Entrepreneur, VC offers shortcuts to help startups be more successful

Suggesting there are shortcuts entrepreneurs can take to improve their chances of success would appear to refute Malcolm Gladwell’s popular “10,000 hours” theory.

But instead of picking a fight with the “Outliers” author, entrepreneur and fund manager Mark Hopkins is just trying to be provocative to get people to pick up his own book: “Shortcut to Prosperity: 10 Entrepreneurial Habits and a Roadmap For An Exceptional Career”.

“I’m not at all refuting Gladwell’s 10,000 hours,” confessed Hopkins, 53, who actually references Gladwell in the book. “The shortcut is really a way to get people to pick up the book and for me to say: ’If you do these things then you have a good shot at it, but it’s going to be a lot of work.’”

As far as the 10,000 hours goes, Hopkins has put in his time as an entrepreneur. After a career with Hewlett-Packard (NYSE:HPQ), Hopkins started his own medical device manufacturing company – Peak Industries – in 1996 and sold it nearly a decade later in 2004 for $44 million to Delphi (NYSE:DPH).

After that success, Hopkins, who describes himself as an “operations guy,” was looking to share his knowledge with other entrepreneurs and started up his own Denver, Colorado-based private equity firm – Crescendo Capital Partners.

“The motivation there was to continue to be involved in small businesses that we thought we could help,” said Hopkins, who targets companies with market capitalizations of $20 million or less in the health services industry.

Since starting the firm five years ago, Hopkins has switched from early-stage companies to more mature businesses: “We’re taking larger positions in small, boring, mature companies that we think we can help grow and operate better.”

He said one of the most important things successful companies share is what he refers to as “creative tension,” which emanates from founders who have a clear vision about where they are and where you want to be.

“Any entity that doesn’t have that clearly in mind is going to be wandering in the wilderness.”

The following is an abridged version of the conversation between Hopkins and Reuters Small Business:

What are some key takeaways for entrepreneurs from your experience and from your book?

The most fundamental thing about successful startups has to do with people. Startups only survive if they do something better, faster and cheaper than the other guys that are out there. The best indicator of whether you are able to do that or not, is the strength of the people you’re able to hire and how well they work together as a team. Do what you have to do to get the best people on the team and then use trust to cement their relationship. Teams that trust each other way outperform teams that don’t.

Every startup has a core group of leaders who are going to make great sacrifice and spend an inordinate amount of time with each other to make an organization a success. Choose them wisely. A good partner means someone who shares your values, balances your strengths, will work as hard as you do and is fun to be around. If you can do those things, you’ve got a wonderful opportunity to be successful.

Where do you see private equity right now and where it’s heading?

I see two different worlds in private equity. I see the really large private equity entities in the world – the multi-billion-dollar companies that are doing multi-billion-dollar deals – and that’s all about asset utilization and somebody having a better way to utilize assets that are captured in a big company. That’s not the world I play in. I play in the world that makes much smaller investments in arenas that we’re familiar with where it’s pretty clear to us how to operate those companies better.

I’m pretty bullish about private equity, because I always think there will be companies that are under-utilizing their assets. The amounts of leverage you’ll be able to attract through debt is going to be a lot different going forward than it has in the past, but that’s not necessarily a bad thing. It puts more of a premium on operating, which is more fundamentally helpful to the company.

A lot of private equity firms have been pretty outspoken about where they sit on the whole fiscal cliff debate. What’s your take on it?

I have a pretty moderate take on it. We’ve got spending problems that we fundamentally have to understand and begin to take actions to address. On the other hand we are historically gathering revenues that are under what it takes as a percentage of GDP to run our country the way we want to run it. We need both parties to come together. Somebody, or some group of people, has got to stand up. I listened to Erskine Bowles (Democratic co-chair of President Obama’s National Commission on Fiscal Responsibility and Reform with Republican Senator Alan Simpson) on a call the other day and was super impressed – he’s a Democrat I could believe in. I’ve heard Senator Simpson talk and I can say the same thing about him. If somebody would embrace the recommendations from a balanced set of knowledgeable guys like that, I think we can get this thing done.

