Briefing: May 2003

Businesses want a say in rewriting regulations, companies fatten their marketing budgets, and leaders receive tips fit for a queen.

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Businesses Want Overseer Oversight

Missouri is likely to enact a law this summer that will give entrepreneurs more say in contesting burdensome regulation. The Small Business Regulatory Fairness Board, if established, would empower nine business owners to weigh private-sector complaints about red tape. The board would then work to amend regulation on businesses' behalf. "People are very burdened" in Missouri, explains bill sponsor State Sen. Anita Yeckel, a Republican from St. Louis County. "The bureaucracy doesn't understand that the business owner is focused on multiple things -- the least of which is regulation."

Thomas Sullivan, the Small Business Administration's chief counsel for advocacy, lauds the proposed Missouri board because he believes it will become a national model for testing the best regulatory review procedures from many different states. It may even affect the federal regulatory review process because Missouri politicians like Sen. Kip Bond and Rep. Todd Aiken are considered pacesetters on small-business legislation.

But Missouri is not alone. North Dakota, New Jersey, and Rhode Island are considering similar regulation, and Oklahoma instituted a volunteer board last July, staffed by 113 business owners. Board chairman Larry Mocha, owner of Tulsa-based Air Power Systems Inc., says, "The common goal is making this state more business-friendly." Though agency bureaucrats are said to be leery of Mocha's board, Boyd West, of the Oklahoma Construction Industries Board, appreciates the input. "I think the perception is that they are going to be a heavy-handed overseer of all the rules, and that is is not the case," West says. "Agencies can lose track of the fact that rules affect real, live people." --Nicole Gull

Marketers Get Fresh Ammo

Business is ready to spend more on marketing this year, despite the war. Separate studies conducted by DoubleClick and Patrick Marketing Group found that the companies surveyed expect to increase marketing budgets by 11% in 2003. Other findings: Businesses are turning to public relations over advertising (see chart below).

Though the studies came out before the Iraq conflict erupted, interviews with business owners and marketing experts indicate no change of heart. For example, John Kalanik, president of Chicago-based InStep Software, intends to hike his nearly $1 million budget by 50%. Because he will travel less, he figures he'll need more marketing to keep his name out there. At a recent peer-group meeting, Kalanik reports, 11 of the 12 business owners present revealed similar intentions. Still, Wharton's Leonard M. Lodish urges prudence. "Spending more because your competitors are spending more is invariably a bad justification for marketing expenditures," he says. "What you say and how you say it is more important than how much you say it." --N.G.

Source: Patrick Marketing Group survey of 250 executives.

Family-Run Companies Face Leadership Crisis

Americans are living longer and working past the traditional retirement age -- and that may spell trouble for family-owned businesses. A surprising 55% of CEOs 61 or older who are expected to retire soon have not chosen a successor, according to a new nationwide study. That's up from just 33% in 1997, when the survey was last conducted. "People have no desire to let go," says Paul Karofsky, of Northeastern University's Center for Family Business. The study, sponsored by the Raymond Family Business Institute and MassMutual, also found that only 37% of respondents have written strategic plans.

John Gregorian, 61, is among the many family business owners who have thought about succession but finalized nothing. His son is the obvious successor at the family Oriental rugs dealer, based in Newton, Mass. But though Gregorian says he hopes to avoid the problems that came up when he inherited the company from his father a quarter century ago, he also asserts: "I am the company and the company is me. I will always have some sort of connection with the business. What that is, we're trying to figure out as we go along."