The Entrepreneurial Mind

Today is the mythical day when you have stopped working for the government and started working for yourself -- it is Tax Freedom Day 2007. From the Tax Foundation:

Tax Freedom Day answers the basic question, "What price is the nation paying for government?" We divide the most authoritative figure for total tax collections by the most authoritative figure for the nation's income. The answer this year is that taxes will amount to 32.7 percent of our income. We convert that percentage into days worked, and if we started on January 1, it would take until April 30. That's when we could start keeping some of our earnings.

I don't know about you, but I've been working hard all of this year. It is nice to know that I finally get to "keep" what I earn for the rest of the year. Technically, since I live in Tennessee my tax freedom day was a couple of weeks ago -- and you poor folks in New York don't really get to celebrate for another couple of weeks....

Where did all of that money go? The Tax Foundation has this handy diagram to illustrate how those tax dollars get collected.

Posted by Jeff Cornwall at 09:25 AM | Permalink | Comments (1)

Having been on the road much of the past couple of weeks I got behind on providing links to my columns in the Tennessean.

This week I address the need for entrepreneurs to understand the changing demands of being a CEO:

As a business grows, much attention is given to the changes necessary to keep the business successful, such as hiring more staff, expanding the resources necessary to support new customers, managing cash flow, building new systems, and so forth.

But, growth also creates personal challenges for the entrepreneur that requires him or her to change and evolve, as well.

Last week, my topic was on bankers and entrepreneurs:

The most confusing and frustrating relationships for many entrepreneurs are those with bankers.

It can seem like bankers speak a completely different language to many entrepreneurs. In fact, it is not so much like a language difference as it is a difference in culture.

Posted by Jeff Cornwall at 06:24 AM | Permalink | Comments (1)

I wrote a post earlier this month about a VC firm in Raleigh, NC that opened their doors to all comers. I took a somewhat cynical take on the whole thing saying:

I knew that VCs had a lot of extra cash these days, but this sounds like it is either desperation or an unprecedented PR stunt for a VC firm. Either way it seems to indicate what many of us have suspected -- VCs have over-sold their funds.

Jason Caplain of Southern Capitol Ventures, the VC firm that had the open house, called me to tell me how it went and why they did it.

Southern Capitol Ventures is a fairly new fund started by a couple of young guys. They want to try new ways to reach entrepreneurs that might not currently see a VC firm as an option for their business.

As measured by the response to their "Calling all Entrepreneurs", the event seems to have worked. They were able to listen to 49 deals from 10 states that they probably would not have seen otherwise. A few deals were outside their areas of expertise, but overall they believe that they got to see some interesting deals and that the entrepreneurs got some valuable feedback. No deals have been funded from this group as of today, but a handful are still being evaluated.

They are now planning to do the same thing again in Atlanta on May 17.

OK, so maybe I was a little rough on these guys in my earlier post. If their goal is to shake up the VC industry a little bit, more power to them.

Posted by Jeff Cornwall at 10:40 AM | Permalink | Comments (2)

The SBA Office of Advocacy has released a study conducted by George Haynes, Income and Wealth: How Did Households Owning Small Businesses Fare from 1989 to 2004?

This study extends work previously sponsored by the Office of Advocacy for the study of income and wealth of business owner households using the Survey of Consumer Finance (SCF), the most recently available data being
2004. By examining two sub-periods, from 1989 to 2004 and 1992 to 2004, the study concluded that:

- Families owning businesses remained significantly more likely to be high income earners and high wealth holders than families not owning businesses. In fact, the income gap widened between business and non-business owners during this time.

- Income and wealth for households owning businesses are more sensitive to fluctuations in economic activities. After all, there is risk in owning a business!

- Owning multiple businesses leads to even greater prosperity.

Posted by Jeff Cornwall at 09:30 AM | Permalink | Comments (1)

I've been on the road with our students the past week. In addition to the business plan competition in Evansville last week, we took 21 students to the International Competition for Delta Epsilon Chi in Orlando for students in business.

Congratulations to all of the Belmont students who competed.

