From Greg's Head

Raissa Evans is the Senior Manager in the Practice Growth department of PKF Texas.  She attended the May 14th panel presentation, "The Upside of the Downturn" and I thought it would be beneficial for you to hear her thoughts. 

This week I was privileged to hear a wise panel of speakers speaking on the topic of the “Upside of the Downturn.” They were Val Gibbs, president of Bank of Texas, our own Byron Hebert, director of Entrepreneurial Advisory Services at PKF Texas, Alex Howard, senior managing director of Howard, Frazier, Barker, Elliot and Fritz Koehler, Executive VP of Sales at Insurance Alliance. Russ Capper, host of the BusinessMakers Radio Show was the facilitator for the group.

As economic news and conversation continues to be peppered with negativity, talks of cuts and financial hardship, at PKF Texas it has long been the conversation that it is more productive to our clients’ business strategy and frankly, morale, to talk about the opportunities. Action is, after all, more beneficial than the paralysis of gloom. These knowledgeable panelists came together to give their clients some insightful views on the present. Some key takeaways for me, that I thought might be beneficial to the From Greg’s Head readers:

- Val says some banks really are loaning some money, to some borrowers. Just don’t expect it to be as easy as it was. Have a plan and contingencies, communicate with your banker to give them confidence. Also use your banker for benchmarking - ask, ”How do I compare to others?” Approach your banker first, but other types of lending such as asset-based or mezzanine may be available to you.

- Byron affirms that his best clients are busy working ON their businesses. They work with him on process improvement, efficiency of their operations and conducting waste audits. It is also a key time to renew your relationships. Clients like this are taking market share. And inevitably, this economy and the brilliant talent making transitions is going to spark another wave of entrepreneurism as it did in 2003.

- Alex agrees that now is the time to position for your next growth period. Reflect, take time to do the right steps that in the faster times you skip over. Also, this is a perfect storm for wealth transfer planning for the next generation.

- Fritz warns of how the SALY effect (same as last year) inhibits most people. For insurance, it is wise to evaluate your strategy, take advantage of cost savings, and make sure you are covered for incidents. Protect what you have built. You can view your broker as an insurance vendor, or a risk management consultant that can help with disaster planning, loss control and contracts review. He says he encourages his clients to ask “What if?” instead  of “Oh, by the way…”

- All of the panelists agreed that this is a key time to provide reassurance to your top tier people. Retain them, train them, and engage them. Doing so will ensure that they do not become targets to your competitors. It may also be a time to recruit some star players who may not feel confidence in how their company has been handling this market. And above all, communicate with your people.

Feel free to contact Karen Love, director of Practice Growth (klove@pkftexas.com) if you have questions or want to talk to Byron or any one of our professional advisors. Or, let us know if you’d like to be included on our mailing list for events and news that may impact your business by emailing me at revans@pkftexas.com.
 

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 Monique A. Hitchings is the Editor in Chief of FUEL Magazine, a Hart Energy publication.  You may recall that PKF Texas partnered with Hart Energy to host the NASDAQ OMX presentation.  Hart Energy is hosting the Energy Solutions Conference in Houston on November 6 and 7, 2008.  Monique may be reached via email at mhitchings@hartenergy.com.

Conventional vs. alternative fuels and energies, refining technology, clean technology, climate change – these are today’s buzzwords to effect tomorrow’s changes.

As we enter a new U.S. Administration, a new year and face financial constraints in all aspects of the global downstream industry from refining to transportation to research and development to fuel management, it’s time to continue much needed dialogue and recognize potential solutions to myriad challenges our industry faces.

The gap between supply and demand continues to grow and a reduction in the heavy dependence on imported crude is paramount.

Companies are noting alternatives to typical ways of conducting business, including implementing alternative fuels and technologies in all arenas of the downstream business.

Industry representatives have been talking about it; government and organizational leaders have been talking about it; operating companies and their vendors/providers have been talking about it. It’s time to bring these entities together to talk about it and learn from one another.

Houston’s Energy Solutions conference featuring the Global Energy & Environmental Excellence Awards Celebration and Biofuels Briefing, Nov. 6 and 7, is the place to interact with leading energy industry strategists and analysts, policymakers, refinery and transportation executives, financiers and technology providers.

These sector leaders will examine national and global progress since the release of the National Petroleum Council’s report and the 2008 World Petroleum Council meeting in Madrid in July.

