You Want How Much?

Trade Show Winner

Clean-up Brown To Build Green

Corrections or additions?

These articles by Bart Jackson and Barbara Fox were prepared for

the July 10, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Stretching the Broad Bands

Broadband cable was to set us free. Daily, the

laborsaving

computer enslaved hours of our lives. We tended it. We awaited its

performance as pixel-by-pixel visions snailed onto our screens. Then

Zap! Broadband connections instantaneously turned computers back into

our tools, serving up words an images with blazing speed. So why

haven’t

more businesses taken advantage of cable? And what — beyond sheer

speed — does the extra cable fee provide?

Garden State business people seeking to learn the full range of

current

and future services will want to attend the seminar "Broadband

Cable, Ready and Accepted," a New Jersey Technology Council event

on Thursday, July 11, at 4 p.m. at Sarnoff. Cost: $70. Call

856-787-9700.

Karen Anderson, president of the New Jersey Telecommunication

Association speaks, as do representatives from regional cable

companies.

Technically, broadband refers to any telecommunication capable of

supplying multiple channels over a single medium. Full federal

broadband

lines are designated as those with a carrying capacity of over 200

Kbps (kilobits per second) in both directions. Compared with standard

dial up services, traveling over copper phone wires, broadband

provides

faster service, and enables high quality audio and video

transmissions.

Digital Subscriber Lines (DSL) provide much of this high-speed,

high-bandwidth

capability via existent telephone lines. DSL has the advantages of

a wire system that reaches nearly everywhere, with data traveling

on a line dedicated to the subscriber alone, which enhances security.

The cable modem services provide a bandwidth shared by the subscriber

and his neighbors, which means speed varies at peak hours. But in

general, oh boy, is that cable modem faster — a lot faster. For

that reason alone, cable companies are expanding territories madly,

expecting a national total of 20 million customers by 2004.

"Yet despite this strong continual growth, especially in New

Jersey,

businesses have been surprisingly slow to take up the cable

advantage,"

says Anderson. The primary culprit, she explains, is television. While

the cable TV revolution has strewn coaxial lines into residences by

the millions, few businesses had a reason to put 109 channels on the

jobsite. Based on customer supply, cable companies began leap-frogging

from neighborhood to neighborhood, bypassing local industrial parks.

For the past four years Anderson has been laboring to stem this tide

on the service, pubic awareness, and legislative fronts. Growing up

amid Manhattan’s frenzied pace, Anderson attended Brown University,

graduating with a bachelor’s in sociology. For the past decade, she

has worked as a shaper of public policy working for such firms as

Ogden Energy. As president of the New Jersey Telecommunications

Association,

she represents four of the state’s seven cable providers as they

expand

both in area and in services.

In addition to overcoming cable’s residential-only misconception,

the system’s very speed often serves to blind business customers to

its other capabilities. "Everyone thinks `Cable — Oh yes,

fast e-mail, quick pictures,’" says Anderson, "and the

business

advantages get dismissed." A host of business packages currently

exist and more lie on the drawing boards. Senator Joseph Lieberman’s

recently proposed additions to the proposed Broadband Strategy Act

of 2002 call for nationwide accessibility and vastly increased

research

fundings for cable enhancement. Some of the offerings worth pursuing

with your local provider include:

Telephony. Not here yet, but Anderson assures us, very

close to resting in our palms. Your current telephone capabilities

will join with your Internet protocol. You will use one line for data

transfer and phone calls; you’ll be able to make transfers either

way, all at the faster cable modem speed — and at a lower cost.

Web hosting and networking. Basically, bigger, faster

and even cheaper claims Comcast Information Specialist Kevin

Anderson.

of the power of cable. Cable modems afford their business customers

a minimal 100 megabyte website. The higher speed allows more graphics,

a greater number of rapid links, and even video capabilities that

won’t have your clients grinding their teeth waiting for your message.

Cable lines currently handle networks for up to 200 stations at the

near instantaneous rate of 2 megabits of data per second. This is

fast enough to handle an almost limitless load of communication within

your firm.

E-mail and voice messaging. Typically, New Jersey cable

companies offer business customers two domain names as E-mail logos.

Voice-produced messages for both incoming and outgoing contacts are

available at a competitive rate due to the cable’s enhanced capacity.

Yet for the business owner, the cable question remains: "How do

I get the line cheaply into my shop?" Cable owners claim Garden

State markets are saturated, but most of this drenching remains

residential.

Even for a firm only five miles from the nearest line, getting the

coaxial into his area can demand Himalayan efforts — and costs.

While the seven broadband cable servers in New Jersey do cover each

region of the state, many niches remain unaccessed due to set-up cost.