Special recognition goes to those students who won the following Grand Awards

Marketing Management - Chelsea Swab (Entrepreneurship and Marketing major)
1st Place

Aparrel & Accessories - Michelle Wilkerson (Entrepreneurship major and Feedback co-manager)
2nd Place

Design Presentation - Emily Swinson (Entrepreneurship major and Feedback co-manager)
2nd Place

Cameron Powell - Winner of $2,000 Ken D'Angelo Foundation Entrepreneurship Scholarship for top entrepreneurship student of the year

Financial Services - Joe Drake (Entrepreneurship and Finance major)
Top Ten

E-Commerce Decision Making - Kirstin Long (Entrepreneurship major)
Top Ten

Entrepreneurship Challenge - Chelsea Swab (Entrepreneurship and
Marketing), Kaitlin Adams (Entrepreneurship), and Tristan Egloff
(Entrepreneurship)
Top 5

Other National Finalists:

Entrepreneurship Written Plan - Andy Tabar (Entrepreneurship)

Posted by Jeff Cornwall at 10:08 PM | Permalink | Comments (1)

Entrepreneurial success can be greatly enhanced through good research. Having strong data and other information is critical for sound business planning. Kauffman's eVenturing has just release their latest collection of articles, this one dealing with Market Research and Competitive Analysis.

However, good research should never stop with the business plan during start-up.

Entrepreneurs should keep up to date on industry trends. Most opportunities come from change. But the very change that got you into a market can just as easily make you obsolete if you do not keep up with the continuous change that seems to be the norm for most markets today (see this post for more on this topic).

You need to be aware of your competitors and how they are trying to get your customer's business. There is always competition (see earlier post on this here), and you need to assume they are trying to improve their business and take away your market share.

And the key to understanding trends in the industry and competitive environments comes from a clear and honest understanding about what customers want and how well you are meeting their needs. Listen to your market!

So think of the ideas and tools from this collection as not just for start-ups, but for any business in a dynamic and competitive business.

Posted by Jeff Cornwall at 12:17 PM | Permalink | Comments (1)

I wrote a post a while back about how we Baby Boomers have become helicopter parents -- hovering over our children during every step of their development. I also speculated that this could dampen what could become the most entrepreneurial generation in over a century.

At that time I heard some people joke that they could just imagine that some day a "helicopter" parent might hover over their children right into their entrance into the job market. Well, it seems that it is no joke and that day is now here. I have heard first hand accounts of parents showing up at job interviews with their children -- these were graduate students, mind you. In today's USA Today there is a story about parents trying to interject themselves into getting internships, finding full-time jobs, and even try to get directly involved in the negotiating process!

"Psychologically, it's somewhat eroding. When an employer is hiring someone, they're hiring an adult for an adult job, and then they have to deal with a parent," says Charles Wardell in New York, the managing director and head of the northeast region at Korn/Ferry. "There comes a time when you've prepared children, and you need to let go."

In my opinion, letting go should start somewhere around their early teens, not early thirties. Let them stumble, let them fall, and for goodness sake let them learn on their own from life experiences.

As I stressed in an earlier post, "We seem to have forgotten that failure, in fact, builds character. And it is the fear of failure that inhibits creativity and keeps us from learning....You will fail. Failure is a prerequisite for success."

Posted by Jeff Cornwall at 11:34 AM | Permalink

There is a relatively new organization trying to take microfinancing to a new level, while also making microfinance a sustainable and profitable business model.

Here is their model as described on their website:

Our mission is to fight global poverty by increasing access to microfinance.

Unitus envisions a world where microfinance is available to every individual. We work toward this vision by accelerating the growth of the world's highest-potential emerging microfinance institutions. We provide capital investments and capacity-building consulting, thus empowering these organizations to scale and provide life-changing financial services to dramatically more of the world's working poor.....

Unitus acts as a social venture capital investor for the microfinance industry. The organization identifies the highest-potential microfinance institutions (MFIs) in developing countries and helps accelerate their growth through capital investments and capacity-building consulting, thus empowering them to help dramatically more poor people worldwide.

In 2006 and 2007 Unitus received the Fast Company/Monitor Group Social Capitalist Award for their work in building microfinance in India and around the globe.

