The following post was authored by Paul Jones.
The American Recovery and Reinvestment Act (Act) established a new 30 percent investment tax credit for clean technology and advanced energy manufacturers. On August 13, 2009, the U.S. Treasury Department and the U.S. Department of Energy (DOE) announced that the application period for companies to apply for $2.3 billion in tax credits opens on August 14, 2009. Applicants must file the preliminary application by September 16, 2009, followed by final applications by October 16, 2009.
According to the announcement, the Internal Revenue Service (IRS) will certify or reject applications by January 15, 2010, and notify the certified projects with the approved amount of their tax credit. Award recipients can expect to receive acceptance agreements from the IRS by April 16, 2010.
So, what types of businesses might be eligible for this credit? Essentially, manufacturers of clean technology (including wind turbine gears, carbon sequestration property, solar panels, energy storage systems, etc.).
Read the entire alert regarding the tax credit for advanced energy manufacturers.
Lee Lurton - – Panel Member at the July 9 CEO Breakfast and Discussion
President, Benefit Concepts of Indiana Inc.
Benefit Concepts of Indiana Inc. is an employee benefits broker/consultant with over 100 small to medium sized clients, mostly in the central Indiana area. There were several areas of the CEO survey that I found particularly interesting and wanted to comment on in this blog.
Comments Regarding Raising Capital:
More of our clients are in survival mode and trying less to raise capital. Few need additional capital for expansion of their business, and the ones who are in the survival mode do not qualify for bank loans.
Comments Regarding Indiana’s Economic Climate:
Thanks in part to the Indiana Economic Development Commission (IEDC) I believe the problems we have here are smaller than the states surrounding us. Indiana is certainly much more "small business friendly" since Mitch Daniels became governor and appointed Mickey Maurer as the first head of the IEDC.
Comments Regarding Talented Managers:
In difficult economic times good business decisions are more critical than when profits are good and mistakes can be absorbed with good margins. Even a small mistake (bad business decision) in difficult times can have a catastrophic effect on a small business. Being part of the human resource team, we believe that for most businesses their human capital is their most valuable asset. Talented managers are essential at any time, but critical in difficult economic times.
Comments Regarding the Survey Finding that Large Businesses are Cutting Costs in the Current Economic Climate and That Small Business are Seeking to Increase Revenue:
Upon getting an advance copy of the survey, I did my own small, informal survey and called a few of our clients. This, in addition to conversations with many clients over the last several months leads me to believe that small businesses are cutting costs, just like the larger firms in the survey. One example is of a commercial woodworking firm who told me that when bidding on a project in the past they would expect to bid against four to five competing firms. Now that number may be as high as 20 competing for the same job. Margins were expected to be three to five percent, now with margins lowered to 0 percent they are winning few, if any bids. As a result, for the first time they have closed their production lines for four weeks this summer. Most of our clients are having a difficult time increasing revenue and have been forced to cut costs. This includes any business related to the construction industry, auto, manufacturing and even the service industries. The majority are taking a very conservative approach to revenue forecasts and many are deciding what additional cost cutting measures may become necessary if the economy does not rebound in the next two to three quarters.
The state in which you form your business may not seem important now, but it could have consequences in the future. Administrative expenses, tax issues, attraction of future investors and simply the ease of governing your entity can all be affected by the state in which your entity is organized.
That being said, it is relatively easy to change the state of your company's formation. As your business develops, the important thing is to periodically evaluate whether it continues to make sense to be organized in the state you originally chose.
There are three main issues to consider when determining where to form your business:
- Location of your business
- Tax issues
- Attracting investors
Clearly, a start-up business wants to keep its tax bill as low as possible. Your company will have to pay state taxes in each state in which it operates. While these taxes are unavoidable, the business can take steps to limit them. For example, Delaware corporations are subject to the annual Delaware business franchise tax. However, many states have no franchise tax, or at least a much smaller tax. While there are certainly valid reasons to incorporate in Delaware, its franchise tax could hit a new corporation with a large tax bill that may be needless.