A quick call to the Board of Public Utilities’ special cable

service number (973-648-2670) can help you determine which cable firm

is nearest and which others may service your area. Typically, servers

will refuse, at first, to string a line any distance for a single

customer. But more and more private businesses are uniting to bring

cable into the remaining unserved neighborhoods, and initial

installation

fees are dropping.

Bart Jackson

Top Of Page
You Want How Much?

The age of acquisition definitely lies amouldering.

Just as investors are sniffing askance at eager new startups, they

are equally pulling back from those mature businesses that are

desperately

waving the sign "Brought to Fruition and Ripe for Sale." As

an owner with a firm to sell, you cannot change this general trend,

but there is much you can do to enhance your company’s value before

you place it on the block.

Investors, owners, and potential buyers trying to get a grip on the

business of selling a business may glean great advice from a Venture

Association of New Jersey meeting on "Valuation: How to Increase

Your Business’ Worth" on Tuesday, July 16, at 11:30 a.m. the

Westin

Hotel in Morristown. Cost: $45. Call 973-267-4200 or visit

www.VANJ.com

Speaker Jim Gunton, general partner and founder of the New

Jersey

Technology Council Venture Fund, discusses the differing perspectives

of buyer and seller, along with certain specific steps owners can

take to avoid having their firms diluted.

"Seldom is the sale of a business all a matter of money,"

says Gunton. "Frequently the entrepreneur will bring his firm

for sale or public offering just to get his sanity back. One can get

awfully tired after three years of endless 18-hour days." An

entrepreneur

as well as venture capitalist himself, Gunton has played the game

on both coasts for years. Following a childhood on the outskirts of

Philadelphia, Gunton went west to attend Stanford University, where

he earned a degree in applied math. After he graduated he became a

principal in several Silicon Valley firms over a 10-year period.

Coming back East in l994, Gunton again took the capitalist reins and

began investing in Garden State firms. "Silicon Valley was

incredibly

fast paced," he admits, "but I find the world of Northeast

investment more intriguing." A Lawrenceville resident, Gunton

oversees the NJTC Venture Fund, which he formed in 2000. Last year

the fund dispensed over $75 million in early stage capital, primarily

to startup high-tech and pharmaceutical firms.

"Probably the most important, yet most overlooked, item in selling

a company is realizing exactly what you want out of the deal,"

says Gunton. Many an owner goes into the sale with vague notions such

as "well, it’s time," or "seems like a good market

now,"

but that’s not nearly enough, insists Gunton. A good seller examines

what she wants as well as what every other interested party wants

to take away from the table.

A matter of perspective. Frequently the entrepreneur/owner

is seeking to build and sell an industry leader. He wants to put his

product’s best gear forward. Basically this is a good idea, but he

must remember that his business’ initial investors primarily want

to build an object with high acquisition potential. One person is

creating a car to run fast and durably, while the other is building

an auto to sell. These conflicts have to be ironed out well before

any initial feelers are made.

Staffing. The first whiff of acquisition will in all

probability

send most employees diving for their resumes, anxious to take their

skills into more secure pastures. This could prove disastrous, not

only to the seller’s image, but also to the very health of the

company.

Actually, in most cases, everyone wants the same thing. Staffers want

to keep their jobs. Sellers want to have their firm sold intact and

the acquirer wants the continuity of employment. Thus one of the

seller’s

very first steps should be to instill a sense of permanency in his

workforce. Regranting stock options along with setting up a system

of staying bonuses can help encourage your employees and make them

feel that their best future lies with this company, despite the change

of ownership. Whatever plans you make, they must be implemented before

the rumor mill begins churning.

Accounting. Nothing can make a company so alluring as

a well shaped set of books. Yet how to present items in a method

attractive

to the outside acquiring investor? Should revenue be booked up front?

Should research and development costs be listed as expenses or slowly

written off over time. Gunton’s rule is "mirror the industry

standards."

Study competitors and find what similar, successful firms doing.

Typically,

a tacit consensus has been reached on accounting practices, without

a lot of talk. These practices may not always be the best for your

firm, but they probably aren’t terribly destructive and they are in

a language your acquirer will understand.

New products. "Here," says Gunton, "lies the

million dollar question — literally." The seller needs to

determine whether it is fiscally wiser to develop the technology,

present a prototype, then sell swiftly to the highest bidder, or to

expand into sales, and auction the entire package off for a real

bundle.

This is what Gunton calls the natural chasm in business sales.

Baron Rothschild gave the advice that fortunes are made by

buying

low and selling too soon. And since the Baron, mountains of caveats

from thousands of pundits have labored to sway entrepreneurs either

way. Gunton’s personal view is that the only way to hurdle this

uncertain

chasm is to return to the first step and review exactly what you want

to take away from the sale of your firm. Of course, the owner’s break

from his creation does not have to be total. Many a sharp entrepreneur

has negotiated a vice presidency in charge of technology and

development

for herself on the term sheet.

