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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
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
$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:
appropriate systems and agreements to make sure the product and the
agreements belong to the company, that what your employees invent
actually belongs to you, and that your consultants don’t own what
they do jointly with you.
Confidentiality is the key here. Know how your scientist keep their
lab notebooks, where everything that is done is documented at the
time. "If there is a question as to who did what and when, you
can point to where you have documented things in a secure system on
a daily basis," says Pinto. In addition to biotech and pharmaceutical
scientists, lab notebooks are also kept in such industries as computer
software, and electronics R&D.
trademarks, or secrecy (trade secrets). The Coca Cola formula, for
instance, is kept as a trade secret. Yahoo, on the other hand, has
technology known worldwide, but it has a trademark for its service.
use confidential disclosure agreements with business prospects,"
says Pinto. "Make sure you don’t talk about things that they then
just don’t go off and take. In certain contexts, trust is indeed the
best method," he says. "In others a confidentiality agreement
can be put together so as to be presented as not silly or threatening
to the recipient."
"Once a prospect becomes a business partner, have detailed licensing
agreements 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 draft
your own joint venture agreements. "They appear simple to a nonspecialist,
but if the nonwary do not insert adequate protections about when payments
are to be made, and what alternate activities are open to a licensee,
you could spend thousands of dollars on a software product and find
that someone is selling it and paying you very little."
companies and trying to use trade secrets. "If they do, they are
no 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 seeks
to protect it," says Pinto, referring to a case that was in the
news a few years back, where Gimbels Brothers store in Manhattan sued
Gimbels General Store in Maine. "It posed no threat to Gimbels
in New York, but under trademark law, if they had not policed the
trademark they would have lost the right to police it later."
to develop skill sets to succeed, says Pinto, who serves on the organization’s
board. He expects 40 or 50 people to attend. " As a result of
a delightful turn of events in our economy, there has been a definite
shift from large companies to small companies. A few are entrepreneurs
by default, but my experience is that most of those people cannot
be successful. As a lawyer who represents emerging businesses in New
Jersey, nothing pleases me more than to help foster the creation of
— Barbara Fox
Bankruptcy is nasty medicine, but small business owners
in particular need to think about the possibility of bankruptcy from
the moment they get started. This is not so obvious, considering that
few people want to think about losing it all amid the excitement of
a new venture.
Downer maybe, but it’s nowhere near as depressing as when you’re staring
bankruptcy in the eye, says attorney David Raven of Business
Alliance Capital Corporation on Alexander Road. He will speak on "When
There Are Stars in Your Eyes, Why Prepare for Chapter 11?" with
of Nauset Business Evaluation, on Tuesday, January 19, at 11:30 a.m.
at the Venture Association of New Jersey meeting at the Westin in
Morristown. Cost: $55. Call 973-631-5680.
It’s essential to realize the sobering truth that a large number of
new businesses will fail, claims Raven. According to a yearly survey
by the American Insurance Group, he says, 86,500 businesses failed
in 1997, resulting in 316 shareholder suits. An average of $5.2 million
was paid per lawsuit.
With such high legal costs, it’s not surprising that bankruptcy is
often a luxury that small businesses can’t afford. "Chapter 11
bankruptcy is rather expensive. It’s a question of whether it’s economically
worthwhile. The cure can kill you. Paying lawyers and accountants
can cost from $300,000 to $500,000 — and the creditors haven’t
seen 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 practicing
law for 47 years, 37 of them predominantly in creditor and debtor
"These days, there may be fewer business Chapter 11s filed than
in the rah-rah days in 1989 and ’90," Raven says. The existing
suits 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 the
VANJ meeting, Koppa will explain his criteria for making loans, which
include ensuring that "for every $10, he makes sure there’s at
least $20 to $25 of equipment to back it up and a personal guarantee,"
Or a concerned business owner can speak with Fred Rice, turnaround
business workout consultant. He will evaluate a business’s alternatives
and steer it in the right direction. He attempts out-of-court solutions
and deals with creditors, helping his clients refinance their debts,
working on lesser payments or longer payment time, or persuading businesses
to sell excess inventory to pay off creditors — something owners
are often loathe to do.
"People want to hold on to inventory, but it’s best to sell and
use 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 anything
to keep it alive. One trap that Rice sees many small business people
falling into is "robbing Peter to pay Paul." Small businesses
often find cash by not paying withholding taxes, he says, "which
has immense consequences, since the government considers you a trustee
for other people’s money."
