From Greg's Head

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Last week we talked about the pros and cons of S Corporations. This week we will continue with some additional information. S corporations have the same liability protections as regular (C) corporations. The biggest advantage of an S corporation is that S corporations are tax-transparent. With few exceptions an S corporation is not taxable on the income it earns.                       

Companies that expect to generate losses in the early years should consider using tax transparent business forms, such as S corporation so that owners who are active in the business may be able to apply the company’s losses against income from other sources.

Due to complexities in every situation, please be sure to contact your tax advisor when making entity selection.

Posted In PKF Texas - The Entrepreneur's Playbook Comments Permalink

This year the annual Inc. 500 list has given way to the Inc. 5000. 

Congratulations to all the FastTech 50 and Aggie 100 companies who are on this year’s Inc. 500/5000 list. I’m glad to see Inc. likes our choices!

By my quick count, 13 FastTech 50 companies and 4 Aggie 100 companies are on the list this year. 

The Houston area has 7 companies in the top 500 and 75 on the overall list. Texas has a whopping 326 companies on the list! This reinforces how the entrepreneurial spirit is alive and well in Houston and Texas. 

Take the time to look at the Inc. 500 web page, as there is lot of great information, including podcasts, articles and in-depth top 100 lists.

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This week's Guest Spotlight is from Ann Lents, President & CEO of the Center For Houston’s Future. Their website is www.centerforhoustonsfuture.org. Ann can be reached at alents@centerforhoustonsfuture.org.

There has been talk recently about Houston's future and particularly the direction that land development should take.  Should it be denser or more spread out; more roads or more trains; more walkability or more cars; should Houston be left alone and allowed to develop without public intervention or do we need to plan to have cost effective infrastructure and a clean environment?   What does the "future" of Houston mean anyway?  Do we concentrate on future business opportunities, future environmental issues, future health concerns, future housing markets, potential future disasters, cultural & population trends or changes in education?  How do futuristic trends and growth affect Houston's quality of life -- issues such as water quality, parks & green space, retail and residential development, employment and health care?  And how can we all be involved in these issues in the midst of busy lives?

The Center for Houston's Future ponders and tries to answer these emerging issues everyday.  In conjunction with various governmental, business and civic organizations, including the Greater Houston Partnership, it surveys, researches, watches, predicts and philosophizes on what constitutes Houston's future and why it's important to know.   Potential "answers" to these questions can be found on the Center's website at http://www.centerforhoustonsfuture.org/.    Please check out the future of Houston! 

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Yesterday evening I had the pleasure of attending my Eighth Rice Alliance Kick off Celebration over at the Jones School at Rice University. Each year Brad Burke and the staff of Rice Alliance do a wonderful job with these emerging business community collaboration events. Brad, you and your staff deserve a well round of thanks for such a fantastic evening! Over 450 people attended this event including several of my colleagues from PKF Texas.

The keynote speaker for the evening was the Honorable Michael G. Oxley (the former congressman from Ohio) who co-authored the Sarbanes-Oxley Act while he was Chairman of the House Financial Services Committee.   It’s not often we get the opportunity to meet and ask questions of such an important person that has influence on the capital markets and the confidence of public investing. When you do, you want to take advantage of them to gain their perspective on the US and World Economy.

Mr. Oxley is currently the Vice Chair of The NASDAQ Stock Market, Inc. In this capacity he serves as an advisor to the Executive Management Team and Board.  Thanks to the Rice Alliance and the NASDAQ for co-hosting the event. I also want to say thanks to Locke Liddell & Sapp for being the co-event sponsor with PKF Texas.

Mr. Oxley opened his remarks with several kudos and recognition of the Rice Alliance and its impact on emerging business, start-up companies, and the Rice Business Plan Competition. A strong proponent of seeing emerging businesses grow into successful companies, Mr. Oxley gave due recognition to the Rice University and the Houston business community.

Some facts that he shared with the audience:

• Texas is the 5^th largest state of with companies on the NASDAQ. (OK that’s something we need to work on for sure! Texas should be 1, 2, or 3)
• The 161 Texas companies on the NASDAQ have a $144 billion market capitalization.
• A little over a 1/3 of the Texas companies are Houston based.

As he continued his remarks he made mention of some interesting points or his keys to success for public companies in today’s world.   Those included companies that are have attributes towards:

• Public Awareness working out in the open, and seeking public support.
• Transparency in the business, their model
• Competatitive in the nature of the business
• Global in their thinking

Some US companies today compete against foreign entities that are supported wholly or in some partial way by their own governments. Even though many global entities outside the US are attractive investment opportunities, Mr. Oxley commented that the US still has the largest pool of private equity capital in the world. Mr. Oxley presented his views on the local economy, the impact of the Sarbanes-Oxley legislation in the US capital markets, and what he sees coming in the future with more globalized business opportunities. After his prepared remarks, he took questions from the audience for about 25 minutes.    Some of the questions where pretty direct on the impact of government regulation and he did a good job of expressing his thoughts on these areas.

