Friday, October 06, 2006

Big Ideas and No Boundaries
New York Times

My rabbi told this joke on Yom Kippur: At the front of the lunch line at a parochial school was a bowl of apples with a sign that read: “Take only one. God is watching.” At the end of the lunch line, after the entrees, was a bowl of cookies, where a student had put up a sign: “Take all you want. God is watching the apples.”

Somehow that joke reminds me of the debate about free trade in America today. Right now, with the Republicans in charge, free trade is secure. Yet, while everyone is watching the front of the line, out back in the country, an erosion of support for free trade is under way. The “Doha” trade talks have stalled, because of opposition by U.S. farmers, and the White House’s “fast-track” authority to negotiate free trade agreements expires soon. With protectionist-leaning Democrats likely to take the House or Senate, any new free-trade accords will probably be stalled.

I hope Democrats won’t go this route. I’ve always believed in free trade, accompanied by better pension and health care safety nets. But I’m not a free trader anymore. I’m now a radical free trader. Why? Because in this new era of globalization, so many people now have the communication and innovation tools to compete, connect and collaborate from anywhere. As a result, business rule No. 1 today is: Whatever can be done will be done by someone, somewhere. The only question is whether it will be done by you or to you. In such a world, the way our society flourishes is by being as educated, open and flexible as possible, so more of our people can do whatever can be done first. It matters that Google was invented here.

“That society which has the least resistance to the uninterrupted flow of ideas, diversity, concepts and competitive signals wins,” says Nandan Nilekani, C.E.O. of the Indian tech giant Infosys. “And the society that has the efficiencies to translate whatever can be done quickly — from idea to market — also wins.”

The old left thinks free trade is something that benefits only multinationals. In fact, it is now critical for small businesses and individuals, who can now act multinationally. They are the ones who create good jobs.

Last week, I was in Nebraska, where I met Doug Palmer. He and his partner, Pat Boeshart, make insulated concrete forms for buildings. The traditional way to insulate concrete with foam is to make the foam and then truck it around the country to building sites to be attached to concrete. Mr. Palmer’s company, Lite-Form, found a Korean machine that, when combined with devices added by his firm, can make the foam and concrete together on site, saving big dollars in trucking. Today, Mr. Palmer’s South Sioux City company imports these machines from Korea, attaches its devices and exports them to Kuwait. His company has an Arabic brochure that tells Kuwaitis how to use the device. The brochure was produced by a local ad agency owned by the Winnebago Indian tribe of Nebraska. The agency was started by the tribe’s economic development corporation. Midwest Indians publishing Arabic brochures for Nebraskans importing from Koreans for customers in Kuwait ...

“Protectionism scares me,” said Mr. Palmer, who has 28 employees. “If we put up a moat and keep doing what we’re doing, thinking we’re the smartest in the world, we’re going to die. We have to have that flexibility to barter and trade.”

A few days later, in Silicon Valley, I met Arijit Sengupta, a young Indian-American educated at Stanford, whose company, “BeyondCore,” developed a software algorithm able to detect and reduce errors in outsourced back-office work. When I met Mr. Sengupta, he handed me a card with his logo, which, he explained, was designed by a graphic artist he found online in Romania. His database and Web server are freeware, and he has outsourced his marketing, sales support and patent filings to Indian firms. When I asked, “Where’s your office?” he held up his BlackBerry, which takes calls forwarded from numbers in India, Boston and Palo Alto. He and his seven workers already have one Fortune 500 client.

“When I started this company I never had to think about geography,” he said. “All I had to think about was: Where was the best resource to get something done. ... What you need are the big ideas. That is the tough thing to come up with.”

The way you keep good jobs in this country is not by building big walls, but by attracting people with big ideas — and then giving them the freedom to do whatever can be done with anyone, anywhere, anytime.
Ten Good Reasons Not To Buy A Franchise
Nolo 10.02.06, Forbes Online

1. Questionable profitability. Most franchisers do not provide much information to potential franchisees regarding earnings possibilities, making it difficult to assess how lucrative investment in the company could be. Even the franchisers who do supply this information usually give only average sales figures and profits before expenses are deducted, numbers that aren’t very helpful when trying to determine if your individual franchise will be successful.