Article source :http://uk.reuters.com

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British Gas managing director to step down

Phil Bentley expected to leave post as owner Centrica announces outcome of strategic review

British Gas is set to lose its boss as the energy provider's parent,Centrica, prepares to announce the outcome of a strategic review.

Phil Bentley, managing director of British Gas.

Phil Bentley is expected to step down as managing director of British Gas over the next few months and an announcement could come as soon as Centrica's preliminary results at the end of February. At the same time the energy group will also announce the outcome of a three-yearly strategic review, encompassing its three main divisions of British Gas, an oil and gas production business that includes a significant North Sea presence and a US operation. Bentley, 53, joined Centrica as finance director in 2000 and was handed his British Gas role in 2007. Centrica declined to comment on Bentley's imminent departure but he is believed to harbour ambitions to become a company chief executive in his own right.

British Gas is a lightning rod for criticism over rising household bills as the provider of energy to 15.8 million customers. In November it implemented a 6% increase in household bills, a rise that it blamed on the cost of upgrading the UK's gas and electricity grids, rising wholesale gas costs and levies imposed on energy companies to pay for low-carbon alternatives. Nonetheless Centrica is expected to announce after-tax profits of £1.4bn in next month, with British Gas forecast to produce a profit of £575m.

Centrica's chief executive, Sam Laidlaw, also faces questions over the group's involvement in the new nuclear power station planned for Hinkley Point in Somerset. It is a junior partner in the project with France's EDF and a decision on whether to proceed with the £14bn project has already missed its year-end deadline. The decision is heavily dependent on how much financial support the government provides, through underwriting a minimum price for nuclear-powered energy.

Article source : http://www.guardian.co.uk

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Tax grab will push 400,000 mid-income earners into top band

Cuts in pension relief could hurt teachers and civil servants, while rise in income thresholds will also hit better off

 George Osborne gave with one hand – a surprise £1bn tax giveaway for working people, with an increase in the amount they can earn before paying income tax – but took with the other, as he revealed a £1bn tax grab from middle-earners, which will see 400,000 more people dragged into the 40% tax band.

Widely trailed changes to tax relief on pensions were tougher than expected, with the cap on tax-free contributions falling from £50,000 to £40,000. That reduction, combined with a cut in the "lifetime allowance" for pension savings from £1.5m to £1.25m, will earn the Treasury an extra £1bn.

The chancellor said the measures will affect just one in a hundred savers, but it provoked a furious backlash from the pension industry, which claimed the move would further alienate people from saving for retirement.

The changes to income tax will benefit more than 24 million people, the Treasury said. The personal allowance (that bit of your income on which you pay no tax) was due to rise to £8,105 in the current tax year and to £9,205 in 2013-14, but Osborne said it would now increase by £1,335 in April – £235 more than previously announced. That translates into a £47-a-year tax cut for working people.

Osborne said of the increase: "This is a direct boost to the incomes of people working hard to provide for their families. That's £47 extra in cash next year. We are within touching distance of the £10,000 personal allowance."

But the point at which individuals start paying tax at 40% will fall from £42,475 to £41,451, and then rise by just 1% a year thereafter. As a result, many more people will start paying higher-rate tax, with the government admitting that 400,000 more individuals will be thrown into the higher tax bracket by 2015/16.

The Taxpayers' Alliance, a rightwing lobby group, said: "The chancellor has sent out entirely the wrong message to those earning or hoping to earn the increasingly modest wage where almost half of your income starts to be taken in income tax and national insurance.

"Hundreds of thousands of new people are being ensnared by a punitive rate of tax."

The chancellor also said he is pressing ahead with the cut in the highest rate of tax to 45% from April next year, claiming that the 50% rate, rather than increasing total tax revenue, actually reduced it. "HMRC data reveals that in the first year of the 50% tax rate, tax revenues from the rich fell by £7bn and the number of people declaring incomes over £1m fell by a half. A tax raid on the rich that raises almost no money is a con."

But at the other end of the income scale, millions of working households will be hit by a real-terms cut in tax credits and child benefit. Osborne said most working-age benefit and tax credit increases would be pegged at 1% for the next three years, and previously planned freezes would go ahead.

