Team Archives - BOLLYWOOD SURKHIYAN

Top Challenges Faced by Family Business and Its Team Leaders

Like every business organization family business has a unique set of challenges and problems.

The Keyword is CHALLENGE

Family Business mixes pride and passion with pain and glory and a very hardworking pathway to success. Sometimes a family finds peace and prosperity without apparent effort, while others seem to lurch from one crisis to the next.

We can define Family Business success as achieving, A Happy Family within a Strong Business. Success is more of a challenge at a family owned business because we strive to produce both desirable outcomes, within set time frames. We have twice the responsibility that is the happy family and the strong business.

Obviously Family Businesses go through various stages of growth and development and it becomes more challenging for the second generation or the subsequent generation that enters the business.

A famous saying about family owned business in Mexico is “Father, founder of the company, son rich, and grandson poor”. The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and an empty bank account.

Family Business is Hardworking Pathway to Success

Below we have listed some of the paramount challenges faced by family owned business which determines the success, growth, and continuation of a FAMILY BUSINESS.

1. EMOTIONS – Family problems will affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members.

2. INFORMALITY – Absence of clear policies and business norms for family members.

3. RESTRICTED VISION – Lack of outside opinions and diversity on how to operate the business.

4. CARELESS DOCUMENTATION – No documented plan or long term planning.

5. FAMILY MEMBERS COMPENSATION – Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified.

6. CONFUSED ROLES – Roles and responsibilities must be clearly defined.

7. PRESSURE TO HIRE FAMILY MEMBER – Hiring family members who are not qualified or lack the skills and abilities for the organization. Incompetency should not be tolerated.

8. GREATER COMPENSATION TO NON FAMILY MEMBERS – It is a common myth that family members will receive more compensation in a family business and develop a attitude of incompetency towards management.

9. PLANNING FOR SUCCESSION – Great conflicts and division are the result of no proper plan for handing the power to the next generation.

10. ESTATE PLANNING AND RETIREMENT – Long term planning to cover the necessities and realities of older members when they leave the company.

11. PROBLEMS IN COMMUNICATION – Difference in level of seniority and emotions like envy, fear, anger invoke zero communication in members.

12. DISABILITY TO CONTROL – Difficulty in controlling the operations of the organization, other family members and lack of supervision in day to day activities leads to more problems.-

But as we all know that Families and Businesses come from different worlds. Like oil and water… they cannot be mixed. But, families have always built businesses together… and they always will.

One of the challenges in family business is working together in teams. It is a fact that team work offers huge rewards but some frustrations are likely. Working within teams needs improvement in the power of creativity. The team leader needs to encourage this creative power, harness it, and channelize the creative fuel.

Andrew Carnegie- “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.”

It is vitally important that the team leader unleash the power of team members with a collaborative leadership style to fuel the creative fire within the team.

Below are our top ten tips for channelizing the creative fire of Family Business Teams.

1. BE CLEAR ABOUT THE EXPECTATIONS – Only after the team members know what is expected of them can they deliver the perfect output. So understanding the difference between expected and derived results is necessary for both the team leader as well as the team members.

2. Faith in the Team Members – Being optimistic and challenging helps when you have total faith in the members of your team. As the leader, you need to expect the best from your team, keeping your expectations high and realistic. This is a challenging balancing act, but people need to be inspired to perform at their best. Instilled faith helps the group to perform better and come up with creative innovative ideas and solutions. Like Mike Litman says Improve at 1% each day and thus raise the bar for top performance one step at a time.

3. Encouragement accompanied with respect goes a long way in generating new thoughts. Fresh perspectives and courage too make up for new ideas easily. the leader needs to master the art of creative mindset.

4. Avoid making judgment while generating new ideas. If you are open to new solutions then the process of idea generation is not suppressed and sometimes best ideas are generated.

5. Brainstorming sessions are a great way to get numerous ideas. While brainstorming avoid judgment, look for quality, make notes to capture the idea and moreover combine two good ideas.

6. Communication is the keyword again, which helps to build strong relationships. Communication with open channels helps to trust the team members and know each other better.

7. Employees need to be given responsibility to bring out the best in them, give them the power to decide on a solution to a problem and watch the creativity grow by leaps and bounds.

8. Praise works like reward for the individuals and team alike. Acknowledgment in the form of encouragement is another word for praising the team members. Making sure that the team is cared for and recognized for its hard work is a reward in it self.

9. Be daring and build a brave team. Accept that mistakes are made at times and it is challenge to build on failures and see them as opportunities to learn and succeed further.

10. Unity in Diversity is the final mantra – build a strong team with diverse people, diverse backgrounds and combine the experience, culture, creativity and align them for the success of our family Business.-

Adding humor as a fuel to creativity is the last but not least step to see the team working happily together and productivity of business soaring to great levels.

A Few Tips on How to Do a Team Building Activity

Team building activities help teams learn and grow. It is important to educate teams in teaming concepts and help them with work processes during all the team-building stages. For those leading teams, a few tips on planning a team building activity can be instrumental to the success of the team.

First, determine the purpose of the team building activity to determine if it can be part of a meeting or should be a separate event. Is the activity to introduce a topic, communicate a point, improve relationships, review previous training or teach a new technique? All of these can be done in a meeting as long as a safe environment and enough time is provided. Otherwise plan a special event so that other work does not interfere with the learning process.