It can end up with some near-tragic situations. After borrowing from
everyone they know, people come into a financing office demoralized
and devastated. "You’re doing triage — dealing with people
who are under tremendous strain," says Raven. One client was so
agitated that Raven had to literally dance the man around the office
until he could stand between the client and a suddenly sinister open
Thankfully, there are compromises between letting the dream go and
holding on when you shouldn’t, and Raven wants you to consider those
before you even get started. Consider, too, if you should be in business
in the first place: Speak with a business counselor or lawyer. Raven
suggests asking yourself these critical questions from the first:
in business? A dreamer, inventor, or a lucky person who comes up with
a fantastic idea while walking the dog may not know what is really
involved in going into business. Can you write a business plan, and
one that banks will understand? A bank will ask you to write a projection
— are you able to do that?
need for your product," says Raven. "Your product may be a
good one, but there are other ways to clean windows." Will it
take too much R&D before the product even materializes?
money. If you have a viable idea but not enough capital, Raven cautions
against taking money out of relationships with people, from your credit
cards, or from the bank. "What happens when you get in trouble?
There are so many terribles."
out instead. You may only get a quarter of the profits, but you won’t
have bet the farm.
Rice agrees with Raven that the best medicine is preventative. "There
are all kinds of Band-Aid remedies. Business people tend to procrastinate
and hope things work out, but hope isn’t good enough."
He suggests knowing and looking for the symptoms of trouble, such
as cash-flow problems (a classic sign), loan defaults, or inability
to supply customers because of low inventory. Small businesses can
look for the same signs banks do to keep an eye on their progress:
current ratios, working capital, equity, and losses. Swallowing some
preventative medicine is better than facing down bankruptcy any day.
— Vickie Schlegel
Shuttle America, the Connecticut-based airline, begins
operations at Trenton-Mercer Airport on Wednesday, February 10. The
airline 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 from
Buffalo to Trenton are scheduled for 9:10 a.m., 3:15 p.m., and 7:05
p.m. To make reservations, call 888-999-FARE. With a 14-day advance
reservation the cost one-way is $39, $69 with a seven-day advance
reservation, 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 marketing
communication. "Trenton is a perfect place for us because it is
between New York, Newark, and Philadelphia. There are a lot of people
who 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 new
destination 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.
Family businesses today face challenges such as globalization
and a complexity that were largely unknown a generation ago. Learn
about these and other threats to family business from Bill Trainer,
who has led a six-generation family-owned business through a changing
competitive environment. He speaks at the Rutgers Family Business
Forum on Friday, January 15, from 8:30 to 11 a.m. Cost: $45. Call
"A family business is designed to fail because it has more going
against it than any other type of business," says Trainer. "Any
business has to struggle to survive today, and smaller businesses
have a double struggle because of globalization; they don’t have access
to international sources of supply or funding, and they lack resiliency
in a downturn." Family businesses, Trainer feels, have a special
set 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 last
name puts another hurdle on the pathway to success. "You’ve just
almost eliminated the possibility of consistently finding good mangers,"
One solution is to have the family own the business, but have someone
else run it.
family business success. Trainer refers to "Future Shock"
by Alvin Toffler. Among the tenets is the notion that the key to understanding
the world of the future is that more changes are coming through society
today than ever before, and they are coming through in a rapidly increasing
Trainer cites the example in the book of a grandfather, a father and
a grandson sitting on the 15th century equivalent to the back porch.
"All of them could talk about anything and they could all understand
each other. The problems the grandson would run into would be the
ones the grandfather had run into. Society changed so little,"
says Trainer. "Consider today where your 17-year old daughter
can’t understand what her 13-year-old sister is up to."
value of ongoing professional training. Too many people land jobs
only to coast through their careers with no real thought about professional
development. "Would you take your tax work to a CPA who has not
kept up to speed on the tax laws in the last 20 years or visit a doctor
who hasn’t opened a medical journal in the past 15 years," Trainer
to small family businesses. Since there is little turnover in most
family businesses, there is little infusion of new ideas. Fathers
who teach their offspring what they learned may be unwittingly setting
the stage for failure. "What made sense for Daddy back in the
’50s is disaster today," says Trainer.
started as a group of bars in Philadelphia. It was founded in 1863
by Edward Trainer, who went to sea at age 13 as a cabin boy and returned
with enough money at age 22 to open a bar and stake some of his relatives
to bars. The next step was a distillery to supply the bars. By the
time Edward Trainer was nearing the end of his life in 1914, Prohibition
was drawing near, and Edward’s son Joseph diversified the company
by buying pharmacies, non-alcoholic beverages, dairy products and
machining 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 McKesson
Corporation, and the machine business, which became the main family
business. The Roller Bearing Company of America had been purchased
by Bill Trainer’s grandfather and moved from Newark to the old Mercer
Automobile factory near the present location of the Amtrak station
"Then a miracle happened," says Trainer, "called Pearl
Harbor." The outbreak of war was a boon to the business since
bearings were part of the bedrock of the war industry. "The Navy
walked into the plant and said, `You still own the plant, but from
here on in we’re running it’," says Trainer. In 1952 Trainer’s father
and uncles relocated the plant to its present location, adjacent to
the SEPTA Regional Rail Line West Trenton Station. The dawning of
the ’80s brought an end to the small ($25-$30 million) family owned
bearing business. During this time the bearing business was consolidating
into what Trainer terms "bearing behemoths, multi-billion dollar
a year, multi-national global firms."