If you anticipate raising money from outside investors, Delaware might be a good state to choose. Investors are generally comfortable with Delaware entities because of the certainty that Delaware's business statutes and courts provide. A lot of businesses have formed in Delaware, and that has led to detailed statutes and a well established body of case law. Investors and businesses can use the relative certainty of Delaware law to plan their relationships in a way that hopefully avoids potential trouble areas and litigation.
We all know that a business owner has hundreds of decisions to make when starting a new venture, and the state of formation may seem inconsequential. Yet, with a little forethought and periodic monitoring of its situation, a business could save itself a lot of hassle (and money) in the long run.
Robert Mackoy – Panel Member at the July 9 CEO Breakfast and Discussion
Associate Professor of Marketing, Butler University
There have been several common questions about the CEO Survey that have come from attendees of the panel discussion that I would like to address in this blog post.
1. Was information learned about the impact the recession had on minority-owned firms and how much does this impact the overall economic stability of Indiana?
The CEO survey does not include questions about business ownership, so I am unable to answer this question specifically. However, the survey does include a question about the ethnicity of the CEO respondent and I am able to examine results based on this variable. Of course, there are ethnic minority CEOs of publically held companies and of non-minority-owned firms, and there may be non-minority CEOs of minority-owned firms, so the following does not directly address your question.
With the above caveat, it appears that there are only a few significant differences between the responses of minority and non-minority CEOs. For example, minority CEOs on average rated the importance of “sustained and steady topline growth” and “corporate reputation” more highly than did non-minority CEOs. They also were more likely to note they are planning to “add jobs” within the next 18 months. On the other hand, they were less likely to rate the overall business environment of Indiana as an advantage relative to the business environments of neighboring states.
Specifically with regard to the current economic situation, minority CEOs were slightly more likely to agree that “major public works infrastructure projects will help to shorten the economic crisis.” They were also slightly more likely to report dipping into cash reserves to help deal with the current economic situation. Other than these two items, there are no differences in the mean responses of minority and non-minority CEOs.
This year’s survey also included an open-ended question which asked what, if any, specific activities “your organization is taking in response to current economic conditions.” Because the question was completely open-ended, responses to it probably best capture how individual firms react to the recession. On this question, there were no differences between how minority and non-minority CEOs responded. Both were equally likely to use cost-cutting and revenue-generating measures and both were equally likely to use any specific measure.
Thus, in summary, it appears that there are many more similarities than differences in CEO perceptions of -- and reactions to -- current economic conditions.
2. The CEO survey has been administered in Indiana for three years in a row. Have the same people responded to the survey each of the three years, or are there different people in the sample each year?
This is an important question because we have seen generally consistent responses (across the three years) to “big picture” issues such as CEO priorities, strategic plans, perceptions of Indiana’s economy, etc. If we are simply hearing from the same individuals year after year, this consistency may be less surprising than if we are hearing from different individuals at different points in time.
The simple answer is that “we don’t know exactly.” The survey respondents are always anonymous to us, so there is no way we can track respondents over time. We guarantee anonymity so that respondents are more likely to be completely candid in their responses.
Our sample frame, that is the listing of individuals we invite to complete the survey, grows each year. Many of the same individuals are invited to participate annually, so there is likely to be some overlap each year. On the other hand, the total number of respondents has grown from 210 in 2007 to 225 in 2008 to 360 in 2009, so we know that we are capturing the thoughts and opinions of at least some new respondents each year.
Finally, one should note that the survey has an exceptional response rate of over 21 percent. In addition, our respondents mirror the profile of all Indiana firms in terms of industry classification and firm size (both revenue and number of employees), though firms based in central Indiana are slightly over-represented. Thus, we believe that the thoughts and opinions captured in the CEO survey are generally representative of the thoughts and opinions of Indiana CEOs as a whole.
Niel C. Ellerbrook – Panel Member at the July 9 CEO Breakfast and Discussion
Chairman and CEO, Vectren Corporation
I very much enjoyed participating on the CEO Survey panel which discussed the survey results on the state of our Indiana business climate. What I found particularly interesting from the survey overall was that results didn’t significantly differ from the prior year. I expected to see greater variation, given the fact that we have been in the midst of the most significant recession since the Great Depression for the better part of a year. I am anxious to see what the survey results show next year although by the time next year rolls around we will hopefully be emerging from the recession.
