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Way Out
Remember your feature "No Way Out" [November 1991]? Our founder is in the same position: he can't let go of his 19-year-old company. He micromanages everything, since he hasn't built a management structure to run the company when he's gone. How do other founders learn to let go?

Name Withheld

* * *

It's a common problem, aggravated by founders' fears of the unknown. In Growing Pains: How to Make the Transition from an Entrepreneurship to a Professionally Managed Firm (Jossey-Bass, San Francisco, 1990, $29.95), Eric Flamholtz, a consultant quoted in our feature, discusses ways to manage the transition.

Some founders learn to delegate by attending seminars and reading. Others hire a professional manager as CEO and then make themselves chairman. But when a founder is engrossed in one aspect of a business -- say, product development -- succession works best if he or she steps down a rung to run that department and a professional manager is hired to run the company. That strategy keeps the founder involved and gives the incoming CEO a chance to absorb the wisdom only the founder has. The hardest part for these founders is having to report to a higher authority because they lack (or chose not to learn) the skills to manage a whole organization. Managing at the Speed of Change, by Daryl Conner (Villard, 800-733-3000, 1992, $22), explains why CEOs resist change and how company culture determines the success of transitions.

It doesn't hurt to start thinking about those transitions early on. Beyond Entrepreneurship, by James Collins and William Lazier (Prentice Hall, 800-374-1200, 1992, $19.95), uses case studies to show how companies can lay the foundation for greatness while they're still small and flexible enough to embody their leaders' values.

Robert Fulton offers a one-man lesson in the art of letting go. Until recently, Fulton was the CEO of Web Industries, a plastics manufacturer he started 25 years ago in Westboro, Mass., and he never thought anyone could fill his shoes. But in the mid-1980s he formed an in-house team to write a five-year succession plan and hired consultants to help him understand the emotional side of letting go.

Seeing his team making headway without his input gave Fulton confidence in his employees' abilities; it also helped to know that his values had been cemented into Web's operations. But he still wasn't ready to let go until board members had rated CEO candidates.

The plan was successful. In 1990 Fulton sold part of the company to its employees, made himself chairman, and promoted his executive vice-president to president. In the end, admits Fulton, "it's a question of humility."

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Bonsai Bazaar
We own a retail gallery that sells bonsai trees, which we'd like to sell wholesale to nurseries or retailers nationwide. Is recruiting a salesperson the best way to make contact?

Peggy and Jerry Justice

Owners

Bonsai Gallery

Atlanta

* * *

Hiring a full-time salesperson could be expensive, especially when you consider the cost of frequent visits to distant accounts. The easiest way to get your name to nurseries and retailers is through a broker, says Tom Kusmerz, CEO of the Barn Nursery & Landscape Center, in Cary, Ill. Brokers match the needs of nurseries, retailers, and landscapers, arranging sales for a 10% to 30% cut. For $100, the Southern Nurserymen's Association (SNA; 404-973-9026) will search its 1,500-member database for suitable brokers.

A national list of 600 retailers is available from the American Association of Nurserymen ($75; call 202-789-2900). But provided you control travel and exhibit costs, the cheapest way to find retailers is to attend industry trade shows, which attract brokers, buyers, and landscapers from around the nation. (See "Stretching the Trade-Show Budget," Sales and Marketing, May 1992, [Article link].) Charlie Bailey, buyer for McGinnis Farms, in Alpharetta, Ga., recommends the SNA-sponsored show in Atlanta (July 30 to August 1). For a list of other industry gatherings and an all-industry Buyer's Guide to help you size up the competition, call Nursery Manager magazine (800-433-5612).

Before you jump into the national market, why not seed your local pastures through advertising? The Plantfinder directory (800-627-3819) distributes 18,000 copies monthly throughout the Southeast. A one-eighth-page space ad costs $100 per issue. If response is strong, you can then place ads in national trade magazines. Kusmerz suggests Chicago-based bimonthly American Nurseryman (800-621-5727), which charges $225 per issue for a one-sixth-page display ad.

