In Box
The Doctor Is In
After a summer of cyberplagues, you have to wonder: Can your company fight off the Code Red worm that defaces Web sites, or the demonic Sircan virus that e-mails your files to people in your address book? If not, expect trouble. By 2004, cybercrime will create "economically significant losses" for more than half of small businesses, says Bill Malik of Gartner Inc. in Stamford, Conn.
Luckily for you, the tech downturn means network security consultants are underemployed--and they're all cutting fees to win business from small companies. Also, antivirus software options like Norton's AntiVirus Corporate Edition 7.5 for Small Business ($384.95/ten computers) and McAfee's VirusScan ASaP ($468/ten computers) come with increasingly effective updates--downloaded automatically--to ensure you're protected against each new virus. "Sure, protection costs money," says Malik. "But so does a lock on a front door."
A Pan-Asian Shopping Spree
Looking to import exotic Thai handicrafts or leather upholstery from India? AsianVendors.com, an India-based portal launched in June, has info on 3,000 vendors who sell 17,000 products in seven Asian countries. An importer can find silk rugs to children's apparel on the site--and search for it free of charge.
Capital Idea
Cary Kinross-Wright wanted to be a venture capitalist. But while she had an MBA and experience as a chemical engineer, the venture world was a mystery.
Her answer: the 18-month VC training program at the Kauffman Center for Entrepreneurial Leadership. The program, which combines classroom teaching and on-site training at venture firms, has churned out 62 graduates, who have invested in 256 companies.
This year, despite the tech downturn, applications are at a record high--about 300 for 12 spots. Most applicants are between 25 and 38 and are either scientists, technology experts, or financial pros. Why so competitive? Look at Kinross-Wright. In the 12 months she has spent at Intersouth Partners in Durham, N.C., Kinross-Wright, 29, has shadowed one of the firm's founders, evaluating investments and sitting in on companies' board meetings. As a kicker on the deal, fellows get an annual stipend of $110,000 while enrolled. Something ventured, something gained.
Sound Bites
David Behnke, managing director, J.P. Morgan Chase, on selling your business
What should entrepreneurs consider before they begin the sale process?
Think about timing. If something is about to happen that will increase the value of your company, then hold off. And consider your objectives. Do you want the highest price or the right to retain a stake in the company? Do you care if key employees stay on?
How should you evaluate the valuation?
Advisers usually give you a range of what we think the business will sell for. If you don't like the bottom end of the range, don't even get started. You're often selling to competitors. If you begin the process and decide not to do a deal, they'll have learned a lot about your company.
What should entrepreneurs remember during the negotiations?
Don't overpromise. It takes six months to finalize a sale, so you need two quarters of projections. You don't want to be in the middle of negotiations and have to explain why first-quarter projections were missed.
We'll Help You If You Help Them
Most investment groups look for strong profits and solid management. Philadelphia-based Capital to People/Murex Investments hunts for something else--sloppy managers and red ink--and offers to help out for a price. In return for its cash and expertise, Capital to People asks troubled companies to pay their workers a living wage and give them at least 10% equity. "You can't have social gain without profitable companies," says Jacob Gray, associate director of development. The foundation-backed group has invested in eight businesses in the past three years, streamlining management and bringing them into the black. But the altruism goes only so far: The group gets a cut of the profits.
Rosy Scenario
A brave few entrepreneurs (12%) still think this is a good time to expand. Their reasons:
25% say they're encouraged by economic conditions
42% cite their prospects for strong sales
33% think they can get favorable loan terms
8% say they like the political climate
Data: National Federation of Independent Business, July, 2001. Figures exceed 100% because of multiple answers
One Iota
FOCUS GROUP
Percentage of serial entrepreneurs with Attention Deficit Disorder, vs. 5% for the total population: 18%
Data: The Stockholm School of Economics
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Copyright 2001, Bloomberg L.P.
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