Child benefit payments will also face further cuts. In a month's time, 1.2 million families with a higher earner will start losing some or all of their child benefit. Osborne had already announced that child benefit rates would be frozen for three years until April 2014, and on Wednesday said that after that, increases will only be 1% a year for the following two years, saving the public finances £175m, rising to £330m by 2017/18.

The government billed the changes to pension taxation as a measure that will only affect a tiny number of wealthy savers. Under the new rules, any payments into a pension scheme above £40,000 will in effect be hit with a charge set at the individual's marginal tax rate.

For someone earning more than £150,000 in the 2013/14 tax year, when the top rate of tax will be 45%, the cost of contributing £50,000 into a pension scheme will rise by £4,500.

But pension experts warn that the changes could also hit teachers, doctors and civil servants, who have a good final salary-based pension scheme.

According to figures prepared by Hargreaves Lansdown, someone earning £55,000 a year could face a tax charge of as much as £13,000 in 2013-14 as a result of the pension cap, although they can take advantage of unused pension allowances to minimise the charge.

The impact will be felt most by someone with a long service record who receives a pay rise towards the end of their career, which can have a significant impact on the final value of their pension.

Meanwhile, savers hoping for a big increase in tax-free Isa limits had their hopes dashed. In the face of collapsing interest rates paid to savers – thanks in part to the government's Funding for Lending scheme – pensioner and other groups had called on Osborne to raise significantly the amount savers can put in tax-free Isas. This would have helped to offset the impact of record low rates.

Instead, he raised the overall Isa contribution limit by less than inflation, to £11,520. The new limit, up from £11,280, comes into force next April. Half the new limit, £5,760, can be placed into a cash Isa. Last April the Isa limit rose by £600.

Osborne also said the government is consulting over whether to allow direct investment via an Isa into smaller and start-up firms, listed on the Alternative Investment Market, a move he said would boost enterprise.

Article source :http://www.guardian.co.uk

George Osborne: "This is a direct boost to incomes … we are within touching distance of the £10,000 personal allowance

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stock markets surge on compromise

FTSE 100 breaches 6000 level for the first time since July 2011, while Dow Jones opens sharply higher

US President Barack Obama said he had fulfilled a campaign promise to make the US tax system fairer with a deal to avert the fiscal cliff crisis that passed after a fierce duel in Congress

Global markets have surged on the first trading day of the new year in relief that the US had stepped back from the fiscal cliff, propelling theFTSE 100 above 6000 for the first time since July 2011.

After weeks of worry, the US Senate and House of Representatives finally passed a compromise bill to water down the combined tax hikes and spending cuts, which had been due to come into effect this month, avoiding the prospect of the world's biggest economy moving back into recession.

Asian markets led the way, with Hong Kong rising 2.9% to its highest level since June 2011.

In London, the FTSE 100 closed up 129.5 points, or 2.2%, at 6027.37. Banking shares were among the biggest risers on relief over the US agreement, with Barclays 5% higher and Lloyds Banking Group up 4%. Mining shares were also boosted by growing optimism about the prospects for the global economy, with the sector accounting for eight of the 10 risers in the leading index.

US investors have also reacted positively to the late night agreement, despite worries the deal could see the country's credit rating lowered. The Dow Jones Industrial Average has opened up 224 points, or 1.7%, higher at 13,326.

In Europe, Germany's Dax and France's Cac have both risen more than 2%. Even the struggling eurozone countries have been lifted, with the Athens market up 3.8%, Italy 3.6% higher and Spain adding 3%.

But some cautioned that Tuesday's US agreement had merely delayed a decision for two months, and predicted further volatility to come.

Mike van Dulken, head of research at Accendo Markets, said: "We are back near the highs of last Thursday when 6000 was almost missed by just a whisker. Some may be disappointed that the initial reaction to thefiscal cliff deal has not taken up back there quicker, however, optimists must bear in mind that the deal has only bought an extra two months and pessimists should remember that full volume trading may take a few more days to resume."

Simon Denham at Capital Spreads said: "The problem is that all the US has managed to do is take a leaf out of the European's books by kicking the can down the road. Spending cut delays for a couple of months means that more negotiations will take place in only a few weeks time and we will have to go over the same old ground again."