I also found it beneficial to talk a little bit about the possibility for climate control (cap and trade) legislation and its potential impact on Indiana. As everyone knows, Indiana is very heavily coal dependent for electric generation with approximately 95 percent of total generation being supported by coal. As a result of the extremely high use of coal, we do produce and emit substantial quantities of CO². CO² is a significant greenhouse gas and likely the most significant manmade contributor to global warming. The stakes are high for the potential implications of sustained higher temperatures and one only has to look at Venus in our solar system to get a sense of the implications of rising CO². The atmosphere of Venus is 96 percent CO² and the atmospheric temperature is hot enough to melt lead! So I don’t argue the need to do something to control CO² but the potential economic impact on Indiana residents from imposing controls will be very significant. I think all of us need to send the message to our congressional representatives that we need free emission allowances for a sufficient period of time to allow technology to develop that will permit the targeted reduction in CO² emissions to be achieved.
As an example, carbon capture and sequestration has promise but it is not commercially achievable yet. We need to provide time for these technologies to develop so that customers are not unnecessarily burdened with costs that they cannot afford to pay. We also don’t want to see more Indiana jobs lost because our industries are overburdened with energy costs and uncompetitive as a result.
In closing, the panel was a lot of fun for me, but if I get another chance to participate, I intend to follow my friend Bill Corley’s casual dress code.
William Corley – Panel Member at the July 9 CEO Breakfast and Discussion
President, Community Health Network
During the panel discussion there were several questions written by attendees that I wasn't able to answer because of time. I'd like to address those now.
1. If the numbers are correct, there are about 47 million uninsured in the U.S. How does the cost of the current proposal really come out favorable over an expansion of Medicare/Medicaid or other existing programs?
With nearly 47 million Americans without insurance the Obama administration has proposed a universal health care insurance plan. This would require all Americans to be covered by a health insurance plan much like automobile insurance. The cost of this health care reform plan will cause health care cost to increase. Much like the state of Massachusetts plan enacted in 2006. The cost of this plan has exceeded estimates by 300 percent.
Signed into law on April 12, 2006, Massachusetts health care reform launched the effort to reach near-universal coverage of the state’s population. Currently, Massachusetts is looking for ways to reduce the cost of care. Since 2006, the increase in demand for health care services in Massachusetts is associated with the shortage of primary care physicians (internists, family medicine and pediatricians) and has caused many people to seek health care services in emergency rooms—driving up the cost of care.
My recommendation is that if you do not have a primary care physician that you seek one before the Obama universal health insurance plan is enacted. There are insufficient numbers of primary care physicians in Indiana.
2. With the potential for universal health care on the horizon and the implications of rampant cost increases due to lack of primary care physicians, shouldn’t the providers provide more alternative avenues of service for non-life threatening emergencies such as expanded med-check facilities and the use of nurse practitioners?
Community Health Network is implementing more health care access points to try to improve access to health care services in central Indiana. We have over 200 primary care physicians, six MedChecks for non-appointment health care, nurse practitioners through Wal-Mart stores and Infinity where we provide employer health clinics and wellness coaches to improve the health and wellness of Hoosiers.
3. Health care represents 20 percent of our GDP. If not universal health care, what is the solution?
We believe that universal coverage is one answer but it must be linked to an increased number of primary care physicians, nurse practitioners and physician assistants to improve the access issue. Also all Americans should be provided a small incentive to take responsibility for maintaining healthy life styles of eating right, exercising and reducing stress levels.
4. Primary care physicians have had major shortages for 10 years or more. What is the solution for this shortage?
We need to provide financial, and other, incentives to induce people to become primary care physicians.
The last day of our trade mission started with Mayor Ballard being interviewed by TV Brazil, which is part of the Bandeirantes Communications Group, to discuss some of the highlights of the trip. Interestingly, Brazil's television, newspaper and radio outlets are all interrelated. There are multiple media companies, but they have all three media components. Surprisingly, the Internet hasn't had the negative impact on the communication/publication companies like it has had on the U.S. Print subscriptions are down, but online subscriptions have compensated for the loss.