Decide how much time to spend on the team building activity and when it would be best to do it. If the activity is to be part of a team meeting, plan it for the appropriate spot on the specific meeting agenda. At the beginning of the agenda is a good time for “getting to know you” type of activities and icebreakers, or revisiting points from a recent training course. If a non-controversial topic is to be presented or a new technique is to be taught during a few minutes of the meeting, those can fit anywhere within the agenda where it needs to occur. For example if a new decision making process is to be taught, explain it just before the team needs to use it to make a decision. Applying techniques immediately to work makes them more meaningful. Introducing new training concepts that are not to be used within the meeting should happen near the end of the meeting time.

If the time/date for the team building should be outside of a regular team meeting, plan a special training session or team-building event. This will require extra work by a team member or the leader to find a good date and a location that meets the needs of the activities to be done. Decide on activities before choosing a location or rescheduling may become necessary in order to meeting physical requirements. In selecting an activity for the event or training, take into consideration any physical limitations of team members. When planning a multi-exercise team-building event, activities that every team member can participate in should be considered before those that may require a member to “sit out” during the exercise because it may make them to feel excluded.

Find the activities or exercises that best make the intended training point or exemplifies the desired team concept. Then narrow down the selection list to which ones maybe best to use based on the materials necessary, the time available, relevancy to particular team, and fun factor. It is a success key for team-building events to be fun as well as informative. In meetings, it is nice to have a fun activity but relevancy to work at hand will mean more to the team, so aim for relevant first and both whenever possible.

Before the date of the meeting, training session, or team-building event: decide who will facilitate, invite participants, provide the agenda if appropriate, and gather necessary supplies. If it is a special session rather than a team meeting, it may be more fun to surprise the team with the agenda at the beginning instead of in advance. If facilitating the activity, arrive early and be prepared with all necessary materials. If someone else is to facilitate, then make sure they understand the expectations they are to meet, as well as when to be there and where to go. It may be beneficial to have someone from outside the team facilitate if the activity requires special training, facilities, or materials that a member of the team does not possess.

Use these tips when planning to do any type of team activity. Continual learning will motivate the team to contribute even better results as they mature and move through various stages.

Project Manager Considerations When Building a Project Team

As a Project Manager, your team may already have already been assigned before you build a project plan. If this is so, it will allow better estimations of resource budget and the team can participate in designing the project schedule. Alternatively, the team may not be approved and build until the implementation phase begins, which means a preliminary plan has been developed. Remember that if the team can help with planning, then they are more likely to be committed to accomplishing the plan and the project goal or objective. In addition, it is less likely that omission of important details from the plan will occur if the team is involved in developing the plan. Where possible, before trying to develop a project plan, assemble a Project Team of people who have something to contribute to the overall project.

These project team members may have expertise in similar projects or be someone with a stake in the outcome of the project. More experienced people will help ensure the project stays on schedule, however working on a project with a mentor or others more experienced can be a great learning experience for those new to this type of work, process, service, or product. Team members may be volunteers or given the assignment to participate on the project. Typically, volunteers make more of an effort and require less supervision than those assigned without asking if they would like to participate. As the Project Manager, you should talk with each perspective member to make sure they understand what their project responsibilities and accountability might be, what challenges they may look forward to, and what value they offer to the team. Additionally, you should note how much freedom each member would have in carrying out their tasks and making decisions related to their assignments.

If the project team members have worked together before, then the project may start well. Team members who have worked on team projects before will already be familiar with team problem solving and participatory decision-making and will see working on the team as a motivating factor in their and others’ contribution to the project. However, if some of the team members have not worked together or been part of a team before, you as the project manager need to consider if there is need for any team training or other team-building activities to help the members work better as a team. If the team has not worked together before, in their first team meeting, you and your team members will need to establish conduct guidelines for personal and group behavior. You may want to establish what types of information sharing may or may not go outside the project team as well. Working as a team and with your feedback, the project members should find they produce better project results in a more effective manner.

If any team members are only a part-time assignment to the project, then you need to determine with them how they will prioritize their work. As a rule of thumb, no one should be working on more than three projects at a time. As your project continues, be sure to give team members feedback on their individual performance. If they need to change the way they are doing something, be sure to explain why they need to make the change as well as what and how to change. Be sure to let team members know that their contribution is valuable to project and team success. If a team member is not willing to work toward the project goal, then they need to be convinced or removed from the project team. Reward both team behavior and individual accomplishments in order to ensure team members work together and value each other’s contributions.

The 5 P’s of Team Design and Development For Managers

Teams are a useful business tool for process and quality improvement, which may lead to higher customer satisfaction or cost reduction. Many managers recognize the benefits teams may bring but do not properly consider what it takes to get a team functioning in the direction management desires. When forming teams, manager should consider the purpose, member participation and placement, as well as team processes and plans. With the 5 P’s of purpose, participation, placement, process, and plan, management can better design teams and determine development needs.

Purpose – Will the team clearly understand why it exists, what it is to do and how it will know they are successful? The team and management must agree to written purpose or mission statement so that they are working together in a common direction towards solutions that meet their overall purpose. Team goals and management deadlines should align with their overall purpose and will serve to guide performance and help them meet challenges.

Participation – Who would be the best people to include on the team and how large should the group be in order to accomplish its purpose? Management needs to consider necessary skill sets, professional attitudes, and process knowledge when selecting team members. In addition, for membership at the formation of team or as personnel needs grow, look for a balance between personality types for both task and people focus to be included so the solutions team may design will be more diverse and innovative to achieve team purpose and required work.