The family elected to sell the business in 1987. During the ’80s the
family had been developing side businesses in industrial distribution
such as fluid power (hydraulics), pneumatics, and light manufacturing.
The Trainer family’s current parent corporation, General Sullivan
Group Inc., is owned by the family, but most of the family members
do not participate in the business.
During the past four years, when Bill Trainer was president of the
firm, he changed the focus of the company to "value-added industrial
distribution." Trainer defines this as, "buying a product
from someone else and then doing something to it: assemble it, fabricate
it, design it, machine it. We add value before we redistribute that
Trainer brings a unique perspective since over 30 years of his professional
experience was with publicly held firms. At 59 he has two grown children,
recently retired from the business, and lives with his wife in New
Hope. Trainer has one brother and four sisters; they are not involved
in the family business.
— Jeff Lippincott
It will become evident in 1999, says Charlie Levin
of the Pathfinder Consulting Group LLC, that the Internet has been
underhyped all along. "Business opportunities will exceed one’s
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 at
500 College Road. Part I will cover what works and what doesn’t in
selling products and services over the Internet. The second session,
with a "how-to" emphasis and involving panelists telling success
stories, 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’s
Rothman Institute for Entrepreneurial Studies starting Thursday, March
4, 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 commercial
business, president. His six-person consulting firm, founded in Annandale
in 1994, includes two web designers and two programmers (E-mail:
He suggests that web users are surfing less and choosing favorite
sites. "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:
the Internet. "The paper models of product catalogs and brochures
do not translate well to the Internet." Take advantage of the
technology to provide something — information or an interactive
presentation — that visitors can’t get anywhere else.
"Amazon and Yahoo recognized a different business paradigm and
built a business approach around that. Those with a traditional mindset
must figure out what could make their business exciting and new,"
"Unless you engage people immediately, deliver your message, and
allow them to act in some way — to give you a lead or give you
a sale — you won’t succeed."
and for the latter he refers to http://www.webpagesthatsuck.com.
Bad web sites are not necessarily the cheap ones. Says Levin: "There
are multimillion dollar bad web sites."
When choosing a child care center or care provider,
look for one that does not insist that children share, says Connie
Danser, director of the University-N.O.W. Day Nursery at 171 Broadmead
Though the "no forced-sharing" rule may surprise parents who
cope daily with sibling fights, it is well grounded in early childhood
education theory. "Sharing doesn’t mean that if another child
wants it, you give it to them," says Danser. "You can find
something else for the other child to play with, or negotiate with
the first child on when he or she will be ready to give it up."
Just as Governor Christie Whitman is insisting on full-day opportunities
for preschoolers in some school districts, Danser will discuss child
care alternatives on a panel for the Princeton Business & Professional
Women on Monday, January 18, at 6 p.m. at the Holiday Inn. Also speaking
are Sandy Feldman of the state Division of Youth & Family Services
and Kathy Challendes, a family-centered child-care provider
and former school teacher. Cost: $28. Call 908-359-2034 or E-mail:
The University-N.O.W. Day Nursery will also have a parents’ open house
on Saturday, January 23, from 10 to 12 a.m. Call 609-924-4214. The
full-day nursery, founded in 1970, is supported by Princeton University
(the space is rent-free). With a staff of 23 (and ratios higher than
the 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 League
Nursery School, a half-day and full-day cooperative nursery school.
More widely known than the sharing philosophy is the non-sexist stereotyping
philosophy upon which Danser’s school was founded. The founders were,
after all, women from N.O.W. and Princeton University. "We are
bias-free in all ways," says Danser, a graduate of Rutgers’ Douglass
College, Class of 1959, who has certification in elementary education
and early childhood from College of New Jersey.
"We encourage lots of freedom and autonomy for both children and
staff members," says Danser. "Children are supposed to have
experiences through play that expose them to books and letters and
numbers and on their own they develop school readiness. We don’t drill
them on anything. We encourage their thinking skills and innate creativity
by open-ended questioning and allowing them to work out things on
Since Whitman wants to improve the cognitive skills of children in
the poorest school districts, you might think she would emphasize
drills, but no. Whitman says that three and four-year-olds should
be playing, not cramming for kindergarten: "What children need
most at this age is nurturing, stimulating, creative adults who interact
with them in an age-appropriate way. They’ll do educational and developmental
activities, but a large part of that is play."
Danser gives these tips for parents trying to choose:
center ," she says. "See if the adults are respecting each
other and the children. Is there a sense of warmth and joy?"
Teachers should not say "That doesn’t hurt, don’t cry about that,"
but acknowledge their feelings: "You were upset about that, weren’t
"so the teachers don’t get stressed out and over tired."
sign of excellence. "You want stability for the children,"
she says. Because her school operates rent free, she can pay salaries
comparable to the norm, but offer more benefits than usual, including
liberal 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 hand
takes the mother by the heart." For the non-sexist standard, that
needs to be translated: "Those who take the children by the hand
take the parents by the heart."
— Barbara Fox
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