Thanks again to the Rice Alliance and thank you Mr. Oxley for sharing your evening with us! By the way you look great it that Cowboy Hat. I hope you wear it often and think of us here in Houston at the Rice Alliance.

Posted In In Our Community , Observations Comments Permalink

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

A corporation formed in the US can elect to be taxed as an S corporation. S corporations are organized in a single state, and ownership is in the form of stock. There can only be one class of stock issued and no more than 100 shareholders. Shareholders can include only individuals and certain estates, trusts, and other S corporations. 

To form an S corporation, you must file articles of incorporation with the secretary of the state in the jurisdiction of the organization, adopt bylaws, elect a board of directors, hold organizational meetings, and keep minutes. In addition, an S corporation election must be made with the Internal Revenue Service. 

Tune in next week for the final segment on S Corporations entity selection. Due to complexities in every situation, please be sure to contact your tax advisor when maxing entity selection.

Posted In PKF Texas - The Entrepreneur's Playbook Comments Permalink

My good friend and business associate Richard Scruggs, the Executive Director for the CNVE at Texas A&M recently wrote an outstanding article showing the comparison between Biggio’s successful career and a successful business career.  You won’t want to miss this one.  Thanks Richard for your sage and wise thoughts!

Biggio and Business

On June 28, 2007, Houston Astro Craig Biggio joined an elite group of ball players becoming just the 27th person ever with 3000 hits in a major league career. As an Astros season ticket holder for years and a fan since I can remember, I’ve had the pleasure of watching Biggio play over the years. While I wasn’t always happy with the Astros’ performance, I have always been impressed with the way Biggio plays the game.

As the media coverage began to build in the days leading up to his 3000th hit and afterwards, a lot was said about how Biggio approaches the game. Reporters talked about how he “respects the game” and conducts himself with poise and character. As a fan, I have seen the same thing. Sitting in the stands one recent evening I reflected on what I have seen and the parallels that apply to business. For example:

Loyalty

• Biggio: He has worn only one major league uniform. Publicly he supports his teammates, management and owners.
• Business: The days of one company careers are long gone but respect and company loyalty are not. Loyalty means adopting your company’s goals as your own and giving 100% towards their attainment. It means supporting your company, management and co-workers publicly. Sometimes it means standing up for your organization to make sure it gets a fair shake.

Prepare, Do the Hard Work

• Biggio: At 41 years old, he is competing with players half his age in a demanding game with a grueling schedule. He is known for showing up to spring training ready to go and arriving early on game day. He puts in the time exercising, practicing and preparing for opponents. He never goes into a season or game unprepared.
• Business: The parallels in business might be education and research. We can’t write the best proposal if we haven’t been educated on sales and researched our target customer. We can’t provide the best coaching and mentoring to young employees without a training and preparation. Business people are always “doing” and little time is given to “practicing”. The better performers figure out how to work in a little practice time and do their homework before acting.

Run Out Every Hit

• Biggio: Long fly ball or sharp infield grounder, he is running full bore towards first base – even when all 42,000 fans know he’ll be thrown out at first.
• Business: If you decide to go after a new business pitch, make a run at a new employee or radically revamp your business…run it out. Carefully decide where you’ll spend your time and resources and then go for it…give it your all…run it out, don’t jog.

Poise, Calm, Character

• Biggio: He has been in bigger pressure cookers than most business people ever experience yet rarely loses his cool. When he does lose it, you get the idea that it was a calculated move to make a point. He always conducts himself with integrity. In this time when there are many questions about people in sports, nobody questions Biggio’s character.
• Business: Rarely does losing your cool in business pay off. Same thing with trying to take shortcuts or relaxing your values to attain a goal. In the end, you only have your reputation and your company’s reputation. Don’t blow it.

Whatever it Takes

• Biggio: Has played three different positions and has no problem being the guy at the plate with the game on the line. He has been hit by more pitches than anyone has in the modern era of baseball, showing that he’ll “take one for the team”.
• Business: We all need players on our team that will do whatever it takes – people that will play multiple roles, who will pitch-in in a crisis, go the extra mile for a customer, rework a proposal one more time, make one more phone call or listen to one more employee. We don’t need people that say, “it’s not my job”, “its five o’clock” or “I don’t travel”.

I could go on and talk about Biggio’s high standards, quiet leadership style, willingness to take responsibility, putting team wins ahead of personal accomplishment or legendary community involvement. I could also tell you that he is famous, yet approachable – on Halloween last year he sat in the front yard passing out candy and taking pictures with kids (just ask my daughter!). You get the idea. All of these attributes make a great ball player. They also make a great entrepreneur, business leader and employee.

Think about how you approach the game of business…do you set an example for others, prepare like there is no tomorrow, run out every play, maintain your poise, conduct yourself with integrity?

What about your company? Does the culture encourage people to “respect the game” as well? Do people come in prepared and give 100%?

If not, chances are you or your company are not as successful as you would like. The good news is that most of these attributes are the result of attitude and hard work – both of which are in your control. No special training or investment is required!