2. High startup costs. Before opening your franchise, you may be required to pay a nonrefundable initial franchise fee, which can cost from several thousand to several hundred thousand dollars. In addition to the initial fee, there are also usually high startup costs associated with furnishing your franchise with the necessary inventory and equipment. It can easily take several years to recoup the expenses connected with getting your franchise off the ground.

3. Encroachment. Imagine the following scenario: You have just spent thousands of dollars opening your own GasMart station when another GasMart station opens across the street, essentially cutting your customer base in half. This type of thing happens to franchisees all the time, as nearly every franchiser reserves the right to operate anywhere he or she wants.

4. Lack of legal recourse. As a franchisee, there is little legal recourse that you can take if you are wronged by the franchiser. Most franchisers make franchisees sign agreements waiving his or her rights under applicable federal and state law, and some agreements contain provisions allowing the franchiser to choose the venue and the law under which any dispute would be litigated. Shamefully, the Federal Trade Commission, which is supposed to regulate fairness in franchising, investigates less than 6% of the franchise-related complaints it receives.

5. Limited independence. When you buy a franchise, you are not just buying the right to use the franchiser’s name. You are buying its business plan as well. As a result, most franchisers impose price, appearance and design standards on franchisees, limiting the ways you can operate the franchise. While these regulations can help promote uniformity, they can also be stifling to franchisees who feel they could run the business more effectively their own way.

6. Royalty payments. Franchisees are generally required to make continuing royalty payments to the franchiser each month based on a percentage of his or her franchise’s sales, eating into the franchisee’s net profits.

7. Inflated pricing on supplies. In many cases, the franchiser can designate your franchise’s supplier of goods and services. Franchisers argue that this is done to maintain quality control, but almost all franchisers receive kickbacks from the vendors. By not allowing you to shop around and subsequently limiting competition, you are forced to pay higher prices on supplies.

8. Restrictions on post-term competition. Let’s say that you decide to purchase a McDonald’s, but after a couple of years you determine that you could run a higher-quality, more profitable burger joint on your own. Unfortunately, due to noncompetition clauses built into almost every franchise agreement, franchisees are not allowed to become independent business owners in a similar business after termination of the franchise agreement. By purchasing a franchise, you may be unwittingly limiting your business opportunities for years after the expiration of your contract.

9. Advertising fees. Many franchisees are obligated to make regular contributions to the franchiser’s advertising fund. Franchisers maintain broad discretion over how to administer the advertising fund, and the money you contribute does not necessarily need to be used to target your specific franchise. In a case against Meineke Discount Muffler Shops, for example, it was discovered that Meineke was using the advertising fund for costs wholly separate from advertising, yet the case was ruled in Meineke’s favor under a verdict that stated that the franchiser has no fiduciary duty to its franchisees!

10. Unfair termination. Even the slightest impropriety on your part, such as being late on a royalty payment or violating the franchise’s standard operating procedure, can be cause for the franchiser to terminate your agreement. While most franchisers are not this strict, the possibility of losing your entire investment for being late on a payment is a scary thought.

Tuesday, October 03, 2006

Denver IDEA Cafe Meetup in News:

Freelance writer Sonya Simpkins visited our last
Denver IDEA Cafe Meetup. Her article about her
experience is in today's (Tuesday, Oct 3) DDN:"

Please RSVP today if you want to join us for our
next meeting, and/or forward this along to your
friends and associates who might find it helpful.

New Book about Business Creativity:

MAVERICKS AT WORK--WHY THE MOST ORIGINAL MINDS IN BUSINESS WIN has just been published. Author William C. Taylor will be at the new Colfax Tattered Cover this Wednesday at noon. "We will consider 'Mavericks at Work' a success if it opens your eyes, engages your imagination, and encourages you to think bigger and aim higher...We will measure our success by how much we contribute to yours."

I'll give a free copy of the book to the first person to email me at agreeing to attend Wednesday and get my copy signed (I can't make it, being installed as the new President of the Denver South Optimist Club.)

New Franklin Circle Now Forming:

A new Franklin Circle is starting for small business owners, entrepreneurs, and creative managers. It will meet the 4th Friday of each month from 3:45 to 5:15 p.m., let me know if you might be interested in joining us.

