Entrepreneurial Fellows Center Accepting Applications

The Entrepreneurial Fellows Center of Institute For Entrepreneurial Excellence at the University of Pittsburgh’s Katz School of Business is accepting applications for its 2006 program.

The Entrepreneurial Fellows Center (EFC) program, is a ten month entrepreneurial education program that begins in January and provides established business leaders with the opportunity to continue their business education, network and formulate strategic plans to enhance their company’s success. Monthly half-day sessions are taught by successful, seasoned entrepreneurs and Katz Graduate School Faculty.

Ten Patent Portfolio Management Issues

‘Some common issues encountered by companies in the management of the company’s patent portfolio include:

1. Use preliminary and supplemental claim amendments….
2. Manage continuation or divisional patent applications and/or RCE’s….
3. Partition your technology into inventions….
4. Consider the strategy or cost of pursuing improvements or extensions of your existing technology….
5. Consider low-cost procedural options….
6. Utilize appeals, teleconferences, and affidavits during prosecution….
7. Meet your duty of disclosure to the USPTO of known prior art….
8. Learn to let go when you need to and consider alternative approaches….
9. Identify licensing opportunities as well as litigation possibilities….
10. Use reissue, reexamination and interferences…”

Read more in this article by Dennis Fernandez via VC Experts.

Entrepreneurship Three Step

Reprinting this evhead post:

“Regarding Innovation 2.0 (sorta) Naveed Ahmed writes in with:

“I think to be a successful entrepreneur only 3 things matter:

1] A clear vision of where your company is going.
2] Genuine desire and passion to create amazingly great products/services.
3] Strong conviction that your product/service is going to make a positive difference in your customer’s life.’

I like it.”

So do I.

Value vs Price in the Sale of a Business

Rules of thumb and valuation formulas are a starting point in determining the value of a business. A standard rule of thumb is to value a business at a multiple of EBITDA (earnings before deducting interest, taxes, depreciation and amorization). The most useful formula for approximating value may be the discounted cash flow method which calculates the net present value of the future cash flows of a business based on certain assumptions.

Remember, however, that value is not the same as the price that is paid for a business. For many reasons, such as the relative bargaining positions of the parties and the skills of their negotiators, businesses are often purchased for more or less than their valuations. For instance, a business seller may be anxious to sell because of factors, such as family issues, that have nothing to do with the value of the business. Anxious sellers tend to accept prices that may be below the value of the business from an objective or market based perspective.

Nonetheless, having an accurate picture of the value of a business is essential in determining whether and how to proceed.

This post from The Entrepreneurial Mind summarizes a list from the Christman Group, LLC that equates value with price, but otherwise is instructive as to the types of factors that determine the value of a business for sale:

“Number 10: Industry Outlook
If the outlook for the industry is bright, the price goes up. Buyers look hard at the outlook for a company’s gross margins, future growth projections, international economic factors, etc.

Number 9: Depth of Management and of the Sales Team
If an owner wears all of the hats, including generating most of the sales, the price will go down. A strong and experienced management team to operate the business is key value driver.

Number 8: Customer Base
If a company has limited customer concentration with no single customer representing more that 5-10% of revenues the price goes up. If the customer base is made up of “blue chip” companies, the price goes up too.

Number 7: A Good Story to Tell
Telling a company’s story is critical in helping the buyer recognize the full value of a business. An extensive confidential offering memorandum that describes the business operation, the marketing and sales programs, its organizational structure, its facilities and equipment, its financial performance, and provides a financial analysis including a believable 5 year financial forecast.

Number 6: Stage of Industry Consolidation
If a company’s industry is experiencing consolidating with the big companies getting bigger through acquisition, prices for smaller companies will rise.

Number 5: Company Track Record
If a company can show a track record of consistently growing profits and sales, buyers will pay more.

Number 4: Type of Business
A manufacturing company with a proprietary product will sell for more than a job-shop manufacturer. A distributor that adds value by offering installation, repair, and/or engineering/design will sell for more money than a non-value-added distributor. A service company with a special expertise will sell for more than a similar service company without this expertise.

Number 3: Revenue Size
The larger a company’s revenues, generally the higher the price. A business with $25 million of annual sales will sell for more than a company with $5 million in sales.

Number 2: Market Position
A company that dominates its market or has a unique niche in the market will sell for a premium over other companies that do not dominate their markets.

Number 1: Having Multiple Buyers
When there are multiple buyers bidding on a business, the price of the business will exceed the price paid for a business that is sold without competitive bids.”

Top 10 Most Practical Blogs for Entrepreneurs

I humbly report that this blog has been selected by Scott Allen, the About.com guide to entrepreneurs as one of the Top 10 Most Practical Blogs for Entrepreneurs.