Placement – Where will the team members be physically located and how often should the team plan to have meetings? If the team is to be an intact work group, this may make some things simpler but the group will need a meeting room for complex problem solving. If the team is spread over multiple sites, managers will need to consider costs and possible problems team may have due to culture or time differences, and then determine whether travel for some meetings is required or if any special equipment is needed for members to meet regularly via phone or on-line.

Process – How will the team get to where it needs to go in order to accomplish its purpose? The members should develop and agree to their ground rules, any constraints that management may set related to decision-making authority or functional boundaries. Initial team training should include meeting management with a suggested meeting agenda and record-keeping formats, interpersonal communication, problem solving, and if relevant to team’s work include process mapping.

Plan – Will the team acknowledge when its project or assignment will be complete and know what it needs to accomplish its tasks? If the goals are specific to their purpose and the team agrees these are relevant and achievable goals, then the team needs to agree to a timeline for goals and a way to measure how they are doing towards goals. Not only should the team and their management define work deadlines and expected milestones in its goals and schedules, but it should also include necessary training to acquire cooperation and task related skills.

Considering the 5 P’s of purpose, participation, placement, process, and plan, management can design better teams and plan their development needs accordingly. Recognizing the benefits teams can bring to a business or organization is good, but teams are only effective when management understands what it may take to get their teams moving in the desired direction. Well designed and developed teams only become a useful for process and quality improvement when managers consider member selection for best participation and preferred placement along with the team’s purpose, process and plan.

The Not-So-Invisible Hand – How The Plunge Protection Team Killed The Free Market

“We’re now no different from any of those Western European semi-socialist welfare states that we love to deride. Italy? Sure, it’s had four governments since last Thursday, but none of them would have allowed this to go on; the Italians know how to rig an economy.”

– Bill Saporito, “How We Became the United States of France,” Time (September 21, 2008)

October 24 marks the 79th anniversary of the October 1929 stock market crash. Heavy selling started on Thursday, October 24, 1929, and accelerated the following week on Black Monday and Black Tuesday, October 28 and 29. Many feared a repeat of this disaster on Friday, October 24, 2008, after Japan’s Nikkei stock average fell nearly 10% during the night, Hong Kong’s Hang Seng fell 8%, and Germany’s and Britain’s fell 5%.

“In a stunning turn of events,” reported Yahoo! Finance, “the futures for the major indices were ‘lock limit’ down before the start of trading Friday, meaning they had hit a 5% threshold that prevented them from trading any lower until the stock market opened Friday.” Traders prepared for the worst, but remarkably, disaster was averted. The U.S. market fell only 3.5%, just another “ordinary” bearish day.

Why the more modest drop in the U.S., where the financial debacle originated and should have hit hardest? Suspicious observers saw the covert hand of the Plunge Protection Team (PPT), the group set up under President Reagan to maintain market “stability” by manipulating markets behind the scenes. Bill Murphy commented in LeMetropoleCafe.com:

“Today the Muppets on CNBC were remarking how well our market acted, not falling apart as expected. All day long they spoke of how our market was acting differently today than every other stock market in the world. Well hello, the other countries don’t have a PPT, which is WHY our market is so different.

“There are those who might think what the PPT is doing is right. What they don’t realize is their making ‘Everything is fine’ for so long, and not allowing the market to trade freely . . . like allowing the stock market to fall the way it should, has kept the individual in the market . . . when they might have been SCARED out some time ago.”

In response to Bill Saporito’s comment in Time, it might be countered that Henry Paulson’s Plunge Protection Team is quite adept at rigging an economy. The difference between an acknowledged socialist state and the stealth socialism we have in the U.S. today is that in a socialist state, everyone expects the market to be rigged and operates accordingly. In a rigged pseudo-capitalist economy, investors are easily separated from their money because they expect the market to follow “free market principles” based on “supply and demand.” They are seduced into “pump and dump” schemes – artificial manipulations that allow insiders to unload stock at a high price or buy it at a low price – because they trust in Adam Smith’s “invisible hand,” which is supposed to automatically set things right in a market left to its own devices. The market today is indeed controlled by an invisible hand, but it is not necessarily serving the interests of small investors.

PLUNGE PROTECTION FOR SOME, PLUNGE CREATION FOR OTHERS

The most egregious examples of market manipulation have been in gold, silver and oil. The official “spot” (or cash) prices of gold and silver were taken down sharply in the week before October 24, despite the fact that physical demand has been inexorable. Gold is available in the “real” market only at huge markups, and popular types of silver are not available at all.1 We were taught in school that communism does not work because when industry is in the hands of a single owner (the government), competition is eliminated and chronic shortages and black markets develop, since the government does not let prices respond to “supply and demand” but dictates them from the top. Today this is happening with gold and silver, with the true physical price varying radically from the reported paper price.

Gold is known as the “contra-investment,” the “go to” investment which historically has gone up when other stocks were failing. Investors see it as something tangible that will hold its value when everything else is falling apart. For that reason, rigging the market to “maintain stability” means suppressing the price of gold.