After the media interviews we visited COPPE. COPPE has become the largest engineering education and research center in Latin America and is comprised of 113 laboratories. They analyze a variety of issues including offshore oil, hydrobuses, biofuels, CO2 emissions, solid waste, wireless Internet and stem cells. Their project scope is vast but there were a few projects that I found particularly interesting, including the first wave power plant (energy created by waves in the ocean), a hydroelectric bus (which they are planning to introduce in 2010) and a magnetic levitation train that has no wheels or tracks. COPPE is also researching the potential for using urban waste and sewage as an energy source. This possibility could have an enormous impact on Brazil, the U.S. and the world.
It was then time for us to head home; slightly exhausted but definitely more enlightened.
The below statement from fellow delegate Carey Lykins, president and CEO of Citizens Energy Group, summarized the trip well.
"Overall the trade mission trip was a wonderful experience. We went with the idea to open doors and open doors we did. We discovered on the other side of those doors that the Brazilians, not unlike Americans, are a very energetic and knowledgeable group. They have a great deal of leading edge technology in biofuels, biodiesel and bioengineering that we can learn and benefit from. We look forward to partnerships with some of the new relationships we forged this week. The trip was a tremendous success."
After our meeting with Paes, we visited the Brazilian Development Bank (BNDES), which is the second largest development bank in the world. Their minimum financing amount is $5 million and they only finance Brazilian projects or projects that directly benefit Brazil. By law, a focus of Brazil banks has to be job creation. Social improvement is also a big focus. In fact, the mission statement for BNDES includes reducing social inequality and financing social projects. Doing what is right, for the Brazilian people and country, is more important than doing what is right for the bottom line of the bank.
The last company we visited for the day was Petrobras. Petrobras is a semi-public Brazilian multinational energy company that is headquartered in Rio. It is the largest company in Latin American (based on market capitalization and revenue) and the largest company headquartered in the Southern Hemisphere. Petrobras has an output of more than 2 million barrels of oil per day and is a world leader in the development of advanced technology from deep-water and ultra-deep water oil production. They are shifting their focus from fossil fuel to biodiesel renewable energy.
We wrapped-up our day listening to Hispanic and jazz music at a local club. Rio not only offered us the opportunity to learn more about their energy development and banking system, we were also able to enjoy their sun, sand and music. Not a bad day at all.
We spent the afternoon at the Brazilian Sugarcane Industry Association (UNICA), which represents 127 sugarcane producers and mills. UNICA members account for more than 50 percent of all ethanol produced in Brazil and 60 percent of overall sugar production. I can't overstate the importance of sugarcane production in Brazil. The Brazilian sugarcane industry is 500 years old, which is as old as the country itself. Of course, some of the issues facing the industry have changed and UNICA helps members with environmental, energy, technology, international trade, sustainability and communication issues.
Because of all the ethanol produced in Brazil, flex-fuel cars are heavily used here. Almost every filling station has both a gas pump (which still use some ethanol) and an ethanol pump. There are over 25,000 filling stations that sell ethanol in Brazil. The U.S. uses flex-fuel cars, but we have less than 1,000 filling stations that offer ethanol pumps. Interestingly, Brazil's public transportation system doesn't use flex-fuel transporters. They have recently begun the process to change to flex-fuel, but it will take time.
We left for Rio de Janeiro in the evening, but not before I was able to truly enjoy some legendary Brazilian coffee. They serve their coffee like we serve our espresso and they use a lot of sugar. Delicious! I look forward to the sun and learning experiences that Rio de Janeiro has to offer!
Agriculture's value to all of us is undeniable. It is an industry that satisfies our most basic needs for human life and further enhances our quality of living. At no other time in history has agriculture been charged with so many additional responsibilities. It is the industry the world looks to when faced with extreme hunger, searching for new sources of energy, developing new foods to improve human health, and addressing climate change, among others.
Read the entire article.
I may decide to stick with my traditional Indiana meat styles, but I humbly admit that we have a lot to learn when it comes to energy efficiency. This morning we visited the Technical Companies of Monsanto (CanaVialis) in Campinas, Brazil. CanaVialis develops and supplies genetic solutions for sugarcane production. Currently, the development of sugarcane is a six year cycle. CanaVialis is working to help reduce the time it takes to bring sugarcane to market. Sixty-five percent of the production cost involved in sugarcane is on agricultural production. The rest of the cost is associated with packaging and transportation. Increasing sugarcane production efficiencies will have an enormous impact on the Brazilian economy. Our trip to Unicamp later in the day proved that Brazil is determined and sophisticated enough to make historical changes to better position themselves in the global economy.