Entrepreneurship is not just a model for building wealth. It is a model that can, through free enterprise and business ownership, help transform the world in ways that models based on wealth redistribution and government dependency can never accomplish.

(Thanks to Ben Cunningham for recommending this post).

Posted by Jeff Cornwall at 05:06 AM | Permalink | Comments (5)

Sara Loeppke of Belmont University received a third place award at the Evansville University New Venture Competition this past Friday for her business the Silver Tulip. Her business is an on-line formal wear consignment business that she is transforming into a retail operation. She is also exploring importing her own brand of women's formal wear from either Romania or China.

Congratulations to Sara and all of our student entrepreneurs who presented their businesses!

Posted by Jeff Cornwall at 05:48 AM | Permalink

Congratulations to Cameron Powell for being named the Regions Bank Outstanding Belmont Student Entrepreneur for 2007! Cameron's business, River Rock Media, will be competing to two business plan competitions this weekend.

Posted by Jeff Cornwall at 07:22 AM | Permalink

The Senate Small Business and Entrepreneurship Committee is taking testimony on the effects of Sarbanes-Oxley on smaller companies. At issue is how quickly the SEC will move to make smaller public companies comply with all of the requirements of Sarbanes-Oxley.

From the International Business Times:

In testimony prepared for delivery Wednesday to the Senate Small Business and Entrepreneurship Committee, [Securities and Exchange Commission Chairman Christopher] Cox didn't rule out an additional delay in applying the internal-controls requirement to smaller companies, but said that approach isn't "Plan A" for regulators.

Cox said the SEC plans to make changes in a matter of weeks, giving smaller companies plenty of preparation time. Under the current schedule, smaller companies would make their first assessment of internal controls starting this year, and have auditors weigh in starting in 2008.

Chief Counsel for the SBA Office of Advocacy Thomas M. Sullivan said in his written testimony submitted to the Committee that "There is a compelling record demonstrating that the costs of complying with Section 404 are large and disproportionately high for small public companies.... Advocacy believes that the excessive cost of Section 404 internal controls reporting may restrict a new generation of small innovative companies from seeking capital in the U.S. capital markets."

Sullivan went on to say, "Advocacy strongly recommends that the SEC continue to provide further extensions for small public companies until such time as more cost-effective procedures for internal controls can be developed." Additionally, he urged Congress to exempt smaller public companies from Section 404(b). These recommendations are consistent with a report from the SEC's own Advisory Committee on Smaller Public Companies. As the Advisory Committee has pointed out, Section 404 compliance costs in relation to revenue will be disproportionately borne by smaller companies.

But, Senator Kerry (Chair of the Committee) said the following in his opening statement:

Too many small public companies who played by the rules are now expected to deal with the time and financial burden required to comply with the Sarbanes-Oxley law. Last year, small businesses with less than $75 million in assets saw the number of financial restatements increase by 46 percent. This shows that small businesses getting ready to comply with Sarbanes-Oxley are having trouble. I believe that we will all benefit when small businesses eventually comply with Sarbanes Oxley. According to a recent United States Government Accounting Office (GAO) study requested by Senator Snowe, the cost of compliance and the time needed for small public companies to comply with Sarbanes-Oxley regulations has been disproportionately higher than for large public companies. Firms with assets of $1 billion or more spend just thirteen cents per $100 in revenue for audit fees, while small businesses are forced to spend more than a dollar per $100 in revenue to comply with the same rules.

So it seems that the most we can hope for is a little time, for Sen. Kerry clearly states that he believes that "...we will all benefit when small businesses eventually comply with Sarbanes Oxley."

However, the impact of Sarbanes-Oxley will not just be on public companies. Sarbanes-Oxley is already influencing commonly accepted standards of many private small businesses and non-profits. That means that even though these small organizations do not technically fall under this law, accountants are beginning to act as if they do in some areas of reporting. This is primarily to limit the accountant's liability in case an outside investor moves toward litigation, or in the case of a non-profit, if someone challenges the financial management by the board.

In terms of expenses related to regulatory compliance that comes from Sarbanes-Oxley, the cost of poker is about to go up for a large number of smaller organizations.