The current round of gold manipulations started on Thursday, October 16, at 10 am, when the price of gold suddenly suffered a freefall plunge of $45 within minutes. It continued to drop until it was down by nearly $60 in a little over an hour. Nothing happened on Thursday between 10 and 11 am to warrant this vertical drop. If anything, gold should have been shooting up in the same exponential fashion that it was falling. On Wednesday, the stock market had dropped over 700 points, and Dow futures (bets on which way the market would go) were down by 150 points Wednesday night. During the night, the Japanese stock market fell more than 10%, and all European markets were down.2 Thursday morning, among other very bad economic news, U.S. industrial output was reported to have posted its biggest fall in 34 years, and mid-Atlantic factory activity had crashed unexpectedly from September to October. Yet Dow futures were suddenly 130 points higher; and gold was slammed down right at 10 am, although physical gold was available only by paying huge premiums, and gold prices around the world were shooting up. The day continued in the same counterintuitive way, just one more egregious example of an ongoing pattern of manipulation that has become so blatant that either the manipulators have become supremely confident of their invulnerability or they are so terrified of impending doom that all pretense of plausible denial has been abandoned.

“THE MOST MASSIVE INTERVENTION SINCE ROOSEVELT”

Market manipulation is not generally discussed by the commentators on CNBC, but sense can hardly be made of today’s wildly unpredictable trading patterns unless the plays of powerful men behind the curtain are factored in. One commentator who does talk about this manipulation is Don Coxe, strategist for the Bank of Montreal. In a weekly conference call on September 5, 2008, he described what has been going on in the markets since July as “the most massive intervention of government into the capital markets or the financial system since Roosevelt closed the banks back in 1933.”3

According to the British Globe and Mail, Coxe is “no paranoid conspiracy theorist. As the chairman and chief strategist of Harris Investment Management in Chicago, he is one of the most respected investment authorities in North America.”4 The unprecedented intervention he described went back to when the financial establishment was facing a very banker-unfriendly market in July. Gold was about to break through the psychologically important $1,000 mark, oil was above $140 dollars a barrel, the dollar was breaking down, the bank stock index had dropped in six months from 90 to 50, and the Federal Reserve had a balance sheet to match, after making huge loans to banks on shaky collateral. Fannie Mae and Freddie Mac were on the verge of collapse, and hundreds of billions of their securities were held abroad. As if by magic, these trends all suddenly reversed, beginning with a dramatic reversal in the swooning dollar.

How was it done? The cat was let out of the bag by the Nikkei English News, which reported in late August that finance officials from the U.S., Japan and Europe had drawn up plans to strengthen the dollar following the collapse of investment bank Bear Stearns. The intervention called for the central banks to purchase dollars and sell euros and yen if the dollar’s value dropped significantly, with Japan providing the yen for the currency swap.5

As the dollar strengthened, gold, silver and oil plunged. The pundits read the drop in gold and silver as a reaction to the rise in the dollar, since precious metals rise historically when the dollar falls. But what they failed to explain was why the dollar was rising. As Bill Murphy observed, “the dollar rallies sharply whenever the US stock market comes under pressure. It is almost simultaneous.” He quoted one of his newsletter contributors:

“Since the [stock market] low on 22 SEP we have lost 8.3 trillion bucks worth of asset value within the equities markets and what happens? The US dollar goes up, and up, and up, and up, and up. From what? 72 to 84 now (up 1.14 just today??!!??)? A non-stop rally that is NEVER adversely affected by news or market events. It’s almost been a 45-degree ascent. THAT is pure unmitigated intervention of a huge degree.”6

How to explain the stunning reversal in the dollar’s slide? In Coxe’s September 5 conference call, he candidly laid out how the Federal Reserve and the Treasury, in conjunction with the CFTC (Commodity Futures Trading Commission) and the SEC (Securities and Exchange Commission), colluded to manipulate this “necessary” bounce in the dollar, along with a corresponding boost to financial stocks and sudden collapse in the commodities markets. Coxe called it “brilliant,” but the play was at a cost of millions of dollars to commodities investors and short sellers who were betting on what a “free” market “should” do. Oil plunged more than 50%, from a high of $145 a barrel in July to a low of about $64 on October 24. The same pattern was seen in silver and gold, with gold falling from a high of over $1,000 an ounce to a low of $700 on October 23. It all added up to a massive “pump and dump” scheme, with insiders pocketing the fortunes lost by unsuspecting investors. It’s a messy business, but somebody has to rake in these obscene profits for the “greater good” of market stability.

“THE MOST SORDID SCHEME IN THE HISTORY OF FINANCE”

Theodore Butler, writing on SilverSeek.com on September 2, reported that there was more than just central bank collusion going on behind the scenes. He tracked an unprecedented wall of short selling of gold and silver – massive “borrowing” of stock to sell it into the market, forcing down the price, then “covering” by buying the stock back at the lower price. Butler wrote:

“In gold, no more than 3 U.S. banks sold short in one month more than 10% of world annual mine production. This was the largest short position in gold and silver ever recorded by U.S. banks. After the massive and concentrated silver and gold short position was established by these U.S. banks, the [gold and silver] markets experienced a historic decline in price. It all took place during the first widespread retail silver shortage in history. It is completely at odds [with] how the law of supply and demand works.”