Unicamp is one of three large universities in Brazil funded by the government - 2.5 percent of taxes goes toward Unicamp. Unicamp is widely regarded for their research and helped transform Brazil from a country dependent on oil imports to a global powerhouse in energy production. In the 1970s, 80 percent of the oil that Brazil used was imported. In 1975, Brazil decided they needed to substitute biofuels for their gasoline usage. With the help of Unicamp, Brazil is now 100 energy independent. Not to mention the fact that they have become the largest producer and exporter of sugarcane in the world. Brazil predicts that they could provide 10 percent of the worlds fuel by 2020. If Indiana and the United States want to become competitive in biofuels we must learn from Brazil and become the best at producing our own raw materials, whether it is corn or sugarcane.
The excitement for possibilities didn't end at Unicamp and CanaVialis. This afternoon we visited Campinas, which is a city and county in the interior of São Paulo. Campinas is also the number one hub for cargo in Brazil. In fact, they have a cargo airport. The delegation met with the mayor of Campinas, Hélio de Oliveira Santos, and discussed how the cities may work to learn from each other. Specifically, how the Indianapolis International airport and the Campinas cargo airport can work together, as well as what they can learn from the U.S. regarding public transportation. Public transportation is a big problem in Brazil. In fact, Indiana is miles ahead in this area. The synergies that both these cities can bring to each other are so tremendous that Indianapolis and Campinas became sister cities today.
We ended our day at a traditional Brazilian restaurant where we were served fresh fruit and vegetables, rice, beans, and, of course, beef. Dinner is not to be taken lightly in Brazil. Their work days are long and they end it at an evening meal that can take two to three hours. Quite different from the American drive-thru.
When you are choosing an entity there are a number factors you should consider. For instance, you should think of how you would like to manage the business, protection against liability and your preferred tax treatment. Below are brief descriptions of several business entities that may suit your needs and some of the advantages and disadvantages of choosing those entities.
Sole Proprietorship
The sole proprietorship is the simplest form of business. A sole proprietorship is not an entity separate from you. Though the sole proprietorship is a simple and convenient way to operate your business, you should beware, you will be exposed to unlimited personal liability if you operate your business as a sole proprietorship. The owner of a sole proprietorship is directly and personally liable to creditors and other claimants.
Corporate Entities
Corporation
A corporation is a business entity created under state law and is as an independent legal "person" apart from its shareholders and directors. A corporation's shareholders are generally not liable for the obligations of the corporation and are thus generally shielded from the corporation's creditors even if the corporation cannot pay its obligations. Corporations must comply with statutory rules which are typically more restrictive and require considerably more formality than limited liability companies.
C Corporation
The distinction between a C Corporation and an S Corporation relates to the corporation's tax treatment. Some of the advantages of a C Corporation are that ordinarily you may deduct the entire value of the fringe benefits offered to shareholders who also serve as employees, the number of shareholders the entity may have is unlimited and they may be either individuals, entities, U.S. residents or foreign. C Corporations also have significant flexibility to carry corporate losses forward to future tax years. But, operating as a C Corporation usually subjects you to double taxation, i.e., tax at two levels. First, the net earnings of the corporation are taxed, and then, the shareholders will be taxed on the earnings of the corporation distributed to the shareholders. For example, if a corporation issues dividends to its shareholders, it has already paid income tax on that money, but the dividends remain taxable as income to each shareholder.
S Corporation
An S corporation is a regular corporation that has elected "S corporation" tax status. An S Corporation provides the limited liability of a corporation and the tax treatment of a partnership or a limited liability company. With respect to non-tax considerations, the S corporation is essentially identical to a C Corporation. The significant tax advantage with the S Corporation is that the corporation does not pay any income tax on its earnings. Some disadvantages to an S Corporation are that only once class of stock is permitted and you must limit the shareholders to 100 individuals, none of which may be an entity (with the exception of estates and certain types of trusts) and none of which may be non-resident aliens.
