The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
A company's culture is a key component to employee satisfaction. Check out Netflix's Reference Guide on Our Freedom and Responsibility Culture. It looks like they are thinking outside the box on many issues that keep employees happy such as salary, vacation and other benefits. What do you think about Netflix's policies? What are some creative ideas that you have implemented or experienced that keep workers commited and working hard? Leave your thoughts in the comments, we would love to hear from you.
Business owners are often not aware of the nuances of intangible asset value. Intangible Assets are comprised of two principal groups both of which can add value: Discrete and Non-Discrete Intangible Assets.
Discrete Intangible Assets: are assets which have a legal existence in and of themselves and which may be transferred independently of the business. Examples are intellectual properties such as patents or copyrights, franchise agreements, licenses, proprietary processes and trade secrets, administrative policies and procedures, etc.
What distinguishes Discrete Intangibles from Non-Discrete Intangibles is that they meet the following criteria:
• are subject to specific identification and recognizable description.
• are subject to legal existence and protection.
• are subject to the right of private ownership, and the private ownership should be legally transferable.
• have some tangible evidence of the existence of the asset.
• have been created or have come into existence at an identifiable time or as the result of an identifiable event.
• are subject to being destroyed or to a termination of existence at an identifiable time or as the result of an identifiable event.
Unless Non-discrete intangible assets have a stream of profits that is separable and identifiable, such as a stream of royalty payments, they are otherwise analyzed as if they are part of the going-concern value and not valued separately from it. However, their presence can significantly influence the appraiser’s analysis and judgment as regards an appropriate capitalization rate and can result in a premium on value.
Non-Discrete Intangible Assets: Intangible Assets which are not discrete, but which have an economic value are usually classified as “Goodwill Intangible Assets” or “Going Concern Value”. The value of these assets lies in the principle that when all of the elements of a business system (capital, labor, management) are combined in a going-concern (or able to be going-concern), the value of the whole exceeds the sum of the value of the parts. It is important to recognize that it is a quantifiable number, and not just a “feeling” about the business.
There are three elements that create Going-Concern or Goodwill Value. Not all three need to be present to create the value.
• Assets in place and ready to use as a going-concern (capital, labor and management)
• Excess economic income over that justifiably allocated to other assets.
• Expectation of a valuable future event, such as gains on a sale.
Book Value Intangible Asset Values: Where intangible assets of any sort are shown on the balance sheet as part of an allocation of purchase price resulting from an acquisition, they do not necessarily reflect market value. The appraiser must determine the current market value of these assets, and adjust the balance sheet by removing the “book values” and replacing them with appraised intangible asset values which are determined in the course of the appraisal process.
Personal or Professional Goodwill: When either of these exist (they are functionally identical) they are normally included in the total goodwill value shown for a business unless there is a specific reason not to. When included in the total value, the underlying assumption is that any buyer of the business will insist upon mitigation measures to preserve the personal or professional goodwill values for the business. This is normally done by non-competition agreements, employment contracts, and a period of time specified for continued involvement in the business by the holders of these assets. In divorce cases an exception arises. When a business is being valued for a marital dissolution it is necessary to further analyze whether or not mitigation measures are feasible, because the divorcing spouse who holds the personal or professional goodwill may not be willing to enter into a mitigation agreement. It is further necessary to review the prevailing court cases pertaining in the particular state. Some states count personal or professional goodwill as a marital asset, others do not. It takes coordination between the respective divorce attorneys and the appraiser to determine the proper way to handle personal or professional goodwill in these cases.
Radio II: Mastering the Radio
In my last post I wrote about booking yourself on call-in radio shows. This can be the easiest access you’ll have to media, but live radio is very unforgiving in a number of respects, so let’s deal with live radio media mastery today.
There are some basic radio rules. Last time I emphasized the need to brand. In fact, I put it in all upper case -- BRAND -- because it is so important. On live radio no one will know what company or product you’re talking about if you don’t tell them.
It is a rule of all media mastery that you speak clearly, simply, and in short but complete sentences. Nowhere is that rule as critical as it is in radio where you have only one tool, your voice, to capture the listener's attention. In Addition, you need to speak slowly enough for listeners to hear and understand you. But at the same time you need to energize your voice. Make your voice commanding by using inflection and stresses, not by talking at machine-gun speed. A lot of professional radio personalities achieve vocal energy by acting out as they speak or read. That is, they grimace and gesticulate with exaggerated movement. To brighten their speech, they do something old radio pros call “putting teeth in it.” Putting teeth in a line means delivering it with a huge smile on your face. It looks ridiculous but sounds great. And, since it's not TV, no one sees the jack-o'-lantern grin.
Here are some more live radio rules:
Keep it Simple
Be Brief: You already know that radio is a non-visual medium without a reread factor. A very long statement can sound like a speech or a sermon, rather than a conversation. Also speaking at excessive length may spur an interruption by the host. And even if he doesn't cut you off, your long-winded answers are sure to frustrate listeners and cause their attention to wander. Brevity is not “Yes” and “No,” by the way; “Yes” and “No” are not answers but are the beginning of answers.
Keep it Simple: Radio listeners get one brief shot at comprehending what you're saying. In media training sessions I used to tell participants that rather than “dumb down” their answers, just pretend to be talking to their aunt across the table at Thanksgiving dinner and speak at the appropriate level for her to understand without condescending to her. Simplify as much as you can without changing the meaning of what you're saying.
Don’t Pause: Just as nature abhors a vacuum, live radio abhors silence. A listener hunting through the radio dial and hearing no talk, no music, nothing but the “sound of silence,” assumes that there's no station and moves on. Radio interviewers know this and don't want to lose the station surfers, so if you are silent for too long after a question, it's likely your interviewer will begin talking to fill the void. When he's talking, he's using the medium's most precious commodity - airtime - and you are not; you can't deliver your message when he's talking. In print interviews and in edited broadcast interviews, there’s nothing wrong with pausing after a question is asked, thinking for a beat and then launching into your answer. But in live radio -- and live TV, for that matter -- you can’t afford the luxury of thinking before you speak. And that’s why it’s extremely important that you never go into a live broadcast interview without a well-thought-out, well-rehearsed agenda.
I grew up with parents who owned their own business since before I was born so the model of working for yourself has always been a part of my experience. I have always thought that there are certain people who know that someday, when the time is right, they want to be their own boss. These people are essentially setting the intention to become an entrepreneur. Recently though, I have been thinking about those who are just the opposite. That is, people who have been quite satisfied with working for somebody else yet, at some point, due to various factors, they find themselves in the situation where their only option to continue making an income is to work for themselves. They essentially become unintentional entrepreneurs.
I am wondering: are you an intentional entrepreneur or an unintentional entrepreneur? How has this affected your experience of owning your own business? We would love to hear from you; please leave your thoughts in the comment section.
Today while listening to Marketplace on the public radio station in my car I heard a very interesting trend report on the average age of entrepreneurs. Below is an excerpt:
Time for a misconception check. If you think all the hot entrepreneurs out there are twenty-to-thirty-somethings with the next big idea and unlimited energy to launch it, it's time to readjust your thinking. The average tech-company founder is 39. Overall the over-50 crowd outnumbers the under-25's two to one. From the Entrepreneurship Desk at Oregon Public Broadcasting, Marketplace's Mitchell Hartman has more on the graying of the entrepreneurial workforce.
Read and listen to the full report here: http://marketplace.publicradio.org/display/web/2009/07/23/pm-elder/