Butler called it the most sordid scheme in the history of finance. “It makes a mockery of financial regulation and the rule of law,” he wrote. “It allows a large financial entity, or entities, to rip off the investing public and gouge them for obscene profits. It is cronyism, back-room dealing, market fixing and inside information at its worst.”7

While gold and silver were being shorted to oblivion, the SEC imposed a ban on the short selling of 19 select financial stocks, including Fannie Mae and Freddie Mac. It was blatant favoritism for the privileged few, but Coxe said it was necessary to make financial stock look attractive to potential buyers (particularly sovereign wealth funds), in order to allow the banks to sell their stock and raise the capital necessary to start lending again.

At the same time, Treasury Secretary Paulson sought and was granted an unlimited credit line to Fannie Mae and Freddie Mac directly from the U.S. Treasury, as well as the authority to buy the mortgage giants’ stock. Fannie and Freddie were put into a form of bankruptcy called a conservatorship; but unlike in the ordinary bankruptcy, in which creditors divide up the debtors’ available assets without government help, in this case the claims of the lenders were guaranteed by the Treasury. Foreign lenders were bailed out while the shareholders were wiped out – including banks, pension funds, and other institutions holding the savings of millions of Americans. In the long run, the “bailout” created more problems than it solved; but according to Coxe, it was a necessary sacrifice to keep the mortgage market functional for the near term.

How near? The Presidential election is now only weeks away. Markets have an uncanny way of looking good before elections.

Rob Kirby, writing in LeMetropoleCafe on September 9, observed that there are laws and stiff penalties against market collusion. The U.S. antitrust laws impose fines of up to $10 million and jail terms of up to 3 years for unfair practices that inhibit competition or monopolize markets in restraint of trade. “I admire [Coxe’s] candor,” said Kirby, “but my take on this is that all the perpetrators should face a firing squad, or worse, for treason.”8

That probably won’t happen, however, because the “perpetrators” can claim governmental immunity. The Plunge Protection Team, officially called the President’s Working Group on Financial Markets, was formed by President Reagan in response to a stock market crash in 1987 for the express purpose of “maintaining investor confidence” by manipulating markets with public funds. The PPT includes the President, the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and Exchange Commission (SEC), and the Chairman of the Commodity Futures Trading Commission (CFTC).9 Calling the shots is no doubt Secretary Paulson, who now has a $700 billion fund to use for the purpose, after Congress passed his massive bank rescue plan on October 3.

“SOCIALISM FOR THE RICH”

Nouriel Roubini, Professor of Economics at New York University, wrote on his popular blog Global EconoMonitor:

“Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill . . . .”10

Investment guru Jim Rogers told “Squawk Box Europe”:

“America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich. . . it’s just bailing out financial institutions. . . .

“This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I’m not quite sure why I or anybody else should be paying for this.”11

If we are going socialist, we should own up to it and have some transparency in what’s going on. We the people need to know how to plan and to invest for an uncertain future. If we’re nationalizing the banks, let’s nationalize them all the way, with the profits going back to the people along with the losses and risks. Better yet, let’s nationalize the Federal Reserve, so it can issue “the full faith and credit of the United States” directly, without having to back this credit with a multi-trillion dollar federal debt that will never get paid back but just continues to grow. It would actually be less inflationary for the government to print dollars directly than for it to print bonds that are swapped for dollars created on a printing press by a privately-owned central bank, because in the latter case both the bonds and the dollars remain in circulation. U.S. bonds not only serve as money around the world, but they count as the “reserves” for banks to create many times their face value in loans. These bonds never get paid off but just get rolled over from year to year, inflating the money supply just as if dollars were printed directly; but the bonds carry the added burden of perpetual debt and interest payments.

The costly bank bailouts and blatant market manipulations going on today are justified as being necessary to save a private banking system that we think we need to get the credit that keeps the economy running. But we don’t actually need private banks to get credit. Many authorities have attested that, contrary to popular belief, banks don’t lend their own money or their depositors’ money. Every dollar lent by a bank is money created out of thin air on a computer screen. It’s just “credit.” The bank “monetizes” the borrower’s own promise to repay. The government could issue its own credit in the same way. There are a number of successful historical precedents for this, including the publicly-owned central banks of Australia and New Zealand, which saved those countries from the devastating effects of the Great Depression in the 1930s; and the publicly-owned bank of the colony of Pennsylvania, which funded the Pennsylvania provincial government without taxes or debt in the first half of the eighteenth century.

Today’s bankrupt banks dug their own black hole when they loaded up their books with lucrative but highly risky derivative bets that are now backfiring on them. Instead of trying to clean up the banks’ books by throwing taxpayer money at this impossible-to-fill black hole, we would be better off simply letting the banks go bankrupt, as President Reagan did with the savings and loan industry in the 1980s. The banks’ bad debts could then be discharged in bankruptcy, and their assets could be absorbed into a public credit system with a new, untarnished set of books, a system that would serve the interests of the people and return the profits to the people.

SO WHAT IS AN INVESTOR TO DO?

That still leaves the question of how to negotiate today’s very unpredictable markets. The Friday before the white-knuckle October 24 ride, investors were being encouraged to get back into the market. Commentators cheerily announced the best market week in 5-1/2 years, after the Dow climbed from a low of 7,774 on October 10 to a high of 9,924 on October 14. But the week still ended below 9,000, and the market was coming off the most historic plunge since the Great Depression, down from a high of 10,845 on October 3 to below 8,000 a week later. By October 24, the Dow was again hovering near 8,000.

“Frankly, I’m sick of this,” said CNBC market watcher Erin Burnett as she tracked the Dow’s wild gyrations on October 23. “Up and down, up and down. It doesn’t seem to mean anything or be linked to anything.”