Posted by Jeff Cornwall at 03:04 PM | Permalink

Often would-be entrepreneurs need to find a "partner" who can supply the cash they need for their business idea. The trick comes in how you value the cash of the investor compared to the sweat equity of the entrepreneur. StartupJournal has a good discussion on this topic:

What frequently happens is the working partner gets paid a regular annual salary, says Billy Ellyson, a small-business attorney in Richmond, Va. On top of that, he or she also gets a prenegotiated share of the ownership that usually hinges on how crucial the capital partner feels that person is to the business's chances of success. It could be anywhere from a 5% slice of profits to 30% or more for those partners deemed as irreplaceable.

Notice that he does not say a 50-50 deal is likely! As a start-up, you need to be ready to give up a significant share of your business if you need a significant amount of cash. The negotiations are different if you are looking at expansion capital. Having an operating business and a proven concept allows you to bring more value to the deal in the form of a successful company and hopefully positive cash flow. It also puts you in a stronger bargaining position.

Posted by Jeff Cornwall at 07:38 AM | Permalink | Comments (1)

Five Belmont practicing entrepreneurs (all current students) are among the twelve finalists for the Evansville University Business Plan Competition this coming Friday. Congratulations!

Sara Loeppke, The Silver Tulip

Cameron Powell, River Rock Media Group (2007 Belmont Entrepreneur of the Year)

Elliott Donnelly, Pink Polo Entertainment

Molly Povolny, Tanks & Airplanes

Andy Tabar, Orchid Inc. (2006 Belmont Entrepreneur of the Year)

Posted by Jeff Cornwall at 10:30 AM | Permalink | Comments (1)

"Get a good mentor."

This is advice that we hear early in our working careers. But sometimes, it is offered in a rather casual way almost like, "find a good dry cleaner and, oh yea, get a mentor while you are at it.' However, a good mentor is like a true friend -- neither comes along that often.

I have been blessed to have had a few good mentors in the various stages of my working life. Some I still keep in touch with, while others I lost contact with over time. One of the important mentors in my entrepreneurial career was my father, Bob Cornwall, who is still active as an entrepreneur himself at 85. My father called me yesterday to tell me that one of the most important mentors in his life, a man named Jack Murray, passed away this past weekend at 93.

My dad worked for over 25 years at a company called Speed Queen in Ripon, Wisconsin. Those of you my age and older probably remember this company as a popular brand of washers and dryers in the mid 1900s. Those of you who are a bit younger may recognize this name from laundromats. Dad started out working there in purchasing not long after the end of World War II.

Early in his career at Speed Queen a man named Jack Murray took my dad under his wing. Jack's grandfather, Joe Barlow, was a co-founder of Speed Queen. My dad progressed through the ranks at Speed Queen under Jack's mentorship. Jack became not only a mentor to my dad, but a close friend.

In the late 1960s Jack took a position with the conglomerate that owned Speed Queen at that time and my father succeeded him as President. Eventually my dad left corporate life and began the entrepreneurial phase of his career, which has been going strong for about the last 30 years. However, even after leaving the corporate world, Jack and my dad kept in touch.

When you find a person who is willing to invest the time and energy it takes to be a true mentor to you in your career, cherish that relationship. I appreciate the support and guidance I received from my father, just as I know he appreciated his relationship with Mr. Murray. May he rest in peace.

Posted by Jeff Cornwall at 05:08 AM | Permalink | Comments (2)

The 2.0 version of Carnival of the Capitalists has become much more selective in its posts and is doing an excellent job. This week find the top ten posts submitted at Scatterbox by Steven Silvers.

Posted by Jeff Cornwall at 12:30 PM | Permalink

Entrepreneur magazine has released their annual ranking of franchises for 2007. You can find it here.

I wrote a post last year on the pros and cons of buying a franchise. You can find that post here.

Posted by Jeff Cornwall at 09:48 AM | Permalink

From the Office of Advocacy of the SBA:

Small business is a big contributor to the nation's economy, generating 50 percent of the private, nonfarm gross domestic product (GDP), according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. The study covers the period 1998 - 2004, and confirms the findings of earlier research.

You can find the full report here.