One notable industry icon, Donald L. Paul, president and managing director, Energy and Technology Strategies, chief technology officer, Chevron (retired), will share innovative ideas for saving energy tomorrow, noting “every molecule counts” on the road to sustainability and clean technology.

Timely and topical information will be discussed, analyzed and in some cases debated in an array of manners by the best in the business. Discussion points include:

• U.S. post-election policy and energy outlook;
• The effect the U.S. election will have on international energy opportunities;
• The degree to which we’ve progressed toward energy security;
• The true nature of worldwide demand;
• Supplies that are available now and in the future;
• Upcoming transportation technologies to change energy use;
• Local and global low-carbon solutions;
• The meaning the weaker dollar has for capital markets; and
• The way in which biofuels fit into the global market.

At the end of the day, we all want the same thing: improve our environment in the most cost-effective, energy efficient manner that results in less dependence on conventional fuels and foreign crude imports. How do we get there? One step at a time – working together, listening, talking and acting to arrive at energy solutions for tomorrow from challenging times today.

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At PKF Texas we often meet people in the marketplace who have advice that is beneficial to the blog audience .  Barbara Hayley of Hayley Ranch Consulting, Inc. is one of those people and she wrote the below guest blog for our readers.

I am often asked at my presentations to give advice to entrepreneurs about growing their business. I believe if you give more of your time, your efforts, your resources and your contacts to others generously, many good things will come to you. I founded my company, Hayley Ranch Consulting, Inc. based on the business theology of net-weaving. Net-weaving is a way to help others, being generous with your resources and contacts and find out who people are deep inside and share what you have with them.  

Do you have customer evangelists for your company? They are customers that believe in your company, your people and your products or services. They want you to succeed and want to share in your dreams and are willing to spread the word of your business. In order for your customers to believe in your business, you must start with a great team, talent and the right culture. It is important to know where you are, survey your people, find out where the gaps are and do something about it, don’t just let the dirt build up until it is too late. Your customers will not believe in your dream and vision unless the heart of the company is in the right place. So we net weave-become a connector and evangelist for others.

Another piece of advices I can share is to cross sell your customers to each other. Host “lunch and learns” for your customers. Have a speaker outside your industry teach them something; allow your customers an opportunity and drive the conversation for them to do business with one another.

Below are some action points and questions to ask yourself when analyzing your business:

1. Visit with your customers
2. Is your company focused on creating memorable experiences?
3. Do your customers feel like a part of your family?
4. Do you spend money and time on training your employees and is there a commitment for growth & development?
5. Is employee compensation tied directly to customer ratings?
6. Are employees empowered to do the right thing?

If you have thoughts, comments or questions, feel free to contact me at bhayley@hayleyranch.com.

Barbara Hayley is a 5^th generation Texan and a 13^th generation American and a member of the Daughters of the American Revolution. Barbara formed Hayley Ranch Consulting, Inc. to provide exciting and innovative ideas for companies to market and serve their customers though a technique called Net Weaving. In 2008 Hayley Ranch Inc. was a finalist in a city-wide Star Awards Recognition. Barbara was recently named to the Board of Directors for the Houston West Chamber of Commerce and serves as a Director for Mind Technologies, Inc. Barbara can be reached at bhayley@hayleyranch.com.

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I’ve asked my colleague and Next Gen “advisor” Jen Lemanski to comment on the Forbes list of Best Cities for Young Professionals. Houston is number three on the list. Jen is the Practice Growth Specialist for PKF Texas and is a member of several young professional initiatives in Houston and the accounting industry.

Forbes was absolutely right when they put us on their list of best cities for young professionals (YPs). Houston is not an obvious choice for YPs that are outside the oil/energy industry. while we don’t have the shiny, sleek reputation of New York City or the laid back, beachy atmosphere of Los Angeles, Houston is one of the country’s best kept secrets. The ratio of cost of living to salary is much better than our counterparts on the East and West coasts. The Houston economy hasn’t seen the downturn that other major cities have seen, business is booming and it’s an exciting time to be here.

The diverse population and international flavor isn’t something that you can copy. Many of us are transplants (I’ve lived all over the country), we may not be native Houstonians, but we’ve made the conscious decision to call Houston our home.