As a final warning, Gunton adds the old and wise rule: keep it simple.

"A difficult, complex presentation of terms is an instant turn

off to even the brightest of investors," he says.

— Bart Jackson

Top Of Page
Trade Show Winner

When Bill Hogan began his sales career at IBM

in the late-1960s, that company had a 90 percent market share. "It

was the same with Xerox," Hogan recalls. "They had about a

90 percent market share." IBM had an excellent training program,

but, he acknowledges, it didn’t take a whole lot to make a sale for

a company with that kind of market share.

It’s a new world for sales.

"We don’t even trust the clergy," says Hogan. "Where does

that put salesmen in the food chain?"

Hogan, who left IBM after 15 years to start his own business, is

founder

of the Hogan Leadership, a management and consulting business with

offices at 2 Carnegie Road in Lawrenceville. While selling has become

more difficult, he says, it has become more vital, and not just in

the traditional sense. Sales, says Hogan, founder of the Hogan

Leadership

Group, filters through to every part of the organization.

On Wednesday, July 17, at 8:15 a.m. Hogan speaks on "Trade Fair

Sales and Marketing" at the Chamber of Commerce of the Princeton

Area at the Nassau Club. Cost: $24. Call 609-520-1776. Larry

Hollander,

president of the Entrepreneurial Management Group, also addresses

the subject.

Hogan, who did his undergraduate work at Montclair State, spent the

early part of his career teaching math. His real love during those

years, though, was coaching. Among his coaching jobs was a four-year

stint — 1969 to 1973 — at Notre Dame High School in Lawrence.

His job with IBM included an assignment as sales manager of the

company’s

Trenton office. After a three-year assignment at headquarters, in

Armonk, he decided to return to central New Jersey and open his own

business.

Most of Hogan’s clients are small businesses, which he defines as

start-up through $10 million in annual sales. He doesn’t cater to

any particular industry niche, because, he says, at its core all

business

is the same. Whether it is promoting a product, attracting VC money,

or hiring a star, the key task is sales.

He finds, however, that sales often is way low on a young company’s

list of priorities. "Everybody works with accountants and

lawyers,"

he says, "but there is still the feeling that `my product is so

good, people will buy it.’" The start-up will have brochures

printed,

and will take out an ad or two, but it often neglects selling.

Not only should sales be a major focus for small companies, but, says

Hogan, the founder should be the person who is out there selling.

"Think of the psychology," he says. Potential clients,

business

partners, and funders react differently when the sales card they are

being handed says "CEO" than they do when the card says

"sales

representative."

Trade fairs afford top management a valuable sales opportunity. Many

potential clients and business partners gather under one roof, and

funders may well be circling around as well. Reporters, on the lookout

for news, also are in attendance, offering the possibility of free

publicity. Make the most of trade fair day, says Hogan, suggesting

the following strategies:

Know why you are there. Preparation should begin well

before the first visitors enter the exhibition hall. Think through

the company’s reason for attending, and plan staffing, training, and

hand-outs around what the company hopes to accomplish.

Get as good as you give. Sometimes the only reason to

attend a particular fair is to brand the company. If that is the case,

prepare effective materials, build an impressive booth, and use it

as a base to hand out brochures, pens, and T-shirts. Generally, this

is not enough. In most cases, it is a good idea to use the trade fair

as a chance to gather information as well as to hand it out.

Ask four questions. Key information can be elicited by

asking those who stop by the booth: Do you currently use my product,

or have you used it in the past? What is your experience with it?

Whose product are you using now? What reason would you have for

switching?

In addition to yielding specific information, these questions will

separate genuine prospects from the folks roaming the aisles with

the sole goal of filling their plastic bags full of logo pens,

frisbees,

and T-shirts.

Do lunch. A trade show, says Hogan, is a good place to

get some time with elusive prospects. Well beforehand, call and invite

one to lunch, one to tea, and one to dinner. You know they will be

there, and may be receptive.

Keep the day going. A trade fair may occupy only one day,

but it offers an opportunity to schedule post-fair appointments. Try

to make as many business dates as possible, and where it isn’t

possible

to nail down a prospect on the spot, be sure to get his business card,

and to record the information soon after returning to the office.

Roam around. The boss should not be in the booth, says

Hogan. The founder, and perhaps other members of top management,

should

be out and about, scouting the competition. He sees nothing wrong

with leaving the booth to handsome/beautiful young people, the types

most likely to attract visitors. But, he stresses, it is vital that

these booth staffers, who do not have to be company employees, are

well trained, and instructed to get in touch with top management via

cellphone if a prospect would like a word with them.