Beleaguered investors might well decide it’s time to pull their money out of a stock market that is looking more and more like a rigged and risky Las Vegas casino and put it somewhere else. As one talk show commentator quipped recently, “I’m fully diversified. I’ve got some under the mattress, some under the floor boards, some in the backyard.”

24/7 Expert Team for Google App Migration Services

Google App provides cloud based solution that allows a complete solution for all your employee’s, which is available anytime & anywhere making the collaboration of Google Apps extremely easy.

Google offers Mail, Calendar, Drive (consisting of Docs, Sheets, Slides, Forms & Drawings), Sites, Hangouts, and Groups for your Business.

By using the Google Apps Status Dashboard, you can have the Google Play Apps Status. When you are unable to access any of your Play Apps and if they load slowly, then you can employ Google Apps Status.

Also, to know the detailed status you can use another service from Google, which is commonly called as Google App Engine. The apps admins who employ this Google’s App Engine service for their businesses, schools and organizations can view the performance by using admin control panel.

The Admin Control Panel who can access the Google Services. In case you’re an admin of Google accounts for an enterprise/organization, you can easily control who uses any of the Google service from their account. Turn any service on or off from Google Admin Console, and when the users sign in, they will be able to see only those Google Services which are turned on for them.

Get to know some top-notch features of Google App Services:

Just access information on fly.
Avail 30GB of free storage space.
No software or hardware required.
Securely share information within your team members.

Easily set up your Google Play Apps Now!

Go through the steps here,

Go to Admin console dashboard & sign in. Open the gear menu to get started.
Access the wizard: Click in the top corner and select the option “Setup”.
Verify your domain.
Create the user accounts.
Set up Gmail and other services.
Migrate mail, use mobile devices, and more.

Google Play services are used to update them and apps from Google Play. This component enables the core functionality such as authentication to your Google services, synchronized contacts, higher quality, lower-powered location based services, and access to all the latest user privacy settings.

Several other app services will be made available in the future. Opting to these Google data migration services would require you to personally enter an agreement with the Google. You would need to read and accept Terms of Service and Privacy Policy. While using additional services, all your personal information will be treated with its own policies.

So, take the advantage of most secured managed service provider, CloudEgg, providing the best services for your enterprise. Migrate your data to the Google Apps by using CloudEgg Managed Services.

Startup Law 101 Series – Distinctive Legal Aspects of Forming a Startup Business With a Founder Team

Introduction

A startup with a founding team requires a special kind of company formation that differs from that used by a conventional small business in several key ways. This article alerts founders to those differences so that they can avoid mistakes in doing their setup.

Attributes of a Typical Startup Business

A startup is a type of small business, of course, and its founders want to make substantial and long-term profits just as any small business does. Perhaps some of the empty “concept companies” of the bubble era did not ever intend to build for long-term value but that era is over. Today’s startups need to build value in a sustainable market or fail, just like any other business. Nonetheless, a startup that is anything other than a solo effort does differ strikingly from a conventional small business. Why? Not because the enterprise itself has any different goal other than that of building long-term and sustainable value but because of how its founders view their short-term goals in the venture.

Unlike a small business, a startup founding team will adopt a business model designed to afford the founders a near-term exit (typically 3-5 years) with an exceptionally high return to them if the venture is successful. The team will often want stock incentives that are generally forfeitable until earned as sweat equity. It will typically want to contribute little or no cash to the venture. It will often have valuable intangible IP that the team has developed in concept and likely will soon bring to the prototype stage. It frequently encounters tricky tax issues because the team members will often contribute services to the venture in order to earn their stock. It seeks to use equity incentives to compensate what is often a loose group of consultants or initial employees, who typically defer/skip salary. And it will seek outside funding to get things going, initially perhaps from “friends and family” but most often from angel investors and possibly VCs. The venture will then be make-or-break over the next few years with a comparatively near-term exit strategy always in view for the founding team as the hope of a successful outcome.

The blueprint here differs from that of a conventional small business, which is often established by its founders with substantial initial capital contributions, without emphasis on intellectual property rights, with their sights fixed primarily on making immediate operating profits, and with no expectation of any extraordinary return on investment in the short term.

Given these attributes, company formation for a startup differs significantly from that of a small business. A small business setup can often be simple. A startup setup is much more complex. This difference has legal implications affecting choice of entity as well as structural choices made in the setup.

Startups Generally Need a Corporate as Opposed to an LLC Setup

An LLC is a simple and low-maintenance vehicle for small business owners. It is great for those who want to run their business by consensus or under the direction of a managing member.

What happens to that simplicity when the LLC is adapted to the distinctive needs of a startup? When restricted units are issued to members with vesting-style provisions? When options to buy membership units are issued to employees? When a preferred class of membership units is defined and issued to investors? Of course, the simplicity is gone. In such cases, the LLC can do pretty much everything a corporation can do, but why strain to adapt a partnership-style legal format to goals for which the corporate format is already ideally suited? There is normally no reason to do so, and this is why the corporate format is usually best for most founding teams deploying their startup.

A couple of other clinkers inject themselves as well: with an LLC, you can’t get tax-advantaged treatment for options under current federal tax laws (i.e., nothing comparable to incentive stock options); in addition, VCs will not invest in LLCs owing to the adverse tax hit that results to their LP investors.