There are YP initiatives around the city that are growing by leaps and bounds. For those who join, it’s an opportunity to get in on the ground level and steer the ship so to speak. We are able to get involved and shape our city. With the Baby Boomers beginning to retire, the city is ready for us to step up and show what we can do.  The Boomers are ready and willing to help us make connections in the marketplace to expand our centers of influence. 

All in all, Houston is a great place to be right now and I can't wait to find out how the YPs (myself included) will shape our city!

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Stephen Nunes, the Controller from Merrick Systems (www.merricksystems.com) and I were recently talking about various technology trends and new items and the capabilities of the Nintendo Wii came up. It really isn’t just a gaming system. Stephen wrote a helpful document describing how to connect a Wii to use it as a multimedia center. With the success of the Wii during the recent holiday season, I thought this might be helpful to those of you who received one. Merrick Systems is a software and technology solutions provider for the upstream market located here in Houston.

If you have a Wii connected to your main television, it can be more than a gaming unit. You can also use it as a multimedia box to browse the internet on your television (go to Youtube to watch videos)  and to stream pictures, videos and music from your PC to  your TV.

Here’s how:

1. if you have a wireless network in your home, start by connecting the Wii to the network
   1. At the main Wii Menu, go into the settings menu and follow the network settings from there. Connecting a Wii is very similar to connecting any other wireless device to your home network.

2. Download the Opera browser for Wii to the unit. Do this by going from the main Wii menu to the Wii Store. You will need to spend $10.00 to buy “Wii Credit” on the site, but again, the menus will guide you through how to do that. Once you have the required credit, you can choose to buy the browser from the Wii store and it will download to your unit and update it’s operating system.

3. At this point, the internet browser will appear as a menu choice in the main Wii menu. You can now use it to browse almost all web sites by typing in the web addresses on the on-screen keyboard using the Wii Controller. You can save frequently visited sites as favorites for one-click retrieval.

4. To stream media from your PC, you now need to go to Orb.com, set up a free account, and download and install their client software to your PC. During that installation process, you point the program to the folders where your media files are. I have all my music, pictures and video stored on an external hard drive so it is separate from my other data. You can then go back to the Wii, an browse to your account on Orb. After signing in, you will see the folder with your music**, pictures etc and you will be able to double click on them to start them up. The flash media player within the Wii Opera browser should then allow you to view pictures and play music** and video.

5. Note that you can even play music from your Itunes libraries, but all media has to be unprotected (non-DRM in the case of music) format to play. Thus music you added to your library from CD’s should play, but music purchased from the Itunes store will not.

6. **Security note - Since I’m paranoid about hackers, viruses etc, I only start the Orb client on my PC when I want to stream multimedia through the Wii. Otherwise, I make sure that the orb client has been exited and is not running on my PC. As part of setup, I choose not to have it automatically start up when windows does.

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This week's guest spotlight is from Walter Ulrich, President and CEO of the Houston Technology Center. 

Houston, Texas, January 7, 2008 – Mark my words, “2008 will be remembered as the inflection point for transforming the Greater Houston Region from the 20^th century leader in oil and gas to a 21^st century globally recognized high technology hub.”

How about “Happy New Year” first???  If you are in this region like me, you had better have gotten over celebrating the New Year by January 2^nd and on your way to making a difference today and every day in 2008.

What is going on here?  Houston faces a great opportunity and a great challenge!

The challenge is that Houston must generate 600,000 new jobs over the next ten years.  If we do nothing, only 450,000 jobs will be created in Houston: The Oil & Gas equivalent of Detroit!

But a lot is being done.  The Greater Houston Partnership is raising $30 million to $40 million to bring in those incremental 150,000 jobs.

So problem solved?  Not so fast!  We attack the symptoms – job counts and wage rates – but that does not solve the underlying problems.

The Opportunity è the right kinds of jobs.  While we need more oil workers, logistics businesses, retailers, manufacturers and call centers, those kinds of jobs alone will not provide long-term, sustainable economic growth.  High technology employment is the flywheel that builds robust, growing economies.  The entrepreneurial spirit, which Houston has in its very DNA, will favor those who seize the opportunity and meet the challenges head on.

This cannot be accomplished using traditional economic development methods.  And competition, nationally and globally, is fierce, so we must create high technology jobs now.  THIS YEAR!