Meanwhile, Lee McDarby at Investec Corporate Treasury, pointed out an additional element in the next set of US discussions: "A final note on the cliff for now is that when negotiations re-open in a few weeks' time they will have to cater for the US debt ceiling, which wasn't addressed in the bill passed on Tuesday and is set to be reached mid-February. It appears the US government is going to have a busy and challenging beginning to 2013."

Article Source : http://www.guardian.co.uk

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PFP News

Washington, D.C. -- The board of directors of the CFP Board of Standards announced the resignations of its chairman, Alan Goldfarb, and two members of the Disciplinary and Ethics Commission.

After the CFP Board became aware of allegations that members of the board and other volunteers may have violated provisions of the CFP Board's Standards of Professional Conduct, the board of directors created a special committee, which retained outside counsel to investigate. The investigation found sufficient merit in the allegations against Goldfarb and the two members of the DEC to refer them for further proceedings under the CFP Board's disciplinary rules.

When presented with the committee's findings, Goldfarb and the two DEC members decided to resign from their posts. On October 30, Goldfarb addressed the situation in an open letter: "I am certain that this was a misunderstanding, and I welcome the opportunity to engage in good faith the CFP Board's enforcement process."

Goldfarb added: "I believe that under the circumstances, it is best for the organization that I resign pending the outcome of the process as both chair and a member of the board of directors, effective immediately."

2012 chair-elect Nancy Kistner has since been elected to fill the remainder of Goldfarb's term.

AICPA TO PUBLISH CONSUMER FINANCIAL EDUCATION BOOK

New York -- The American Institute of CPAs plans to publish its first book for the consumer market early next year.

The book, entitled Save Wisely, Spend Happily, combines the personal financial planning insights of 125 CPAs. It is scheduled to be published on January 3.

The book complements the AICPA's 360 Degrees of Financial Literacy volunteer effort. Institute members can begin purchasing the book now through CPA2Biz. Discounts are available for bulk orders. All proceeds from the sale of the book will go to support the CPA profession's financial literacy efforts.

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The Spirit of Accounting: Using Private Company GAAP to Serve Statement Users' Needs

Let's now consider whether the U.S. needs two sets of GAAP for public and private companies. If so, we face many questions as to who should establish those standards and what they should look like.

I'm convinced that the most vocal arguments in favor of private company GAAP are primarily gut-level and emotional. However, it is also true that this issue has been debated and that steps have been taken to consider how to implement the basic idea.

As you know, NASBA has been involved with this effort, and former NASBA chairman Billy Atkinson has been appointed chair of the PCC. Another former chair, Diane Rubin, was also appointed after being nominated by your association. I hope that Billy, Diane and NASBA can lead the council to bring long-needed reforms to GAAP.

I encourage you to make the most of your involvement, because it opens up an avenue to do more good than you may have imagined. The risk is that not enough would be done to attack the real problems created by grossly deficient accounting standards.

A NEW PARADIGM

As I understand it, the council's first effort will aim to identify as many places as possible in GAAP that could be changed to be more useful in the private company setting. In my opinion, there is no better place to start. I urge the council to approach this effort from a perspective different from what you may now hold.

Philosophers use the word "paradigm" to describe an accepted worldview. Profound changes usually follow when we go through a "paradigm shift." For an example, just think how life has changed as a result of the iPhone and other means for mobile connectivity.

Specifically, I call on the PCC to stun the accounting world by adopting a users-first paradigm that would lead to assessing the usefulness of today's GAAP for meeting the needs of those who use private company statements, not those who prepare or audit them.

By analogy, it's well established that good things happen when managers focus on their customers' needs, instead of their own concerns. This shift to the consumer's point of view is at the heart of the Total Quality Management revolution that drastically changed the business world some 25 years ago. It can also be at the heart of a new dawn of relevant and useful financial statements.

THE USERS' NEEDS

So, what would that mean for private company reporting?

For one, this area is ripe for a user-oriented paradigm because there is much less distance, and a longstanding personal relationship, between private company statement issuers and users. As a result, effective financial reporting is more than likely to occur in a setting in which trust has already been established. This trust should not be jeopardized by reports that fail to tell the truth, the whole truth, and nothing but the truth.

To build on that point, I suggest that private company financial reports have usefulness in three primary settings.