LLCs are sometimes used for startup ventures for special cases. Sometimes founders adopt a strategy of setting up in an LLC format to get the advantages of having a tax pass-through entity in situations where such tax treatment suits the needs of their investors. In other cases, a key investor in the venture will want special tax allocations that do not track the investors percentage ownership in the venture, which is attainable through an LLC but not through a corporation. Sometimes the venture will be well-capitalized at inception and a founder who is contributing valuable talents but no cash would get hit with a prohibitive tax on taking significant equity in the company — in such cases, the grant of a profits-only interest to such a founder will help solve the founder’s tax problem while giving that founder a rough equivalent of ownership via a continuing share of operating profits.

In spite of such exceptional cases, the corporate format is overwhelmingly favored for startups because it is robust, flexible, and well-suited to dealing with the special issues startups face. I turn to some of those issues now.

Restricted Stock Grants – Rare for Small Business – Are the Norm for Startups with Founding Teams

An unrestricted stock grant empowers the recipient of such stock to pay for it once and keep it forever, possibly subject to a buy-back right at fair market value. This is the norm for a small business; indeed, it is perhaps the major privilege one gets for being an entrepreneur. It may not be worth much in the end, but you definitely will own it!

Unrestricted grants can be problematic in a startup, however. If three founders (for example) form a startup and plan to make it successful through their personal efforts over a several-year period, any one of them who gets an unrestricted grant can simply walk off, keep his or her equity interest, and have the remaining founders effectively working hard for a success to which the departing founder will contribute little or nothing.

Note that a conventional small business usually does not face this risk with anywhere near the acuity of a startup. Co-owners in a conventional small business will often have made significant capital contributions to the business. They also will typically pay themselves salaries for “working the business.” Much of the value in such businesses may lie in the ability to draw current monies from it. Thus, the chance for a walk-away owner to get a windfall is much diminished; indeed, such an owner may well be severely prejudiced from not being on the inside of the business. Such a person will occupy the no-man’s land of an outside minority shareholder in a closely held corporation. The insiders will have use of his capital contribution and will be able to manipulate the profit distributions and other company affairs pretty much at will.

In a startup, the dynamic is different because the main contribution typically made by each founder consists of sweat equity. Founders need to earn their stock. If a founder gets a large piece of stock, walks away, and keeps it, that founder has gotten a windfall.

This risk is precisely what necessitates the use of so-called “restricted” stock for most startups. With restricted stock, the founders get their grants and own their stock but potentially can forfeit all or part of their equity interest unless they remain with the startup as service providers as their equity interest vests progressively over time.

The Risk of Forfeiture Is the Defining Element of Restricted Stock

The essence of restricted stock is that it can be repurchased at cost from a recipient if that person ceases to continue in a service relationship with the startup.

The repurchase right applies to x percent of a founder’s stock as of the date of grant, with x being a number negotiated among the founders. It can be 100 percent, if no part of that founder’s stock will be immediately vested, or 80 percent, if 20% will be immediately vested, or any other percentage, with the remaining percentage deemed immediately vested (i.e., not subject to a risk of forfeiture).

In a typical case, x equals 100 percent. Thereafter, as the founder continues to work for the company, this repurchase right lapses progressively over time. This means that the right applies to less and less of the founder’s stock as time passes and the stock progressively vests. Thus, a company may make a restricted stock grant to a founder with monthly pro rata vesting over a four-year period. This means that the company’s repurchase right applies initially to all the founder’s stock and thereafter lapses as to 1/48th of it with every month of continuing service by that founder. If the founder’s service should terminate, the company can exercise an option to buy back any of that founder’s unvested shares at cost, i.e., at the price paid for them by the founder.

“At cost” means just that. If you pay a tenth of a penny ($.001) for each of your restricted shares as a founder, and get one million shares, you pay $1,000. If you walk away from the startup immediately after making the purchase, the company will normally have the option to buy back your entire interest for that same $1,000. At the beginning, this may not matter much.

Now let us say that half of your shares are repurchased, say, two years down the line when the shares might be worth $1.00 each. At that time, upon termination of your service relationship with the company, the company can buy up to 500,000 shares from you, worth $500,000, for $500. In such a case, the repurchase at cost will result in a forfeiture of your interest.

This forfeiture risk is what distinguishes a restricted-stock buy-back from a buy-back at fair market value, the latter being most often used in the small business context.

Restricted Stock Can Be Mixed and Matched to Meet the Needs of a Startup

Restricted stock need not be done all-or-nothing with respect to founder grants.

If Founder A has developed the core IP while Founder B and Founder C are just joining the effort at the time the company is formed, different forms of restricted stock grants can be made to reflect the risk/reward calculations applying to each founder. Thus, Founder B might get a grant of x shares that vest ratably over a 48-month period (at 1/48th per month), meaning that the entire interest can be forfeited at inception and less-and-less so as the repurchase right of the company lapses progressively over time while Founder B performs services for the company. Likewise for Founder C, though if he is regarded as more valuable than Founder B, he might, say, have 20% of his grant immediately vested and have only the remainder subject to a risk of forfeiture. Founder A, having developed the core technology, might get a 100% unrestricted grant with no part of his stock subject to forfeiture — or perhaps a large percentage immediately vested with only the balance subject to forfeiture.