The stakes are HIGH!  Failure is not an option.  Did I say opportunity???  Under these circumstances, this is NOT an opportunity!  It is an outright OBLIGATION to transform this community and we must do it now.  THIS YEAR!

Houston: one of the richest troves of innovation in the world – thousands of entrepreneurs, tens of thousands of researchers and scientists, great institutions, lots of intellectual property and a regional economic base that rivals some of the largest countries in the world… oil and gas capitol… mega medical centers… $4 billion IT economy…  pioneers in Nanotechnology at Rice University… and NASA’s largest R&D facility.

And yet, “we don’t get no respect.”  If you believe the pundits, Houston is seen as one or two dimensional only with the real innovation elsewhere.

So why is that?  We have not demonstrated long-term sustainable high tech results.   We have the economic capacity; we have built the infrastructure in the last ten years.  We have to deliver the goods.  Now.  THIS YEAR!

The Houston Technology Center is ready to lead.  It is the largest non-profit community-based organization in the region focused exclusively on fostering innovation and driving emerging technology success:  Emerging energy and clean energy technologies, bio/life sciences, IT and web 2.0, 3.0 and beyond, nanotechnology and NASA-related aerospace.

Our full time technology development managers work side-by-side with over 70 emerging technology companies helping them to identify gaps, find customers, raise money, grow and prosper and thrive.  We partner with over a dozen other organizations and work closely with major Universities, economic development organizations, municipalities and the State of Texas.

Our objective is simple: Houston will be a globally recognized technology hub on a par with the most highly lauded technology centers of the last decade.

AND WE NEED YOUR HELP!

Go to our website, www.houstontech.org.  Attend the free orientation if you don’t know us.  If you do know us, then join us.  The HTC could not accomplish its mission without the support of the community and we need your help.

If you are a technologist or an entrepreneur, you share with us the challenge, the opportunity and the obligation.  Get engaged, give us your support and actively participate (and financial contributions are always welcome).  Greg, his shiny head and PKF Texas get it è they are actively involved and set a great example.  Make a difference!  Get involved!  RIGHT NOW!

www.HoustonTech.org

_____

About our guest contributor – Walter Ulrich is President and CEO of the Houston Technology Center, Chairman of the Gulf Coast Regional Center of Innovation and Commercialization and active in many community organizations.  Appointed by Governor Perry, he recently completed a two year term as one of the founding members of the Texas Emerging Technology Fund Committee.  He has been CEO of several technology companies, a management consultant to major corporations, an expert witness on technology issues, and was responsible for the first commercially successful email service in the 1970’s.  A former Marine and graduate with a bachelors and master degree from Stevens Institute of Technology, he lives with his wife in Pearland.

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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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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!

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In response to my blog on Monday, Kendra Trueba asked me to post the following, which I’m more than happy to do. 

Located in Midtown, just walking distance from Downtown, Houston Technology Center has office suites currently available.  With many floor plans to choose from, furnished or unfurnished, we are sure we can accommodate your office needs.  Our high-tech center is complete with many conference and meeting rooms, high speed internet connections, VOIP phone systems, reception service, and many other amenities that will help accelerate the growth of your business.  With extremely competitive rates, endless networking opportunities, beautiful views, and easy access to major freeways, Memorial Park, hotels and restaurants, HTC will definitely benefit you and your business!  Please contact Kendra Trueba with HTC at 832-476-9256 or ktrueba@htc.org today to learn more about services, availability and rates!

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Kong Hei Fat Choi ! Or in China’s mainland – Gong Xi Fa Cai !

Those greetings – in South China’s and Hong Kong Cantonese, and Mainland China’s Mandarin respectively – betray an interesting cultural difference between the US and China at times of Festive Greetings. While at Christmas or at Thanksgivings, Americans will wish each other “Seasons Greetings!” and employ more family oriented, peaceful expressions to express good tidings – the Chinese are far more literal and down to earth in their culture. Kong Hei Fay Choi – or of you prefer – Gong Xi Fa Cai – means literally, “Have A Prosperous Year”.

Charged then, in the rise of modern China, with rampant materialism, a ‘greed is good’ mentality, a new consumerism and that sin of sins – a huge trade deficit with the US – it certainly seems that this traditional Chinese New Year greeting is coming true for many Chinese. Should Americans be worried? In terms of festive greetings, the benevolent “Merry Christmas” seems almost naïve in comparison. Is this a reflection of a clash of economies, an example of differing cultures, or is it symbolic of America’s long established wealth leading to complacency, rubbing up against a newer, more aggressive culture determined to get rich at any expense?

