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Archive for December, 2010

According to the Wall Street Journal (December 15, 2010) Americans now spend more on tort litigation than they do on new cars.

What a waste. What a waste of energy and creativity that must be siphoned into unproductive litigation or insurance and administrative protection. What a profound nonsensical silliness is our system that so richly rewards a parasitic institution which so effectively and legally preys on small and large business alike.

Surely the rest of the world must laugh at this institutionalized suck on our corporate efficiency. The courts are full of such frivolous items as the $54 million dollar pair of pants that a Washington D.C. cleaner supposedly ruined in 2007. Yet such nutty nuisance lawsuits can hit any one of us at any time.

The simple answer to all this is loser pays, a system like England and most of the rest of the sane world has. The problem is the power of the tort lobby, of course, which makes the second largest political contributions in the U.S. to keep our system less profitable and less productive. The tort bar is a true national villain: It is a profoundly anti-business, anti-efficiency, anti-employment and purely self-enriching force.

However, there is hope and (as most creative governmental ideas these days) this hope is coming from the states. For example, Texas is proposing a British-style, loser pays rule which would require the plaintiff to pick up the legal costs of their targets if they lose their suits.

Texas has had its gimlet eye on the tort bar already, with reforms in 2003 and 2005. Again, the Wall Street Journal states in an editorial of December 15, “Before the reform, Texas was a kind of holy place on the tort bar pilgrimage. Now it is a Mecca [particularly] for doctors…” but increasingly for small business in general. So yee-haw. God bless Texas, an increasingly bright and seminal beacon of business enlightenment and legal sanity.

So as not to end the year with another grumpy screed, I am happy to note that business does appear to be improving. Most economic indicators are pointing up for the next year, almost across the board. I’m certainly seeing a spike up at Corporate Rain International. So God bless us each and every one as we embark on 2011.

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Watch out. Our next financial crisis is impending, brothers and sisters. That crisis, that looming black cloud, that lurking bête noire, is state bankruptcy. And it could be more cataclysmic than all the adjustments demanded by federal mandates passed for us in the last two years.

While there is general relief in our entrepreneurial community about the extension of the Bush tax cuts, the increasing distress of states is a floating iceberg for entrepreneurs, mostly obscured from view, but dangerous nonetheless. What is coming is potentially so bad that it is worth considering abandoning the most egregiously troubled of our states.

This incipient threat is on the doorstep and is getting insufficient attention. Where it will descend first will be California, New Jersey, Illinois, and my beloved New York. Many others will follow in their wake. Pensions, salaries and debt are overwhelming for these states. They are desperate for money. The most obvious place for states to get money is our small business community. We are simply the easiest, largest, most vulnerable money pool for them to go after.

And it is not just the states themselves. It is also their cities, their school districts, and their multifarious independent taxing authorities.

Here’s a story for you. It concerns a company I know well. My own.

Six years ago my firm received a small bill from the unemployment insurance office of New York claiming I should pay NY unemployment insurance for four out-of-state consultants I was occasionally using. I appealed the assessment and fine and won my appeal after three in-person administrative court appearances. Much to my surprise I was notified months later that my case was overturned on appeal, without me even being informed of the appeal. When I called the state to protest this high-handed, unfair action they basically told me, “Tough. That’s the way we do it.” My option, they kindly informed me, was to spend big dollars and time appealing my small debt through the regular courts. I paid. That is the kind of justice by bureaucratic fiat that small business can expect as states grow increasingly desperate.

In truth there are only a few states that actually try to nurture small business, Texas being chief among them. In a recent editorial in the NY Post (Dec. 10, 2010), Ray Keating of the Small Business and Entrepreneurship Council notes the conclusions of the “Small Business Survival Index 2010.” Keating states that, in many states, politicians have spent decades creating over regulation, high taxes, and wasteful public spending that has outrageously raised the cost of economic risk-taking and chased away business. “What we have in these states is one vast anti-enterprise zone.” My theory is that it can only get worse–lots worse–when states hit the panic button.

Call me paranoid. But watch out. As Brooks Atkinson put it in Once Around The Sun, “Bureaucracies are designed to perform public business. But as soon as a bureaucracy is established, it develops an autonomous spiritual life and comes to regard the public as the enemy.”

Amen, Brother Brooks.

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I went to the opening of a marvelous business movie this weekend. It’s called The Company Men. Go see it.

The film is filled with uniformly wonderful acting by the likes of Tommy Lee Jones, Ben Affleck, Craig T. Nelson, Kevin Costner, Chris Cooper and Maria Bello, among others. As an old failed actor, as well as an entrepreneur, I was knocked out by such a generous and artistic ensemble effort. The movie made me feel particularly grateful for the gift entrepreneurship has bestowed on me.