Posted by Jeff Cornwall at 09:38 AM | Permalink | Comments (1)

Ben Cunningham passed along a great new blog called FoundRead, which is another blog that chronicles the early stages of an entrepreneurial venture and invites others who are doing the same to join in the conversation.

FoundREAD is a shared resource, where anyone can contribute, either through their posts, or experiences or comments. You can choose to contribute freely or anonymously. Just like a GPS system helps us drive through a maze of freeways, the founders and entrepreneurs help their peers navigate the twisted, confusing roads of company building.

Posted by Jeff Cornwall at 07:52 AM | Permalink | Comments (2)

A study released by the SBA finds that more minorities in the US are pursuing entrepreneurial careers.

The highlights:

- In 2002, minorities owned approximately 18 percent of the 23 million U.S. firms.

- Using a proxy for measuring minority business growth, Black-owned firms had the highest growth rate for several measures between 1997 and 2002: 45.4 percent for the number of firms; 24.5 percent of total receipts for the group; and 16.7 percent for employer firm receipts. Asians also experienced growth in the number of employer firms, 12.6 percent, and in annual payroll, 25.3 percent. American Indian and Native Alaskan business growth was 2.1 percent.

- Hispanics or Latinos constituted the largest minority business community and owned 6.6 percent of all U.S. firms; 3.7 percent of employer firms and 7.4 percent of nonemployer firms.

You can see the full study here.

Posted by Jeff Cornwall at 10:48 AM | Permalink

The Tax Foundation has issued their annual survey that covers attitudes toward the US tax system. Here is a summary of their findings:

- A majority of U.S. adults believe the federal tax code is complex, that the federal income taxes they pay are "too high," and the federal tax system needs major changes or a complete overhaul. - Just one in ten (10 percent) say they are willing to pay higher taxes to eliminate 2007's projected $244 billion federal budget deficit.

- Two-thirds (66 percent) favor a complete elimination of the controversial federal estate tax.

- Roughly half (48 percent) say they are willing to give up some federal tax deductions if such broadening of the tax base were coupled with an across-the-board cut in tax rates.

- The estate tax is seen as the most "unfair" federal tax, followed by gasoline taxes and personal income taxes. At the state and local level, gasoline taxes are seen as the most "unfair" tax, followed by local property taxes and motor vehicle taxes.

Although this survey is encouraging, there is a long way to go if we ever hope to change the tax system. I just read a student thesis on "economic rents" or as Madison so aptly called it "the mischief of factions." It reminds me of how our system has created a huge network of self-interests that almost guarantee that the current system won't change. Each faction has gotten their own little break and is willing to keep an unworkable system intact just so long as they continue to get their little benefit from the system.

This survey is like the ones that find that people think all of Congress is a bunch of crooks -- all, that is, except their congress person (the one who looks out for their specific interests). I am more convinced than ever that our system won't change until some significant event creates the need for fundamental change. After all, it was a major war and a severe economic crisis that created the system that became the mess we have now.

Posted by Jeff Cornwall at 10:25 AM | Permalink | Comments (1)

I had no intention of having a theme week dealing with "when lightening strikes" stories about small businesses, but just could not resist one more story in this vein.

The pet food scare has created a boom in business for small pet food companies that manufacture all natural products.

From TwinCites.com:

In the month since the recall, Pet Chef Express [in the Twin Cities] added 150 accounts, increasing its customer base to 1,100 pet owners. The small business's typical weekly sales of $2,000 to $3,000 almost doubled in the past few weeks.

Kukla can barely keep his warehouse stocked. The 1,300-square-foot room sat more than half-empty Tuesday. To meet the demand, Pet Chef Express broke ground this week on a 2,100-square-foot warehouse in Lakeville.

So let's recap some of the lessons from the posts this week on what happens to small companies that have a sudden boom in demand:

- Publicity is one of the most powerful forms of bootstrap marketing for a small business. Just ask the folks at SeeMore Putter and Bamboo Comfort.

- But if you don't meet demand, the benefits of the publicity soon vanish, and you run the risk of alienating even your most loyal customers. This includes those from before your "fifteen minutes of fame."