Unincorporated Entities - Limited Liability Company
The limited liability company (LLC) has characteristics of both a corporation and a partnership. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of "pass-through" income taxation. Unlike a corporation, few of the LLC statutory rules are mandatory and most of its governance is dictated by an operating agreement executed by its members The management powers in the LLC can be retained by the members of the LLC or centralized within a board of managers (who may or may not be members). Another advantage of the LLC is that its flexibility allows for much less administrative paperwork and record keeping than a corporate structure. Some disadvantages of an LLC are that some investors are more comfortable with a corporate structure (although this may only be an issue once the company is ready to take on significant investors and not in the early stages of your business) and some creditors may require that you, and other members, personally guarantee a loan to your LLC.
Partnerships
General Partnership
In a general partnership, each partner has full and equal control over the partnership. The partnership is a "pass through" entity for tax purposes. While partners have considerable flexibility in structuring their relationship, partners run a great risk of loss because there is no limitation to a partner's liability. Partners have joint and several liability for the acts of each partner within the scope of partnership business.
Limited Partnership
Under a limited partnership (LP), unlike a general partnership, the limited partners are not responsible for partnership debts, obligations and liabilities. An LP may have an unlimited number of limited partners, but must have at least one general partner who is responsible for the management of the partnership. The general partner remains personally liable for partnership debts, obligations and liabilities, but the general partner can be a limited liability entity to add a layer of protection to the individuals managing it. Like the general partnership, the LP is treated as a "pass-through" entity. A disadvantage of the LP is that the limited partners must be careful not to become engaged in the decision making of the business or they will run the risk of losing limited liability protection.
Limited Liability Partnership
A limited liability partnership (LLP) is a variation of the LP which allows a limitation of liability without the restriction on active participation required with an LP. Under an LLP, partners remain liable for their own acts and are generally not liable for the acts of others, unless the partner has acted negligently or committed misconduct. As with the general partnership and the LP, an LLP is treated as a "pass-through" entity for tax purposes.
Bottom Line: There is no "one size fits all" answer to the choice of entity question. You should give careful consideration to your needs and the needs of your business before settling on an entity. Since the factors in consideration may be significant and the tax analysis complex, it may be wise to consult your tax advisor or an attorney to assist you in the decision process.
After an overnight flight from the U.S., we arrived in São Paulo, Brazil, the nation's largest city in the southern region of the country. Brazil covers a very large area along the eastern coast of South America and includes much of the continent's interior region. The county is equivalent in size to the continental U.S., but has less than two-thirds of the U.S. population.
Once we answered questions from the Brazilian hotel staff on the upcoming NFL season and the Indianapolis Colts, we meet with Scott Shaw, deputy senior commercial officer at the U.S. Consulate. One of the main focuses for this trade mission is to learn about energy. Brazil's advances in this area make it an ideal place to learn, especially with São Paulo on the leading edge of energy independence. The briefing provided a great overview of Brazil's energy programs and the impact they've made in energy advancement.
Brazil is 100 percent energy independent and they have virtually no carbon issues, which means they also don't have the cap and trade issues the U.S. is facing. Seventy percent of Brazil's energy is from water. The rainforests, which comprise about 98 percent of northern Brazil, help stabilize the atmosphere and environment and reduce manmade environmental impacts in the region. In addition, Brazil doesn't use coal. Another strong energy source for Brazil is ethanol with sixty percent of Brazil's ethanol being produced in São Paulo. They've been using homegrown biofuels since 1973 and their ethanol is based on sugar cane. Sugar cane is not a resource easily grown in the U.S. and our ethanol is based on cellulosic and corn ethanol.
Brazil is so committed to energy and global climate change that they have pledged that the 2014 FIFA World Cup soccer event will be carbon neutral. The stadium currently under construction will use only solar energy.
After the briefing with the U.S. Consulate, we met with representatives of the Federação das Industrias do Estado de São Paulo (FIESP). The FIESP is an industrial entity comprised of 127 industrial associations (which make up 42 percent of the industrial GDP). The FIESP monitors and fosters business relations with countries worldwide. Major projects for this group include renewable and sustainable energy, climate change legislation and solar energy for heating.