To describe it briefly, The Company Men is a sad and somber film that poignantly dramatizes the human costs of corporate downsizing and white-collar redundancy in our current fragile economy. It is a recounting of how the lives of three seemingly impregnable and successful company executives are jolted by the unexpected elimination of their jobs. It communicates eloquently the ashen hollowness and stomach wrenching sadness of a sudden overturning of life-long assumptions and the tragic repercussions that result.

But my personal reaction to this film was overwhelmingly one of deep thankfulness that the accidents of my life have made me a small business owner. With all the struggles most of us have encountered just surviving in the last couple of years, there is a great gift that is bestowed by entrepreneurship. And that gift is freedom. That gift is the unique dignity offered by personally creating something from nothing.

It’s a changing world. The dependable sinecures of corporate employment are disappearing. The gold watch corporate culture is no more, often replaced by a cold, perhaps corrupt, Kafkaesque bottom-line dystopia. As challenging as it is to awake each day to once again have to slay the small business dragons of ROI, of sailing the business seas alone, or of the never absent risk of bankruptcy, dealing with employees, the government, and the IRS–entrepreneurship is a spiritual and existential gift.

(This was brought home to me very personally in the last two years as I’ve had to helplessly watch my own wife Patti, a pre-motherhood successful corporate executive, go through the harrowing and humbling process of trying to reenter the corporate job market. Though her process finally has proved fruitful, the toll on family, relationships and self-esteem has been heavy indeed. Not unlike the protagonists of The Company Men.)

The most heroic figure in this small film epic of corporate callousness is the character played by Kevin Costner. Costner’s character owns a small construction firm. He’s an entrepreneur. He struggles. Yet he is free in a way none of his big shot corporate friends will ever be. He is a man of faith and innercenteredness (without the fatuous sentimentality of his earlier character in the movie Field of Dreams.)

Albert Einstein said, “Everything that is really great and inspiring is created by the individual who can labor in freedom.” (Out of My Later Years-1950) This is the special gift that entrepreneurship gives to its committed practitioners.

Thank you, Albert.

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Here’s a little dinosaur wisdom: If you want to initiate new business with real corporate decision makers, write a letter. Send it snail mail, just like Grandma.

Yup. That’s my brilliant marketing suggestion for the week. Send this letter with a real stamp, ideally an attractive commemorative. Do not use labels for the address, but only direct printing on the envelope. Be sure to use expensive stationary. Spend the money. It’s a very minor expense and it makes a major statement. The very touch of your letter connotes seriousness and respect for yourself and your potential client. It creates a sensual branding statement.

Ideally the body of the letter should absurdly, insultingly oversimplify the wonder of your company. It should be able to be scanned essentially in five seconds by a busy executive. The letter should go something like this:

  1. Request a meeting on a specific date. (The date means nothing. It’s simply a technique for focusing the reader’s mind.)
  2. Describe very briefly what you do, some authenticating clients and any salient defining information (awards, differentiators, rankings, quotes from major press, etc.).
  3. Most importantly, one short paragraph should have two case studies of one sentence each–emphasizing money, ROI, or percentages of increased sales or savings. Pure green eye shade stuff.
  4. No creativity. None of the unique qualitative reasons to use your firm. Then bold maybe four phrases in the letter.

That’s it. The letter should include no collateral and make as little time demand as possible on a busy corporate executive. The point of all this is simply to create a hint, a fragrance, a trope, a memory that he or she got something serious from you. Then you or your representative, of course, must follow up, referencing the letter. But that’s a discussion for another day.

There is one thing a corporate decision-maker is looking for. That thing is clear ROI, whether in the form of earnings, savings, or efficiency. If you can make a compelling, differentiated, classy appeal, your chances of penetration distinctly improve.

Despite all the magical new technology and social messaging, real executive rain-making must be personalized. I feel it is insulting to try to initiate with a busy corporate executive without the weighted intonation of a letter. Quite aside from issues of spamming and information overload, a personal letter is innately imbued with the assumption of a high-level courtesy and a bespoke respect between equals. The most important fact about selling to decision-making corporate executives is simply this: They like to deal with their peers. They like to be deal with people of equal gravitas and authority.

Singer/songwriter Peter Allen wrote a song many years ago called “Everything Old Is New Again.” Ironically, snail mail’s very decline in the face of the Internet’s communication maelstrom, makes it increasingly more effective and noticeable when it is used.

For, as John Donne said in his poem “To Sir Henry Wotton” (1633), “Sir, more than kisses, letters mingle souls.” Thank you, John.

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