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Taxing Issues
Got a quick way to beat the tax deadline on a shoestring? I'd also be interested in publications that tackle small-business tax-planning questions.

L. P. Coston

President

Today's Educational Associates

Houston

* * *

With April 15 just days away, we admire your brinkmanship. Here's how to complete 1992's return quickly and cheaply. First, visit a local IRS branch for free booklets answering common questions unique to S and C corporations. Then buy easy yet powerful tax-accounting software. (Intuit's Quicken bundled with ChipSoft's TurboTax costs about $80.) "Even this late, you should be able to format whatever's collected in your shoe box in five hours," notes Murray Alter, a tax partner at Coopers & Lybrand in New York City, "and you'll save three times what you'd have spent on those extra hours of your adviser's time." It's too late to take advantage of the December 31 deadlines, but there are still some channels open for 1992 tax savings -- notably bad-debt write-offs and capital-loss and charitable-contribution carryovers. At this point, says Randy Wright, a tax partner with accounting firm Grant Thornton in Dallas, "you should be doing a postmortem."

Now get into high gear with year-round 1993 planning. A few titles should help you start thinking about a tax strategy. Holmes Crouch's series All-Year Tax Guides (IPG, 800-888-4741, 1993, $16.95) tackles nitty-gritty tax concerns (investor gains, audits, and more) specific to small, growing businesses. For easy-to-apply tax tips, see the Inc. feature "The Tax-Advantaged CEO," May 1991, [Article link].

To prep for Clinton's changes, read tax updates regularly. George Bowles, chief financial officer of Hatfield & Co., a Dallas-based wholesaler of industrial valves, reads Grant Thornton's monthly "Tax and Business Adviser" (free; call 202-296-7800) and Commonwealth Clearing House's "Tax Planning Review" (12 issues, $120). Call CCH (312-583-8500) for a guide to its more than 300 tax reports, audiotapes, and software.

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Minority Interest
My wife (she's Chinese) and I (I'm Anglo) just filed for incorporation in New York State. We found no tips on how we can eventually qualify for Small Business Administration loans or contracts as a minority-owned business. Does co-ownership disqualify us?

Bob Clyatt

Co-owner

Learning Technology

Bloomfield, Mich.

* * *

Relax: incorporating 50-50 hasn't sealed your fate. But you will have to prove minority-owned status if you're looking for that SBA loan.

Business ownership is quite fluid. Paul Broude, a partner at law firm O'Connor, Broude & Aronson, in Waltham, Mass., says, "The way you write your articles of incorporation has no bearing on your real job: convincing agencies you are, indeed, a disadvantaged business."

That's not as easy as it sounds. Say you apply for a loan under the SBA's 8(a) program. Because the program is meant to level the playing field, examiners have been taught to "sense a front," warns Wayne Foren, associate director of the SBA's Office of Investment, in Washington, D.C. Your wife must have at least 51% of the stock in her name -- but that's not enough to convince the SBA she's the legitimate owner. "Did she design the technology? Does she know how the business operates?" asks Foren. For a free copy of the program's rules, call 202-205-6416.

Regarding set-aside contracts for minority-owned businesses: government and private-sector minority-business programs set their own eligibility rules, and for most, stock ownership is key. (If you dilute ownership later, you must reshuffle shares to maintain minority status or waive any benefit the status offered you.) For a list of contracts available to minority-owned businesses, contact the procurement offices of federal or state agencies. Ask for specific contract applications and the rules for each. Minority companies hoping to sign contracts with Uncle Sam will find support from George Mason University's Procurement Technical Assistance Program (703-330-5458).

Also check out lawyer Tony Mancuso's series of interactive handbooks, How to Form Your Own Corporation (Nolo, 800-992-6656, 1992, $24.95; software available), which comprises meaty insiders' guides to incorporating in New York State, California, Florida, and Texas.

-- Reported by Karen E. Carney, Michael P. Cronin, and Phaedra Hise.

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Last updated: Apr 1, 1993




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