We then traveled to the Fundaçoa de Amparo a Pesquisa do Estado de São Paulo (FAPESP), which is the state of Sao Paulo Research Foundation. FAPESP is one of the main funding sources for scientific and technological research in Brazil. Funding is derived from a one percent tax to all employers and the board of directors is appointed by the government. Even with the funding subsidized by the government, the group has autonomy in how they manage and invest the $350 million annual budget.
We were also able to meet with many Brazilian and São Paulo dignitaries at an evening reception hosted by the FIESP. The reception again reinforced what we already learned . Brazil, and São Paulo, has learned to use their environment to improve their country and the lives of their people, without harming the natural resources that provide so much.
The below article was written by William O'Donnell, director of graduate programs, Butler University College of Business.
The 2009 "State of Our Business" survey contained interesting information on how CEOs view Indiana's economy in the midst of the current recession. Particularly noteworthy was the viewpoint that there is an oversupply of qualified workers out there, waiting to be called back to work when the economy improves. In addition, when asked to rate their level of concern with several issues related to their organization and its workforce, the executives showed a general decline in concern from a year ago. One can see the logic behind these opinions.
We continue to read daily of plant closings, layoffs and the continued rise in unemployment. Logic would tell us that there must be a pretty good stockpile of talented people out there and that when the economy turns around, they will be there for the choosing. But are they the right people?
Read the entire article.
Jim Krampen is the co-founder, principal and executive officer at Seven Corners, Inc.
The diversity of industries represented at our roundtable discussion was encouraging, in that all were thriving! Not once during the evening was there any note or comment of future “doom & gloom.” Expressions of concern regarding the current state of the economy and government were mentioned, but then addressed with sheer commitment and confidence that companies, industries and the country will adapt and again return to profitable times.
The most prominent point I took away from our discussions was the emphasis of development and retention of human capital. As markets fluctuate and revenues drop, the most valued resources are the management employees that will be able to foresee market shifts and guide a company through this period and adapt or create new business environments. Chief executives need to not only cultivate these employees, but provide them with the opportunity and support necessary to implement a plan of action to accomplish both long and short term goals.
Many of the roundtable participants are involved in community and educational outreach programs. Should commercial industry be engaged in education? I think yes, to the extent that feedback to educators is needed in order to provide a curriculum that will be beneficial to both the student and industry.
I have had several occasions to speak to current or graduate MBA students from various universities. It seems that the larger and more prominent the school, the more the MBA candidate is taught and believes in the “go big, or go home” philosophy. This is great if it can be applied in a Fortune 500 company, flush with working capital and developmental infrastructure. However, the plethora of MBA graduates far exceed the available positions in Fortune 500 companies. The majority of MBA graduates are placed among small and mid-size companies, which are the backbone of the U.S. economy. Does the “go big, or go home” philosophy work within these companies? “Yes” in the emotional sense, but “no” in the working capital and infrastructure sense. This is where developing human capital to adapt to realistic market conditions is key. Everyone would love an employee ready to take on the world, but few companies can actually afford to employ all of the tactics and protocols presented in MBA classes.
I believe the state should continue in its quest to excel in educational outcomes from K-12 through post graduate programs. However, the state and private educational systems also need to understand the needs of business and industry in the State in order to retain talent within the state. Furthermore, the state needs to be more conducive for business. It could be worse, but on the other hand, it could be better. More business will create more employees. More employees will create more tax base. More tax base will create better schools and communities and thus more propensity to work, live and thrive in Indiana.
The below article was written by Kevin Alerding, partner, Ice Miller LLP.
For many business owners, the hardest part of succession planning is change. And change is perhaps the only certainty in a business succession plan. No change, no succession. You can read books, pay advisors, study techniques. But if you cannot change, then it will all be for naught.
Although it has dropped in importance since the first Indiana CEO survey, succession planning continues to be an issue among the CEOs surveyed as part of the third annual CEO survey.
Read the entire article regarding business succession planning.
The two key documents for a new LLC are:
- Articles of organization
- Operating agreement
The articles of organization are filed with the secretary of state. They contain some very basic information about your LLC, including its name and whether it is managed by a manager or managers. If the articles do not say that the LLC is managed by a manager or managers, then it is automatically deemed to be managed by the members. Articles of organization are required to include much less information than is required to be included in the articles of incorporation for a corporation.