As always, it’s a bit of both. Yes, America has become complacent in matters of international trade. “The Chinese are stealing our jobs!” being the politically charged mantra of various enraged senators. Well that’s surely a bit of “Gong Xi Fa Chinese Cai” going on there. However, when one stops to consider that America has known for 20 years the direction China would take – doesn’t it smack a little bit of a lack of US action in preparing for a new global trading partner to rise? Industry could, and should have re-positioned itself to cater for global changes two decades ago, and to cry ‘foul!’ now seems rather churlish – given the euphoria in the US that “Communist China” was finally opening up and that market of 1.2 billion people was going to be there for the taking. Actually, the market was 300 million and it was the US consumer that bought and paid for it.

But for American businesses, all is not lost. It’s not just China that has opened up – it’s pretty much the entire globe. India is posting record FDI figures. So is Pakistan. Much of Eastern Europe is now open for business. Thailand, Malaysia, Indonesia – and even tiny North Korea are all on the map as regards being open for investment. American businesses can develop their own “Gong Xi Fa U-S-A ! Cai” as well – selling US products to these markets. General Motors opening up a plant in Chennai (India) or Shanghai is not stealing American jobs. It just servicing the local market. In time, American companies will have fully adapted to globalization and be fully participating in it. But if they do not, and remain rooted in the sour grapes attitude over balance of trade deficits, perceived US job losses and the feeling of how unfair it all is – then that is a self prophesying lament. America’s challenge is to develop its own mantra of getting rich – and that lies not in complacency but in an inherent intellectual ability to recognize that its long held dream has come true. It’s a global economy, and national American businesses need to take their seats very firmly at the global trade dining table – or face the consequences.

Chinese New Year was February 18^th. I wish you all – American and Chinese – “Gong Xi Fa Cai!”

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Sheldon H. Eveloff, CPA, CISA, CITP, is Partner-in-Charge of Goldenberg Rosenthal LLP’s Management Consulting Services Division. He can be reached at seveloff@grgrp.com.  Goldenburg Rosenthal LLP is a member of PKF North American Network (PKF NAN).

Each year, the members of the AICPA’s Information Technology Section vote on the top technologies affecting the accounting profession and technology consulting. One of the most important is information security, which has been defined as the “hardware, software, processes and procedures in place to protect an organization’s systems, including firewalls, antivirus protection, password rearrangements, patches, and locked facilities, among other areas.”

Many employees play important roles in information security. Executives develop and approve policy, technology personnel implement it, and end-users follow it. Information security is a team effort; if anyone drops the ball, the entire organization suffers. Most if not all, security mistakes result from ineffective or unenforced information policy, inadequate system controls, or poor education and awareness of end-users and technology personnel. Effective security requires coordinated effort and heightened awareness.

Security policy is at the heart of any information security strategy, representing the objectives from which all security procedures are derived. Formulating effective security policy requires knowledge, time and effort.

Effective information security also requires commitment on the part of management. Management’s commitment is communicated by development of sound information security policy; implementation and enforcement of policy and procedures; effective resource implementation; workforce education; and continuous focus on information security issues. The routine discussion of security issues, in meetings and regular e-mail reminders on the importance of information security, sends a clear message to all employees that information security is important.

Too often, executives and managers pay lip service to information security, authorizing reactive short-term fixes assigning untrained personnel to security tasks, and failing to deal with the operation aspects of security. Unfortunately, most business executives and many technology professionals do not have sufficient knowledge or awareness of the issues at stake, so prudent executives often enlist the help of professional information security specialists.

Business risks underscore the need for management to regularly review its information security policies and procedures, as well as funding. Failure to properly resource an information security strategy will eviscerate policies and procedures, and lead to security failures. Adequate resourcing is necessary for an information security strategy to be effective. Technology personnel require training in security procedures for servers, workstations, and network devices, as well as training on the latest security risks, threats, and developments. End-users, too, must be educated on security issues and policies. 