What is most gratifying about this honor is the opportunity to be listed among the nine other truly great blogs that comprise his list. Thanks Scott.

Annotated Sample Venture Capital Term Sheet

From the Practising Law Institute:

“For any readers who might not know a thing about venture capital, it ‘is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors.’ And a term sheet is more or less a letter of intent for private equity — a non-binding summary of the principal points that will be memorialized in greater detail in a subsequent Stock Purchase Agreement…[This] sample term sheet for a Series “A” Preferred Stock Financing…’is the work product of a coalition of attorneys who specialize in venture capital financings, working under the auspices of the National Venture Capital Association.'”

Principles of Servant Leadership

TDIndustries uses Robert Greenleaf’s essay‚ The Servant as Leader‚ as a blueprint for behavior. Every TD employee completes Servant Leadership training and participates in small Servant Leadership dialogue groups. This philosophy has built an environment where employees trust leadership to listen to their thoughts and ideas. And leadership has learned to trust the judgment of the employees. The Servant Leadership philosophy suggests that every person can become a leader by first serving‚ and then through conscious choice‚ leading. Servant Leadership principles are summarized as follows:

“People can and should work together to grow a company. If an organization is to live up to its basic values and vision‚ a key ingredient will be leadership from a very large number of us.

Simply and plainly defined‚ leaders are people who have followers. They have earned recognition and respect.

Leaders are first a servant of those they lead. They are a teacher‚ a source of information and knowledge‚ and a standard setter‚ more than a giver of directions and a disciplinarian.

Leaders see things through the eyes of their followers. They put themselves in others’ shoes and help them make their dreams come true.

Leaders do not say‚ “Get going.” Instead‚ they say‚ “Let’s go!” and lead the way. They do not walk behind with a whip; they are out in front with a banner.

Leaders assume that their followers are working with them. They consider others as partners in the work and see to it that they share in the rewards. They glorify the team spirit.

Leaders are people builders. They help those under them to grow big because the leader realizes that the more big people an organization has‚ the stronger it will be.

Leaders do not hold people down… they lift them up. They reach out their hand to help their followers scale the peaks.

Leaders have faith in people. They believe in them. They have found that others rise to their high expectations.

Leaders use their heart as well as their head. After they have looked at the facts with their head‚ they let their heart take a look‚ too.

Leaders keep their eyes on high goals. They are self-starters. They create plans and set them in motion. They are persons of thought and persons of action — both dreamers and doers.

Leaders are faced with many hard decisions‚ including balancing fairness to an individual with fairness to the group. This sometimes requires ‘weeding out’ those in the group who‚ over a period of time‚ do not measure up to the group needs of dependability‚ productivity and safety.

Leaders have a sense of humor. They are not stuffed shirts. They can laugh at themselves. They have a humble spirit.

Leaders can be led. They are not interested in having their own way‚ but in finding the best way. They have open minds.”

Key principles for business-driven sotware development

As a major update of IBM Rational’s six best practices for software development, this paper articulates a new set of principles that characterize a mature approach to the creation, deployment, and evolution of software-intensive systems. The paper articulates a set of principles that IBM Rational believes characterize the industry’s best practices in the creation, deployment, and evolution of software-intensive systems:

“Adapt the process.
Balance competing stakeholder priorities.
Collaborate across teams.
Demonstrate value iteratively.
Elevate the level of abstraction.
Focus continuously on quality.”

The paper explains each of these in order, describing the patterns of behavior that best embody each principle, as well as the most recognizable “anti-patterns” that can harm software development projects.

Oregon Business Guide

The Business Referral Center of the Oregon State Department has produced the Oregon Business Guide, a consolidated source of information on starting a business in Oregon, that also is instructive of the types of issues and information needed to start a business in other jurisdictions.

Blawger Bowl Report from Dead Leaves

A few legal bloggers are participating in the second annual Blawger Bowl of fantasy football, whose defending champion is yours truly. Perhaps because of our adversarial natures, or perhaps because we believe, no doubt incorrectly, that we have better things to do, we could not agree on who would write the first report on the progress of the season. Therefore, ipso facto, ergo and brimming with res ipsa loquitor, after week six of the NFL, we have our inaugural report — The Mid-Season Slackers’ Guide to the Violence Inherent in the System that begins:

“Last year, I joined up with a number of other law bloggers for the first annual Blawger Bowl Fantasy Football Competition. It was… well, it was an experience. I’ve never played fantasy football before, and the immediate addiction to statistics and gaming I felt was an experience I had only felt before while handicapping horses. “