LLCs are also required to have an operating agreement. The operating agreement does not have to be written. It can be oral, but a written agreement is better for a number of reasons, including just as evidence of what the agreement of the members actually is. Because there are fewer statutory formalities around the operation of LLCs than there are with respect to corporations, the operating agreement is a good place to memorialize the members' agreement with respect to the operation and management of the company.
Matters that are addressed in a written operating agreement include the following:
- the process for calling and holding members' meetings;
- the powers of the manager or managers and process for holding meetings;
- duties of officers and the process for appointment and removal of officers by the board;
- limitations on members' ability to transfer their ownership interests;
- repurchase rights on a member's death, permanent disability, termination for cause or resignation from employment with the company;
- preemptive, co-sale, tag-along and other rights (these concepts are discussed in the context of corporations in the previous blog post "I'm Raising Raising Venture Capital for My Company and I Can't Understand Half the Jargon They are Using. Can You Help?");
- governance (for example, the agreement may require that significant management decisions require the consent of some or all of the members or the managers);
- allocation and distribution of the company's income; and
- miscellaneous (restrictions on competition, treatment of confidential information and dissolution of the company).
Jerome Peribere is president and chief executive officer at Dow AgroSciences.
I enjoyed this roundtable as it was a prime opportunity to talk about culture, state of mind and values which shape a community and a company. These topics are especially relevant as it has been fascinating to observe the quality of our employees at Dow AgroSciences in the recent months. Not only have they had to cope with the potential consequences of the global recession like everyone else has, but in our case it hit close to home when The Dow Chemical Company, our parent company, mentioned that it was evaluating the possible divestiture of several assets including Dow AgroSciences. Of course employees went through the process of being shocked and feeling uncertain, yet the Midwestern values of hard work and self determination quickly took over. The realization that we are a solid, highly performing technology-based entity valued for the quality of our output quickly reboosted confidence and determination to succeed. The strength of every company depends on the state of mind of its employees and their thinking, which in turn shapes the company culture and brings results. If we engage employees, the values of our communities will come out strong and respond.
Michael Evans, Ph.D. is the founder, president and CEO of AIT Laboratories.
Think Globally, Not Locally.
It was a pleasure to be part of the roundtable discussion hosted by Inside INdiana Business’s Gerry Dick earlier this month. There were some great conversations surrounding the economy, education standards here and abroad, and the global aspect of business, and the whole experience left me with some lingering thoughts about the overall state of affairs in the United States.
With the housing market leveling out in certain parts of the country and an increased commitment from Americans to become more fiscally responsible, there’s reason to believe that the economy will soon be on its way up. However, one of the biggest lessons our country has yet to understand is that when it comes to business, we are competing in a global economy and not just with the competitor next door. In comparison to citizens from places like India and China, we are less traveled, fluent in fewer languages—a large number of Americans only know English—and less in touch with our global counterparts. Take General Motors. One of the biggest contributing factors to their bankruptcy was their dependence on their reputation as an American-made product and a Midwest-based company while Toyota did the leg work to put out a better car.
When it comes to education, I think Americans take a similar, more laissez-faire approach, which is equally hurtful to our economy in the long run. There’s too much “my dad worked at company X, so I’m going to work there, too.” Many of our young people don’t take advantage of all that is offered to them in school. In Indiana, our public education system is broken; that’s evident from low test scores produced at the elementary level and poor high school graduation rates state-wide. We are fortunate, however, to have colleges that produce tremendous talent. My company, AIT Laboratories, has benefited immensely from gleaning talent from colleges throughout Indiana. We just need to start building that foundation much, much earlier, because the better your education, the more capable you are at adapting to change. That applies not only to business but life as well.
The below article was written by Chris Harlow, associate director, Butler Business Accelerator.
At a dinner last fall, a local business leader asked me to explain the difference between a recession and a depression. I had to admit that I didn’t know so of course it was the next thing I searched online. I could find no clear delineation between the two – some sources say a percentage decline of this or a long-term reduction of that. What I’ve started to realize is that maybe a depression is when the general populous gets a case of the blues.
Read the entire article.
| Previous | Next |