- While meeting your new-found demand, you have to balance opportunism with realistic caution. I hope that demand for the pet food in today's example will continue. But this can never be assumed. Pet Chef Express must work deliberately to build loyalty from new customers who certainly came to them in some cases out of desperation. Their marketing plan must now include tactics to lock in their newly expanded customer base, and build on the sudden windfall that the national news story has brought to businesses like theirs.

Posted by Jeff Cornwall at 07:01 AM | Permalink

Getting mentioned in the Wall Street Journal is generally considered a good thing for a business. However, if you are not prepared for the surge in demand that such publicity can bring it can also spell disaster. (I had cautioned about this in my previous post below on the small putter manufacturer whose putter was used by Masters winner Zack Johnson).

The Tennessean offers the cautionary tale about Cyndi Collett and husband Chris Tait's new product -- a brand of environmentally friendly towels and blankets called Bamboo Comfort. A mention in the Wall Street Journal did not work out the way that they had at first hoped it would.

But sweet success has its dark side, as the couple quickly learned.

After The Journal article came out more than a year ago, orders flooded the Web site of their store, Mad Mod. Shortly thereafter, they had no Bamboo Comfortto sell, and it stayed that way for four months.

Posted by Jeff Cornwall at 08:47 AM | Permalink

Once in a while lightening strikes a small business. That may be the case for a small putter manufacturer located right here in Franklin, Tennessee. It seems that Zack Johnson, winner of the Masters on Sunday, used a putter made by SeeMore Putter Co.

From the Tennessean:

The four-person company based in Franklin received some major publicity thanks to Zach Johnson's winning the Masters golf championship on Sunday in Augusta, Ga.

Johnson used a SeeMore putter to stiff-arm Tiger Woods and win the green jacket. Television commentators Nick Faldo and Jim Nantz constantly referred to Johnson's superb putting, and CBS routinely showed close-ups of the putter.

"We probably got way more free publicity than we could ever pay in advertising," said Jim Grundberg, managing director of SeeMore.

Grundberg said he was jumping around his Brentwood home with family Sunday during the action. Johnson's playing partner and good friend, Vaughn Taylor, also was using a SeeMore putter, used by only a handful of PGA Tour players.

So an unlikely winner teams up with a small-time player in the golf equipment industry and both hit it big. Cool story!

SeeMore needs to carefully nurture this publicity. They need to leverage it to build momentum for their company. They cannot just rely on their fifteen minutes of fame. They have done a great first step at their website, which is already full of the big news for their little company.

On the flip side, they also need to be ready for a possible onslaught of demand. If they do not monitor and manage their growth carefully, their own success could sink them. They do not meet demand and have the systems in place to satisfy what can be a fickle market.

I hope Zack and SeeMore make the most of their success and that both are around for a long time!

Posted by Jeff Cornwall at 07:28 AM | Permalink

At the same time we do not seem to have the will or the means to stem the tide of illegal immigration comes news that legal immigration of desperately needed tech staff is being capped. From CNN:

U.S. Citizenship and Immigration Services says it reached its limit for 2008 H-1B visa petitions in a single day and will not accept any more, to the dismay of technology companies that rely on the visas to hire skilled foreign workers.

The agency began accepting petitions Monday for the fiscal year starting October 1 and said it received about 150,000 applications by mid-afternoon.

The temporary visas are for foreign workers with high-tech skills or in specialty occupations. Congress has mandated that the immigration agency limit the visas granted to 65,000, although the cap does not apply to petitions made on behalf of current H-1B holders, and an additional 20,000 visas can be granted to applicants who hold advanced degrees from U.S. academic institutions.

Tech companies are part of the entrepreneurial boom. We need to reform immigration policy to meet the needs of our new economy.

(Thanks to Andy Tabar for passing this along).

Posted by Jeff Cornwall at 09:18 AM | Permalink | Comments (8)

A new report from the Angel Capital Association finds that angel investors are optimistic about the general climate for early stage investments.

In the Angel Group Confidence Report of North American angel group leaders, ACA found that angel groups forecast that the quantity and quality of entrepreneurial investment proposals will increase in 2007, that more than 80 percent of groups will continue investing in seed and early stage companies, that there is a strengthened opportunity for more positive exits, and more plans to co-invest with other sources of capital.