Employee education and awareness is the most important of all information security measures. Awareness comes from education, organizational commitment and focus, enforcement of information policies, and a proactive technology staff. Employees should receive ongoing training on common security risks encountered in the workplace, what risky activities to avoid, and when and how to report suspected problems. The employer must include a policy on computer use in its employee manual, recognizing that employees are the first line of defense in securing information assets. Both the Electronic Communication Privacy Act and the U.S. Patriot Act make it unlawful to monitor any activity without a usage policy.

The first step toward solving a security risk is recognizing that a business has one. Monitoring the security and health of the information technology infrastructure has become an ever-increasing challenge. There are many areas that need to be addressed in a security plan to provide a comprehensive and scalable security solution that is forward-looking, while fitting into a complete technology plan. Since it is impractical to address everything, each company should evaluate its own set of potential liabilities and develop a unique blend of controls within its architecture.

We CPAs are intricately involved in the flow of information within a business, and have become the logical choice for evaluating and recommending information security strategies. Be prepared to offer a comprehensive overview of security threats when asked. 

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Today's guest blog is from Robert Brackenridge.  Robert is the Director of the Technology Program at the Houston Technology Center.  He can be reached via email at rbrackenridge@houstontech.org. 

Lately, I have been receiving an abundance of phone calls concerning the need for technical talent. It seems that the single greatest limiting factor for many of the technology companies in Houston area is talent. Where can I find a software developer that has a few years under his or her belt that I can hire? With the Houston economy performing as well as it has been for the last few quarters, qualified technical talent has once again become scarce. Most of the early-stage companies that apply to the Houston Technology Center are searching for capital funding. After all, without the funding, a company may never get off the ground. With this in mind, the early-stage company often overlooks the people part of the business.

Paul Graham wrote a great essay in May, 2006 in which he discussed his ideas on the building of Silicon Valley. Many others have attempted to define the attributes that created the business ecosystem which developed into the valley, but I really enjoyed Paul’s simplification. In order to duplicate, or for that matter surpass, the Silicon Valley, an area must have both “rich people and nerds.” The rich people are obviously the financial fuel and nerds are the technical talent. So, if an area finds itself devoid of one or the other what should it do?

I propose that the focus should be on the finding of the nerd. Companies should focus their effort on obtaining the best talent possible before they become concerned with sourcing the money. This often runs contra flow to the strategy that many of the early-stage companies select. Most entrepreneurs I run across feel that the choke hold around their business is the lack of money that fuels success. However, what many of the entrepreneurs do not realize is that the savvy investors are not necessarily betting on the technology that they are initially investing in. Hmmm… That sounds a little odd… What about those software demos and PowerPoint slide stacks we put in endless hours to produce? We were demonstrating our technology weren’t we? Yes and no. Investors that have been around the technology space for a reasonable length of time understand that the market is very fluid. The technology developed today will most likely not be the technology that propels the success of the company in the future. The people will. Investors are looking for the right combination of people that will be able to take advantage of the current opportunity as well as identify the next smash hit, down the road. Good people will attract the serious investor. Good people will attract the money.

How does a company find good people in an area constrained by a lack of talent? Fundamentally, this comes back to the company’s culture. Your business has to be a place that someone wants to work. To further this line of thought, your business has to be better than anywhere else that someone would wish to work. I constantly hear the experts promote that in order for your business to be successful, you have to know your customer better than anyone else. If you shift this thought process slightly and apply it to your employees, your company will be able to think of your employees as the customer. Do you know your employees better than anyone else? Chances are you don’t. When your employees are out in the public are they praising your company? It would pay to find out. Because this is by far the best way your company will ever find the talent it needs to be successful in the future. A referral from one of your employees is one of the strongest determinants in finding others to join your business. A referral is also the most cost effective method to hiring your next rockstar.

By thinking about the needs of your business in advance, you will be able to identify the fertile grounds in which to find your next key hire. Which of the trade organization events in your area are your employees attending? Help your employees find these organizations and become an active member yourself. Sponsor some of the organization’s key events and establish your presence within the professional community. Listen to the remarks the other members are making about the companies they work for. What are your employees doing for fun? Find creative ways that your business can promote and become associated with these fun activities. Sound a little familiar? This is the same approach your company most likely uses for your competitive analysis. The same approach can be applied to your human resources. Finding the best employees becomes your competitive advantage. Ultimately, the game will be won by the company that has the best team. Focusing on the creation of that team will yield success for your business. Focusing on your team, will help your company find the talent it needs.