Use a U. The most common trade booth configuration puts

a table out in front, parallel with the aisle. Promotional materials

generally are put on that table. Big mistake, says Hogan. This just

makes it easy for the pen-grabbers to snatch and go. Using a U-shaped

table, and placing promotional materials at the back, forces prospects

to walk in. This gives booth staffers a chance to ask the four

questions,

and lets them give brochures and promotional materials only to serious

prospects.

Hogan makes good use of a psychiatrist/patient analogy in

describing

the sales process. "Who does most of the talking?" he asks.

While the answer, clearly, is the patient, he next asks "Who is

in charge?" Ah ha! So, the good salesperson does a lot of

listening,

but retains control. This principal should apply to a trade fair as

well as to a standard sales call. The salesperson, in this case, often

the CEO, needs to remain firmly in control, using the event to get

the information he wants and the appointments he needs.

Top Of Page
Clean-up Brown To Build Green

While many businesses and politicians are looking on

the dark side of the McGreevey administration’s corporate tax package,

others see a brighter side to the new governor’s policies. Perhaps

because James McGreevey was mayor of Woodbridge, an urban area

beset with pollution and brownfields problems, McGreevey is

focusing more on cleanup than recent governors have been. This means

good news for builders, says Anthony Pizzutillo, a principal

at Issues Management on Poor Farm Road, who represents the National

Association of Industrial and Office Properties (NJ-NAIOP).

"In all my time in government I have never seen an administration

more responsive to the needs of urban revitatliztion and brownfields

redevelopment," says Pizzutillo.

The NAIOP hosts Bradley M. Campbell, the new commissioner of

the New Jersey Department of Environmental Protection, on Wednesday,

July 17, from 8 to 11 a.m. at the East Brunswick Hilton. Following

Campbell’s keynote, Pizzutillo speaks on a panel moderated by David

T. Houston Jr., president of Colliers Houston & Co., which will

respond to the commissioner’s speech and estimate the impact of DEP’s

plans on the commercial real estate industry. Other panelists are

Anthony DiLodovico, vice president at Schoor DePalma Inc. and

Dennis Toft, an attorney at Wolff & Samson. Cost: $85. Call

201-998-1421 (www.njnaiop.org).

Campbell will discuss the restructuring of his department, the

challenges

and opportunities facing New Jersey’s policy makers, brownfields,

and site remediation redevelopment issues. He will also talk about

such water issues as allocation permits, drought restrictions and

watershed management planning, wetlands, smart growth, and

environmental

equity.

"This type of open communication with state agencies, especially

the DEP, is vital to our industry’s growth and the revitalization

of New Jersey’s older and urban communities," says Thomas S.

Michnewicz, NJ-NAIOP president.

The DEP commissioner majored in history at Amherst College, Class

of 1983, and went to the University of Chicago Law School. From 1990

to 1994 he was an attorney-advisor for the U. S. Department of

Justice,

Environment and Natural Resources Division. When Clinton appointed

him to be the EPA’s regional administrator for the mid-Atlantic

region,

he addressed lead contamination in Philadelphia schools, worked on

smart growth pilot projects, and negotiated agreements to strengthen

protection of the Chesapeake Bay and to protect New Jersey’s coastline

without hampering port development. Currently, Campbell is a visiting

professor at University of North Carolina’s Law School.

As the son of a Cherry Hill-based home builder, Pizzutillo was a

political

science major at Villanova, Class of 1975, and has a master’s in

public

policy from the Eagleton Institute of Politics. He has worked at New

Brunswick Tomorrow, Middlesex County Planning Board, on Dick Leone’s

campaign for the United State Senate, and for the New Jersey Builder’s

Association. A founder of Issues Management, the 15-year-old public

affairs consulting group on Poor Farm Road, he has been representing

NAIOP for five years.

Pizzutillo’s finger prints are on important legislation. What he is

working on now are plans to reallocate funds from the underground

storage tank program (which is virtually completed) to hazardous

discharge

cleanup (which has insufficient funds). Another measure would speed

payback to developers that have cleaned up brownfields. The most

unusual

is a plan to sell tax credits based on remediation costs to

corporations,

a plan that is similar to one now used by technology companies who

are not making a profit. "Developers don’t pay a corporate

business

tax, so they sell the tax credits to a big corporation to expedite

the financing," he says.

Previous administrations had other interests, he points out. Governor

Christie Whitman’s environmental focus was open space. "As the

mayor of an urban area," says Pizzutillo. "Governor McGreevey

got a first hand look at how brownfields development can be successful

and how it can work.

"Brad Campbell is familiar with the issues and will present some

very creative ideas," he says. "If the market exists, these

moves will encourage the market to start translating some contaminated

sites to useful areas. It could be a very exciting time."

— Barbara Fox


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