This follows a strong job report last week that included a big jump in self-employment. The entrepreneurial economy seems to be picking up steam....

Posted by Jeff Cornwall at 08:14 AM | Permalink | Comments (1)

See this week's edition at Show Me the Money.

Posted by Jeff Cornwall at 08:12 AM | Permalink | Comments (1)

16th century Russian Icon. Christus Rex

Posted by Jeff Cornwall at 11:01 AM | Permalink

We've been hearing all week to expect an increase in unemployment to 4.6%. Wrong! It actually dropped to 4.4%. And increased self-employment is part of this positive economic report.

Posted by Jeff Cornwall at 10:56 AM | Permalink

There has been quite a buzz about the possibility of Giuliani and Forbes becoming flat tax soul-mates. While the flat tax would be a welcome improvement from our current system and its 65,000 pages of code and over 600 active tax forms, I am still not convinced that a flat income tax is the type of reform that will have a lasting impact.

Sure, the flat tax plan purports to reduce filing to a "postcard." But, it is still an income tax. And I guarantee that over time, it will become a target for well-intentioned and self-serving adjustments that will soon recreate the income tax system we have now. In fact, before a flat tax would make it out of committee, it would begin to include exemptions and deductions just like the current system.

Fundamental reform requires fundamental change. Simply offering a blank canvass to the same artist using the same paints will eventually lead a painting that looks basically the same as we see now. I don't know if it is the Fair Tax, or some other method of collecting revenue for the government, but I know that simply replacing the current income tax with a new income tax will not help out this country in the long term.

We have a new economy being built by entrepreneurs. It requires new thinking of what type of system will both generate the revenues we need to run the basic services of our government and allows our entrepreneurial economy to thrive.

The odds are that this is simply an attempt by a couple of Republican candidates to shore up their base. I agree with James Pethokoukis:

Making sweeping rate cuts--much less totally scrapping the current tax code and instituting a flat tax or a consumption tax--in the current environment is "unrealistic," Ramesh Ponnuru, a senior editor at the conservative National Review magazine, told me recently. At the very least, it would take an articulate candidate committed in his bones to making the argument for such huge change.

And I see no one like this currently in the mix.

Posted by Jeff Cornwall at 07:45 AM | Permalink | Comments (1)

There is a great article at Inc.com on what it will truly take to compete in the evolving global economy. And it will have an impact on businesses of all sizes, as this article so clearly demonstrates.

Thanks to Robert Hill (an MBA student at Vanderbilt) for passing this along.

Posted by Jeff Cornwall at 12:36 PM | Permalink | Comments (1)

Angels also have a lot of idle cash (see earlier post today on VCs) and their deal flow seems to reflect this. From the Center for Venture Research:

The angel investor market experienced steady growth in 2006, with total investments of $25.6 billion, an increase of 10.8 percent over 2005, according to the 2006 Angel Market Analysis released today by the Center for Venture Research at the University of New Hampshire.

Posted by Jeff Cornwall at 08:24 AM | Permalink

The new and improved Carnival of the Capitalists can be seen at Business Pundit this week.

Posted by Jeff Cornwall at 08:20 AM | Permalink

Dr. Jim Stefansic of Pathfinder Therapeutic sent me something I never thought I would ever see:

On Friday, April 20, I would like to invite ANY person that wants to meet to come by our office in Raleigh, NC. You can have just an idea all the way to a well run business doing millions in revenue. It doesn't matter. And all the typical venture capital BS that you may hear is removed - you won't be screened out in advance, you don't need to know someone to "get in" and there are no secret handshakes required. Everyone is welcome and I'll plan to be in the office all day.

This was posted by Jason Caplain of Southern Capitol Ventures at the blog site TechJournal South.

I knew that VCs had a lot of extra cash these days, but this sounds like it is either desperation or an unprecedented PR stunt for a VC firm. Either way it seems to indicate what many of us have suspected -- VCs have over-sold their funds.

Posted by Jeff Cornwall at 05:57 AM | Permalink | Comments (1)