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Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur's Playbook page of the PKF Texas website.

What is Effective Inventory Management?

“Effective inventory management allows a distributor to meet or exceed customers’ expectations of product availability by maintaining the amount of each item that will also maximize their company’s net profit.”

Effective inventory management is the result of outstanding inventory control and inventory management. What is the difference between “inventory control” and “inventory management?” Inventory control involves managing the inventory that is already in your warehouse, stockroom or store. That is, knowing what products are “out there,” how much you have of each item, and where it is.

Inventory management involves determining when to order products and how much to order, as well as identifying the most effective source of supply for each item in each stocking location. Inventory management includes all of the activities of forecasting and replenishment.

The most common question we are asked is “where do we start?” The answer is: You must begin with inventory control. Unless you know exactly what inventory is in your warehouse and that material is in usable condition, you can’t accurately determine when to reorder products.

Stay tuned for future segments on effective inventory management. 

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Note: Running most Fridays in FromGregsHead.com, This is the first in a series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found at the PKF Texas Radio/Television page.

How do you achieve Inventory Control? Where do you begin?

First, you have to understand the problem. I’ve worked with distributors throughout the world. These firms have distributed nearly every type of product imaginable. Despite the variety of locations and industries, I’ve found they typically have very similar inventory-related problems:

• They have too much of some products.
  • Results in excess inventory and dead stock and leads to decreased turnover and profitability
• They experience stock outs of other products.
  • Results in backorders, lost sales and an overall decrease in customer service.
• They don’t know what is in stock.
• They can’t find material in their warehouse.

As a result, many distributors don’t have control of their inventory. So, to get control, you need a plan for effective inventory management.

Stay tuned for future segments on effective inventory management. 

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Our Guest Spotlight for today is Kim Padgett of The Padgett Group, a Houston-based public relations and marketing firm. Kim brings us a first-hand perspective of the Houston Technology Center's recent gala.

Wow, what a night! Black tie galas aren't just for community charities anymore. Houston's business stars were out and shining brightly at the Houston Technology Center (HTC) third annual gala, "A Celebration of Entrepreneurs," May 11 at the River Oaks Country Club.

The energy in the room was again more than we imagined. Following an informal reception with the crème of the crop from Houston's leading business entrepreneurs, the evening kicked off with a lively video of where HTC has been and where the organization is going in 2006 and beyond.

While guests dined on River Oak's finest dishes, they enjoyed lively conversations with their "host" entrepreneurs - one of more than 40 Houston-area entrepreneurs recognized for their contributions to the Houston business, retail, science and technology community, in an "entrepreneur in the round" discussion format. These leaders shared their successes, failures and stories of how they got where they are today with their table guests.

The highlight of the evening was honoring long-time Houston energy entrepreneurs L.E. Simmons and Matthew R. Simmons for their distinguished accomplishments and contributions. It was quite a tribute to the Simmons' brothers and family as the video told the story of their legacy of entrepreneurism, which soon became a tribute to their father, who passed away just a day prior to the gala. The entire room was moved by the brothers' emotional acknowledgment of their father's influence in their successes.

Matthew R. Simmons is chairman of Simmons & Company International, a specialized energy investment banking firm. The firm has completed approximately 600 investment banking projects for its worldwide energy clients at a combined dollar value in excess of $65 billion.

L.E. Simmons is the founder and president of SCF Partners, a private equity firm that manages a $1 billion portfolio of energy service companies. The investment limited partners of SCF are primarily endowments, including Stanford University, Duke University, Rice University, The University of Texas, Northwestern University, University of Notre Dame, Howard Hughes Medical Institute and private families.

After the event is announced in January, this HTC event sells out early each year. The annual event raises more than $220,000 that contributes to the HTC's mission as a business accelerator, assisting Houston-based emerging technology companies within several key sectors: Energy, Information Technology, Life Sciences, Nanotechnology and NASA-originated technologies.

Prior honorees have included Dr. John and Anne Mendelsohn and Walter Johnson.