First, these statements should help actual and potential lenders assess a company's creditworthiness. To do that, users must be provided with clear descriptions of an entity's cash flow. The reports must also reliably describe assets that have been or might be pledged as collateral, and they must usefully describe all existing obligations so the users can fully understand the present debt risk. Therefore, reports should use the direct method to describe operating cash flow and mark all assets and liabilities to market. All off-balance-sheet financing must be eliminated.

Second, private company statements should help owners and potential buyers assess the firm's value so they can conduct informed negotiations for its sale or acquisition. Again, direct-method cash flow information is important. Off-balance-sheet financing must be eliminated, and market-based information about the assets and liabilities is absolutely essential.

Finally, these financial statements will surely prove useful for managers.

Of course, but unfortunately, traditional GAAP statements do not serve these functions. Thus, any effort to merely tweak existing standards won't be good enough. For certain, any efforts to curtail the amount of reported information would be going in exactly the wrong direction.

To put it another way, those who advocated for private company GAAP are looking to reduce preparation costs. To be very clear, the search must be for the most useful statements, not the least expensive statements.

WHAT NEEDS CHANGING?

Here is the main implication for the council and the Financial Accounting Standards Board - and all accountants, for that matter. I am convinced that an objective and thorough evaluation of today's GAAP will reveal that virtually all standards need substantive reform. Superficial modifications will not be good enough. Instead, financial statements must be completely useful.

(I actually drafted the preceding paragraph several weeks ago and was especially pleased to read Billy's comments at the American Institute of CPAs' Council meeting held in October, in which he declared with these words his intent to evaluate all of GAAP: "If we do have fixes, we should first evaluate the fixes from the standpoint of all users, not just private company users.")

If the council does proceed along these lines, they need to ask new questions, such as, "Why are we still doing today what came into common practice before computers existed or when Queen Victoria had just ascended to her throne? Why do managers want to reduce the cost to prepare their statements if cutting those corners will increase their capital costs and diminish their company's perceived value?" My favorite is, "Why are impaired market values below book value considered to be reliable, but those above book value are not?"

These bold questions should lead to bold answers.

AREAS FOR IMPROVEMENT

To hammer home this point, I'm going to list a few places where accounting practices could be improved: the cash balance, cash flow statements, accounts receivable and credit sales, inventory and cost of goods sold, investments in equity and debt securities, property and duh-preciation, intangible assets, financial instruments, consolidated financial statements, off-balance-sheet financing, income tax expense and deferred taxes, accounts payable, long-term debt, convertible debt, defined-benefit pensions, stock-based compensation, shareholders' equity, preferred stock, balance sheet classifications, income measurement and presentation, comprehensive income, and quarterly reporting. Once these are exhausted, I am sure we can find others to fix, like earnings per share.

In other words, GAAP is seriously broken because it has never been developed to address users' needs. Because it is seriously inadequate, it needs to be seriously reformed.

The council has been empowered to kickstart that reform by identifying ways to make private companies' financial statements useful. And, then, as Billy confirmed, it's a natural extension to question public company GAAP as well.

Indeed, I hope that FASB and the PCC can collaborate to produce a new GAAP that can be applied by all companies, private and public. 

AN UNEXPECTED TURN

Putting users first differs from the agenda pushed by those who want an oversimplified GAAP that would be cheap to comply with but fail to provide useful information. If the guiding objective is to help capital markets become more efficient, then users should have a leading role in the standard-setting process for identifying and resolving the issues. Alas, they have been virtually neglected so far.

How do we know that supporters of a separate GAAP weren't putting users first? Evidence is provided by three things.

First is the composition of the Blue Ribbon Panel. More than 70 percent of the panel's 18 members were CPAs, chief financial officers, and other managers. There were only two users, along with two seats for a professor and a regulator. This mix does not reflect a paradigm that puts users' needs first.

Second is the backgrounds of the respondents to requests for comments. Bruce Pounder reported in CFO Magazine that 103 responses to the panel's request came from CPA practitioners and state societies, while only four came from users and business owners. The responses to a later request were terribly skewed toward CPAs because thousands of them clicked on a link that authorized the AICPA to send a prefabricated letter to the Financial Accounting Foundation. (While this gambit was legal, Bahnson and I described it as ineffective and illegitimate.)

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