if you are creating an actual product.

Work out an acceptable rate. Haness believes in the

personal

method. Ask yourself how many days you want to work (200 is the

government

minimum for full time status). Then honestly ask, "How much money

do I want or need annually?" After figuring your expenses, a

little

simple division gives you a daily rate. Then compare this with your

competition. You may be too low.

Sell the image. Haness recalls an occasion when he was

offered work that didn’t appeal to him. "I really didn’t want

the job," he says, "so I pulled the old trick of grossly

over-quoting

my price. The client listened, visibly blanched, paused only a second

and responded, `Well, you must have given a lot of good advice to

earn that $2,000 suit.’" The consultant has only his record, his

tongue, and that aura of expertise to land him the job. Dressing

cleverly

is an absolutely must. Normally this means the best tailoring and

most expensive ensembles available. "Of course," says Haness,

"If you are a landscape consultant, French cuffs and silk cravats

may prove woefully out of place."

Hold dear your integrity. Every item or occurrence in

a client’s office — no matter how inconsequential, stays there.

"As a consultant, you will be privy to a variety of secrets,"

says Haness. "If you leak one negative comment about a firm, you

are dead meat. You might as well seek another line of work."

Beware politics, but don’t shun them. Consultants are

seldom hired because the entire corporation stands twiddling its

fingers

cluelessly in the face of a problem. More frequently, you will be

hired to make a point on some manager’s political agenda. The CEO

may bring in an outside "unbiased" voice to set forth and

thus display the stupidity of the board’s reorganization plan. Or

he may hire you to push his own refinancing program. "Either

way,"

says Haness, "you are viewed as the objective expert, with no

axe to grind, and thus your words carry more weight."

Here is where Haness’ integrity rule becomes an important tool. Remain

private in all your findings, reporting only to the individual manager

who hired you. This affords you the gift of honesty. Even if you’ve

been brought in merely to back up a tenuous plan, your honesty will

prove a saving grace. Give the CEO a report outlining how his plan

falls short of the promised 18 percent increased profitability mark.

Set forth a more realistic estimate, then offer amendments outside

the basic plan that may boost the increase closer to his mark. Your

evaluation, given alone in the quiet of his office, becomes

appreciated

rather than threatening.

Haness’ parting bit of wisdom comes from decades of experience:

"You’ve just got to toughen your skin. The client may or may not

accept your advice. No matter how much of a raving idiot you may think

her to be, simply smile, give her your product, take the check, and

offer follow-up services. After all, it’s not your business. Your

business is to make money."

— Bart Jackson

Top Of Page
Caveat Vendor, or Let Sellers Beware

Everyone has a pet story about the product liability

laws. The rear view mirror that is required to state "Beware!

Objects seen in this mirror are behind you." McDonald’s

over-heated

coffee which netted its crotch-scalded customer a cool $20 million.

And the $50,000 fine incurred if you murder an OSHA inspector while

he or she is reporting a flaw in your product.

Now the product liability laws are being explained by the man who

literally wrote the book. William A. Dreier, retired chief judge

of the New Jersey State Appellate Court, speaks on Saturday, March

17, at 9 a.m. at the New Jersey Law Center in New Brunswick. The panel

will also include Westwood-based Robert J. McGuirl, Robert

Sachs of Monte Sachs & Borowsky, and Christopher Placitella

of Wilentz Goldman & Spitzer. One of more than 200 seminars presented

annually by the New Jersey Institute for Continuing Legal Education

(www.njicle.com), this should prove valuable not only to lawyers but

to the manufacturers whom they represent. Cost: $129. Call

732-214-8500.

A Plainfield native, Dreier went from MIT to Columbia Law School.

In his quarter century on the bench, Dreier faced the full gamut of

litigation, but no one in the New Jersey bar doubts his supremacy

in product liability. His 1,000-page tome "New Jersey Product

Liability and Toxic Tort Laws" (Gann Publications) has been the

mandatory text in most of the nation’s law schools. Having retired

to private practice in 1998, he currently directs the product

liability

arm of the 70-lawyer firm Norris, McLaughlin & Marcus in Somerville.

He also teaches on the subject for ICLE and for the New Jersey Law

Journal.

"New Jersey," says Dreier, "holds its manufacturers to

stricter liability laws, in many aspects, than any other state in

the union." He feels they are neither unfair nor frivolous, but

rather that the New Jersey manufacturer and its legal representative

must be more aware of them. Pay attention, he says, to the four basic

problems facing any maker of a salable product.

Manufacturing Defects. The product did not roll off the

assembly line as designed and is afflicted with, for instance, metal

fatigue. Inspectors do their best, but they can’t catch each flaw

in the thousands of bicycle frames. Frequently, even the best

inspection

techniques offer only a partial remedy. Some multi-step inspections

are too costly. Others may entail total product destruction. Sample

testing of one in ten or one in 10,000 might be the best possible

protection.

But whatever your system, says Dreier, "with this kind of product

failure, you are strictly liable."

Design Defect. Back in the early l970s, a multi-million

dollar government study sought and found the answer as to why toddlers

were falling off tricycles. Since that study, the old, high-seated

three-wheelers have disappeared from bike shop windows. New, lower

slung designs took their place permanently. And therein lies the

sensibility

of design defect law, says Dreier. "You can’t just say `this is

a stupid, unsafe design.’ The burden of proof lies on the plaintiff

to come up with an alternative design."

In addition, this new design must be practical, both physically and

financially. "If you made a car like a tank," he says,

"the

passengers would be infinitely safe, but the thing wouldn’t be

salable.

A hairbrush might be safer if it were made of titanium, but the cost

would skyrocket to the absurd."

This risk/utility balance becomes the main battleground in design

defect cases. Yet to enter the fray arguing an assumption of an

operators’

inherent intelligence may set you on the low ground. "Our

factories

are filled with large presses and punch machines," says Dreier,

"that literally require the non-operating hand to be safely

manacled

out of harm’s way."

Warning of Defects. "Yes, the silly ones are

legion,"

says the retired judge, "but almost every warning is due to a

court case and every court case due to a real life injury."

(Perhaps

it is not the over-cautious judges but freaky nature that leads to

our paranoid assortment of warnings.)

Most of these questions concerning what needs be in the instruction

booklet, how large warning labels need to be, and what should be

painted

"OSHA Orange," are subject to a mound of federal and state

regulations. Prescription drug labels are held to absolutely fixed

FDA specifications, for instance. The question of user sophistication

reappears: That the cockpit of a 747 is occupied by expert personnel

should make exhaustive warnings unnecessary, but any fool can buy

a multi-blade garden tractor.

Successor Liability. Business mergers are like marriage.

You are buying into the debts and flaws of the whole family. If you

purchase the Cranbury Beer Company and then use its plant to make

root beer, you are responsible for the defective glass bottles they

made even before your purchase. "In fact, New Jersey is now the

only state which demands due diligence and traces liability back

through

bankruptcy," warns Dreier. So even if you pick up a Chapter 11

organization, a liability search would stand you in good stead.

Thus, while it is a good idea to arm yourself with a clever attorney

to get you out of such scrapes, better still to hire wise managers

who will avoid them. "Preventative product liability," notes

Dreier, "is a highly underpracticed art in most businesses

today."

— Bart Jackson


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