The point is that founders have great freedom to mix and match such grants to reflect varying situations among themselves and other key people within the company. Of course, whatever the founders may decide among themselves, later investors may and often do require that all founders have their vesting provisions wholly or partially reset as a condition to making their investment. Investors most definitely will not want to watch their investments go into a company that thereafter has key founders walking away with large pieces of unearned equity.

Restricted Stock Requires an 83(b) Election in Most Cases

In an example above, I spoke of a $500 stock interest being worth $500,000 two years into the vesting cycle of a founder, with two years left to go for the remainder. If a special tax election — known as an 83(b) election — is not properly filed by a recipient of restricted stock within 30 days of the date of his or her initial stock grant, highly adverse tax consequences can result to that recipient.

In the example just cited, without an 83(b) election in place, the founder would likely have to pay tax on nearly $500,000 of income as the remaining stock vests over the last two years of the cycle. With an 83(b) election in place, no tax of any kind would be due as a result of such vesting (of course, capital gains taxes would apply on sale).

Tax issues such as this can get complex and should be reviewed with a good business lawyer or CPA. The basic point is that, if an equity grant made in a startup context is subject to potential forfeiture (as restricted stock would be), 83(b) elections should be made in most cases to avoid tax problems to the recipients.

Restricted Stock Grants Are Complex and Do Not Lend Themselves to Legal Self-Help

Restricted stock grants are not simple and almost always need the help of a lawyer who is skilled in the startup business field.

With restricted stock, complex documentation is needed to deal with complex issues. This is why the LLC normally does not work well as a vehicle for startup businesses. The value of the LLC in the small business context lies in its simplicity. Entrepreneurs can often adapt it to their ends without a lot of fuss and without a lot of legal expense. But the LLC is ill-suited for use with restricted grants without a lot of custom drafting. If your startup is not going to impose forfeiture risks on founders or others, by all means consider using the LLC as a vehicle. If, however, forfeiture risks will be in play and hence restricted stock will be used (among other tools), there likely is no special benefit in using the LLC. In such cases, it is usually best to use a corporate format and a good business lawyer to assist in implementing the setup.

Startups Also Use Other Equity Incentives Besides Restricted Stock

Unlike a conventional small business, a typical business startup will want to offer other equity incentives to a broad range of people, not just to founders. For this purpose, an equity incentive plan is often adopted at inception and a certain number of shares reserved to it for future issuance by the board of directors.

Equity incentive plans usually authorize a board of directors to grant restricted stock, incentive stock options (ISOs), and non-qualified stock options (NQOs). Again, complex decisions need to be made and a qualified lawyer should be used in determining which incentives are best used for which recipients. In general, though, restricted stock is normally used for founders and very key people only; ISOs can be used for W-2 employees only; NQOs can be used for W-2 employees or for 1099 contractors. Lots of issues (including securities law issues) arise with equity incentives — don’t try to handle them without proper guidance.

Make Sure to Capture the IP for the Company

All too many startups form their companies only after efforts have been well under way to develop some of the key IP. This is neither good nor bad – it is simply human nature. Founders don’t want to focus too much on structure until they know they have a potentially viable opportunity.

What happens in such cases is that a good number of individuals may hold rights in aspects of the intellectual property that should properly belong to the company. In any setup of a startup, it is normally imperative that such IP rights be captured for the benefit of the company.

Again, this is complex area, but an important one. Nothing is worse than having IP claims against the company pop up during the due diligence phase of a funding or an acquisition. IP issues need to be cleaned up properly at the beginning. Similarly, provision needs to be made to ensure that post-formation services for the company are structured so as to keep all IP rights in the company.

Don’t Forget the Tax Risks

Startups have very special tax considerations at inception owing to the way they typically are capitalized — that is, with potentially valuable IP rights being assigned, and only nominal cash being contributed, to the company by founders in exchange for large amounts of founders’ stock.

Tax complications may arise if the founders attempt to combine their stock grants of this type along with cash investments made by others.

Let’s assume that two people set up a company in which they each own 50% of the stock, and they make simultaneous contributions, one of not-yet-commercialized IP rights and the other of $250,000 cash. Because the IRS does not consider IP rights of this type to be “property” in a tax sense, it will treat the grant made to the founder contributing such rights as a grant made in exchange for services. In such a case, the grant itself becomes taxable and the only question is what value it has for determining the amount of taxable income earned by the founder as a result of the transaction.

In our example, the IRS could conceivably argue that, if an investor were willing to pay $250,000 for half of a company, then the company is worth $500,000. The founder who received half of that company in exchange for a “service” contribution would then realize taxable income of $250,000 (half the value of the company). Another argument might be that the IP rights really didn’t have value as yet, but in that case the company would still be worth $250,000 (the value of the cash contributed) and the founder assigning the IP rights would potentially be subject to tax on income of $125,000 (half the value of the company, owing to his receipt of half the stock).

There are various workarounds for this type of problem, the main one being that founders should not time their stock grants to coincide in time with significant cash contributions made by investors.

The point, though, is this: this again is a complex area and should be handled with the help of a qualified startup business lawyer. With a business startup, watch out for tax traps. They can come at you from surprising directions.

Conclusion

All in all then, a startup has very distinctive setup features – from forfeiture incentives to IP issues to tax traps. It typically differs significantly from a conventional small business in the way it is set up. The issues touched upon here illustrate some of the important differences. There are others as well. If you are a founder, don’t make the mistake of thinking you can use a do-it-yourself kit to handle this type of setup. Take care to get a good startup business lawyer and do the setup right.