Posted In In Our Community , Guest Spotlights Comments Permalink

Speaking of more Microsoft news, have you heard about the new Microsoft Surface? It’s pretty cool. From the Microsoft site:

“Surface features a 30-inch tabletop display whose unique abilities allow for several people to work independently or simultaneously, all without a mouse or a keyboard. Surface can simultaneously recognize dozens and dozens of movements such as touch, gestures and will be able to recognize actual unique objects that have identification tags similar to bar codes.”

Apparently, it won’t be available until “Winter” 2007, but they’ll be doing previews around the country up until the launch date.

I highly recommend checking out the website, as it has a ton of information and some cool demonstrations about the different capabilities. 

Of course there’s no cost information as of right now! Take a look at the website and let me know if you’d spend the money for one. 

Posted In Week in Geek Comments Permalink

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Posted In PKF Texas - The Entrepreneur's Playbook Comments Permalink

Exciting news! Houston has been selected at the host city for Microsoft’s Worldwide Partner Conference (WPC) in 2008!

The Houston Chronicle alluded to it in an article on August 3^rd and I received confirmation yesterday from our Microsoft Partner Account Manager, that WPC will be here in early July 2008.

This is a huge event, the Greater Houston Convention & Visitors Bureau is expecting 50,000 rooms to be booked during the conference. This is a great opportunity for Houston to show off what a great city it is. Looks like we’re moving up in the world!

Stay tuned for updates as they become available!

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"Globalizing is risky. Entrepreneurs embrace risk. Therefore entrepreneurs embrace globalization." - Leigh Buchanan | Editor-at-large | Inc. Gone Global, April 2007

I ran across this quote the other day and thing there is a lot of truth to it. Entrepreneurs these days almost can’t even dream about their next venture with out thinking globally.

Houston, for example, is one of the most international cities in the US, with more than 80 foreign consulates and a port that ranks first in the US for foreign waterborne tonnage.

The number of resources we have here for entrepreneurs thinking globally is seemingly endless, from the Greater Houston Partnership to the District Export Council to foreign chambers of commerce. 

What advice would you give to entrepreneur’s thinking globally? If you’re an entrepreneur who does business globally what are some tricks of the trade you have learned?

Posted In Observations Comments Permalink

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Last week, we introduced KPIs. Here is an example of one type of KPI.

One of the paradigms that you need to discuss with your management team is the concept of revenue minus expenses equals profit which is limiting and one dimensional. Entertain the concept of people times process equals profit. 

For example, sales now becomes a function of y dollars being derived from x number of sales calls. Therefore if x number of sales calls produce y dollars of sales then an increase of 1 more call per person per day should produce what amount of additional sales per month? 

KPIs will help you track and improve these types of concepts and will have a dramatic and instant impact on your business. 

Now imagine you are on the golf course, it’s Friday afternoon and you get an updated KPI report on your iPhone. You see that all of your KPIs are moving nicely in the right direction. It won’t bother you at all that you just put that brand new $4 golf ball in the middle of the lake!

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Last Monday I posted PKF Texas’ invitation to the Rice Alliance Kick-Off event featuring Michael Oxley on August 23^rd.

I’ll be attending and will post my thoughts on the 24^th. The impact of the Sarbanes-Oxley legislation has been huge in our industry and is still a hot topic, especially in light of the current December 15, 2007 deadline for non-accelerated filers (small public companies for my non-accounting readers) to start complying with Section 404 of the legislation.

This will definitely be an interesting speech and I’m curious to see what he has to say about it 4 years removed from the signing of the legislation. If you will also be attending, let me know your thoughts, so those who can’t attend will get the benefit of multiple perspectives. 

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Over the weekend I was checking out Business 2.0 online and discovered a great, relatively new feature. They now have a blog called “Ask Business 2.0.” You can ask business related questions and CEOs and other entrepreneurs and experts will answer. 

Definitely a great concept and service from the magazine. Let me know if you read any posts you think would be valuable here and I’ll link to them. 

Posted In Observations Comments Permalink

Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

Any sports fan knows there are statistics that coaches use to evaluate and improve the team’s performance. The same principle can be applied to your business using Key Performance Indicators or KPIs.    

So how do you start?  Identify the area of your business that has the most possibility for improvement. Focus on particular areas of concern and don’t try to track too many indicators at first. 

For example, you may be tracking gross revenue each quarter. But what is that really telling you? How are you obtaining growth or, more importantly, what is causing a decline?

To answer those questions spend time with your management team. Brainstorm and agree on the top two or three KPIs that are contributing to your success or decline. Using a force field analysis can be helpful. Then determine who will track the measurement and distribute the information on a daily or weekly basis. 

Next week, we’ll discuss a sample equation that demonstrates the process for a sales KPI.

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Attention Houston Tech companies! We’ve received so much interest in the FastTech 50 this year that we’ve extended the deadline to Wednesday, August 15^th. This means you have two extra weeks to get your nomination in. 

Click here for more nomination details:

http://consult.pkftexas.com/fasttech50/

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