Bloggers Block

Thanks to everyone who gave me feedback on my blog I'm going to keep posting from time to time because of all of your positive remarks, and because I find writing it helpful to myself--sometimes I don't know what I'm thinking until I write it down.

My intention is to do a regular, weekly or monthly summary that is funny and insightful, something that everyone really looks forward to reading each week. As a result, I have a major case of writers block. Maybe next week...

This column is in today's Denver Post:

Start your own local rag

By Jonathan Thompson

My fingers pounded on the sticky keyboard. It was 2 a.m.; I'd given up drinking coffee a few hours earlier and was now chewing coffee beans chased with chocolate chips. In less than five hours, I'd make the 50-mile drive over two high mountain passes to the printer's in Durango, fretting the whole way about what I'd left out, the mistakes I'd made and who I'd probably libeled.

It was hour 18 of yet another 20- hour preprint-day haul on the Silverton Mountain Journal, the newspaper I'd started nine months earlier. I covered San Juan County's 387 square miles, one incorporated town, fewer than 600 people and, during the six months of winter, approximately 15 potential advertisers. That's not enough to sustain one newspaper. Yet the Journal was the second paper in town, the upstart next to the Silverton Standard & the Miner, which had fought off a half-dozen other competitors during its lifetime and had survived bust after bust as gold and other hard rock mines closed.

Launching a second newspaper in Silverton was irresponsible, insane and idealistic. Why did I do it? Part of it probably had to do with romantic notions associated with being a small-town newspaper editor. Deeper down, I felt that my community, small though it was, deserved more than it was getting from the existing news outlet.

And there you have the spark behind most grassroots media startups: Someone sees a need in the community - for information, or creativity, or inspiration, or journalistic energy, or just basic truth-telling - and he or she steps in and does his best to fill it.

This happened as the West was settled, and seems to keep on happening as newer people arrive. The same month that I set up a used computer and printer in a grungy office in the former Miners Union Hospital in Silverton, four employees of the Crested Butte News walked off the job in that Colorado mountain town. Then they started a competing publication. In just about every region in the West there's at least one alternative publication available; in cyberspace, ranters and journalists are starting blogs and websites to cover left out aspects of the West's news.

These days, all it takes to launch a publication is a computer and enough cash to foot the first issue's printing bill, and even that's not necessary for a blog or website. That, and something important to say, and, of course, enough coffee to get you through saying it. Silverton had as many as three competing newspapers at a time during its mining heyday, each with its own viewpoint, printing press and printing "devils" to set lead type.

Most of these grassroots publishing efforts died early deaths. Economic capital dwindles fast when reporting comes before business interests, and creative resources peter out under the workload required to put out a weekly or even a monthly. But in a world where giant media conglomerates continually gobble up the little guys in the name of profit, even the briefest lives of grassroots media are important. If nothing else, they keep the big guys on edge: No one knows who's going to come along next ready to start a new paper. That threat, no matter how small, keeps the established press on edge, hopefully resulting in a better product.

Three years after starting the Mountain Journal, I bought the 127-year-old "mainstream" paper. But after a few more years of single-handedly producing a weekly newspaper for minuscule wages, I'd had enough. I searched in vain for someone like me to take over. Eventually, I sold my paper to a national chain that owns hundreds of other papers across the country.

"You've done this community a great injustice," a woman told me when I returned to Silverton recently. I can't blame her: Who wants the voice of their community to be controlled by outsiders who live far away? But it's not enough to just sing a dirge for the loss of independent, community-based media. People who want a local voice need to stand up and do something crazy - like starting up a newspaper of their own.

Jonathan Thompson is a contributor to Writers on the Range, a service of High Country News ( He is the paper's associate editor in Paonia.

Sunday, October 01, 2006

Call them silver entrepreneurs or senior entrepreneurs or third-age entrepreneurs. They are people who do not want — or are not financially able — to idle away their retirement years and, instead, opt to start a business.

More people 55 and older seem to be rejecting the traditional model of puttering around the garden or the golf course. Many, however, have not simply hoped for a great second act, but have carefully planned their transition from lifelong careers...