Honored entrepreneurs included: Lloyd Bentsen III, Cindy Boyd, Alex Brennan-Martin, Rod Canion, Russ Capper, John D. Chaney, Nancy Chang, Ph.D., Ernest H. Cockrell, Lee Cook, Bob Crawmer, George DeMontrond, Shel Erikson, Douglas Erwin, Lupe Fraga, Vijay Goradia, Bernard Harris, M.D., John Hess, Ned Holmes, Roger Israni, Walter Johnson, Deane Kanaly, Wally Klemp, William V. Larkin, Jr., Martin Lindenberg, M.D., MBA, Javier Loya, Paula Manning, Gene McCubbin, Jim McIngvale, Phil Morabito, Dennis Murphree, Don Nigbor, Roger Ramsey, Ashok Rao, Arthur T. Sands, M.D., Ph.D., L.E.Simmons, Matt Simmons, Gerald Smith, Michael Stevens, Ron Stone, Peter S. Wareing, Chris Wasden, Harold Wiesenthal, Wallace S. Wilson, and Beth Wolff.

BMC Software stepped up as the Trailblazer Sponsor for the third year and was joined by Visionary Sponsors: Barbara & Paul Frison, Holthouse Foundation for Kids, Houston Business Journal, Mayer, Brown, Rowe & Maw LLP, Phonoscope, SCF Partners, Shell Technology Ventures, and Simmons & Company International.

Pioneer Sponsors included: Amegy Bank of Texas, Baker Botts L.L.P., Bank of Texas, N.A., Benchmark Electronics, Inc., Blue Lance, Inc., Booz Allen Hamilton, CapTECH LLC, Mr. & Mrs. Ernest Cockrell, Compass Bank, Cooper Cameron, Doug Erwin, Ernst & Young, Frost Bank, Fulbright & Jaworski L.L.P., G&A Partners, Gardere Wynne Sewell, LLP, Haynes and Boone, LLP, Houston Technology Center, ieSmartSystems, L.L.C., Kanaly Trust Company, Lexicon Genetics, Locke Liddell & Sapp LLP, Oracle Corporation, Palmetto Partners, Pierpont Communications, Inc., PKF Texas, Regions Bank, Rod & Cam Canion, SCF Partners, Sterling Bank, Stratos, Symantec Corporation, The BusinessMakers Radio Show, Thompson & Knight LLP, Vinmar International, and Vinson & Elkins LLP.

In-Kind Sponsors included: Chas. P. Young Co., Gotham Image Works, Merrill Corporation, Phonoscope, and Tribe Design.

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From time to time, I will feature a Guest Spotlight - friends and associates who I believe are making a great impact on many of the topics I discuss in the blog.

Our first Guest Spotlight is from Kala Marathi, managing director of the Houston Angel Network. She has more than 10 years of operating and financial experience, and was formerly with Reliant Energy where she was a founding member of the corporate venture group, Reliant Energy Net Ventures, and led investments in home automation technologies. She has also worked with Continental Airlines and Chase Manhattan Bank.

It should come as no surprise that I'm going to talk about my favorite topic: angel investing. In specific, I'd like to talk about "How to find an angel investor."

I ran across an article in Business 2.0 that talked at great length about ths topic. However, the article (and most articles on similar topics) talk about how to work with angel investors and not how to find them.

There are four ways to find an angel investor:

1. Network at organizations that tend to attract angel investors: Angel investors tend to work with several entrepreneurship-focused organizations in town. These organizations include, but are not limited to, BioHouston, HTC, MIT Enterprise Forum, Rice Alliance and Texas Entrepreneurs' eXchange (Texchange).

2. Get a professional reference: Your lawyer, accountant, banker and other service providers are a great source of referrals to angel investors. Most firms that I know of (such as PKF Texas) have thick rolodexes that they might be willing to leverage on your firm's behalf.

3. Get a reference from your current investors: Ask your current investors to refer you to their friends and business colleagues who might be interested in investing in your company. Angel investors tend to have friends who are interested in the same sectors/topics, so one life science investor can lead you to more potential life science investors. These are (in my opinion) the best kinds of referrals you can get, because the referral comes from someone who has "skin in the game."

4. Search the Web: There are several angel investment organizations across Texas, and almost every major city in the state either has one or is planning to create one. The benefit of these types of organizations is that you can get exposure to many angels at one time, and get coaching on how to work with angel investors. Contact your local angel investment organization and start a conversation. Two organizations to start with include the Houston Angel Network and the Angel Capital Association.

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How many of us are working remotely? We're away from the office, yet we're finding ways to increase efficiencies by accessing networks and staying current with our workloads.

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