The Chefs Table


Metaphoric Computing – examining the growth of entrepreneurial initiatives.

Posted in Entrepreneur by ftiess on the March 15th, 2009


This interview, concerning the Kauffman organization, really brings out a great topic of discussion. Because I grew up in “IBM country”, the Hudson Valley of New York, I have observed the growth of many entrepreneurial startups in the Poughkeepsie area since the massive job cuts of 1993. This was due in part to a disenfranchisement with the consumers needs. In the 1980s companies like Microsoft and Apple where producing larger quantities of smaller capacity computers and software, meanwhile IBM was producing smaller numbers of massive capacity computers. As history has proven the sale of the smaller capacity computers and greater capacity software exponentially grew while the sale of the larger capacity computers continued to decrease. IBM missed a fundamental paradigm shift—that the value added in computer sales was shifting from hardware to software. The aggregate value of intellectual capital in software was on the rise while hardware was becoming a commodity product whose prices experienced diminished returns.

In my research I have found over a hundred startups in the East Fishkill New York area, as a result of the IBM job cuts. One of the things that I had assumed as a lad was that IBM would continue to grow, many of my friend’s parents had worked for IBM and our family business, retail pharmacy, relied upon the continued growth of IBM. So you can imagine we were concerned in the 1990s when the structure of our microcosm of high tech industry based jobs changed. What was really amazing was the rather quick growth of these smaller yet nimble computer design firms. Prior IBM employees had learned that their future success was really in their own hands. They could no longer rely on a single entity to support their career choice.

As we see the similar restructuring of companies and displacement of North Carolina jobs today, Bank of America, NASCAR Teams and Freightliner to name a few, what will the future hold? Those innovators who have the ability to accept the change, overcome and adapt to the market shift will be the leaders of tomorrow’s entrepreneurial growth.

Marginalized Cuisine- When finance gets in the way of quality.

Posted in Entrepreneur, Hospitality by ftiess on the March 2nd, 2009

Unmet Expectations
How many times have you visited a restaurant only to end up with a sour feeling in the pit of you stomach? You just realized that warming up the leftovers from last nights dinner would have been a better choice then spending fifty bucks for your family to dine on packaged pre-prepared microwaved dishes from a chain restaurant.

In my book The Culinary Reference Guide, I discuss this concept in the preface entitled, Mental Mise en Place. “Have you ever been to a restaurant where you ordered the same thing on twp separate occasions? When you went back to the restaurant was that meal just as good as the first time? If your answer is no then perhaps, your second experience was an improper execution of the formula. …. This is where the consistency of preparation is critical; you ordered the dish the second time because you liked it the first. Most guests will not reorder a dish that they did not like the first time….”

Drs. Joann and Jim Carland put it another way in their Catching the Dream Series of course materials, to quote and paraphrase from chapter seven of New Venture Growth 3rd edition- Production management. To paraphrase managers are in charge of achieving production goals without sacrificing quality, “if inferior raw materials are purchased inferior products will result. If poorly trained or incompetent people are used on the production line, inferior products will result.”

Quality
Quality is the consistent delivery of a predetermined standard. Without recognized standards and customer-validated expectations, the growth of a brand will not succeed. Why has McDonalds done so well over these past 53 years? Think about it…. the consistent delivery of a predetermined standard. McDonalds became popular as Americans took to the road in the 1950’s, and with any road trip, the necessity, for families to find a safe, quick, and inexpensive place to eat. The reason why there are so many chain restaurants today is directly linked to the success of this business model.

Recent Experience
Recently my family and I went out for lunch to a chain restaurant that we had visited last year. Our first time was on Mothers Day, of all days, the service was ok the food was good. It seemed as if someone had finally found the formula to produce this ethnic cuisine in a sustainable efficient manner. I am a big fan of this particular ethnic cuisine, (by the way I am not trying to indict this restaurant chain in any way and therefore will only give the particulars that are relevant), and since moving to Charlotte several years ago have only found one restaurant, of this cuisine, that has been consistent and of good quality. This recent visit left us walking away, and, as mentioned earlier questioning why we did not have leftover instead. The food was hot and apparently safe, but there was something missing, oh yeah, the flavor we had enjoyed in the past. The key to prepare and serve this particular cuisine is in the freshness and quality of ingredients, and since the time of our last visit something had changed, the quality of food. Our meal tasted like it had been prepared from a box of prescribed ingredients as opposed to being made from fresh product.

The Taste of Industrialized Cooking.
Upon investigation of this restaurants parent company Brinker International some quality issues are rather apparent. Brinker International is one of the world’s leading casual dining restaurant companies. With more than 1,900 restaurants and over 120,000 team members in 25 countries, we welcome more than 1.2 million guests into our restaurants every day. (Source -Brinker.com). Doug Brooks, Brinker International President was quoted in the The Dallas Morning News on October 30, 2008 by Karen Robinson-Jacobs stating their restaurant are experiencing a “difficult operating environment as our country works through these economic challenges,” It is for that reason the Brinker is seeking to expand its brands in markets outside of the U.S. by opening 41 new operations. Going global brings with it a different standard of customer expectations. One of the largest growth areas is the Middle East, yes the land of milk and honey and crude oil is going to be introduced to Salsa, Guacamole and Fajitas. Actually, the cuisines are quite similar- meat grilled and served on a flatbread with a raw vegetable sauce. Brinker International advertised in the August 2008 Food Safety and Quality Website for a Quality Assurance / Food Safety Manager listing the job requirement: “Design, implement and manage the product assessment process for assigned products to ensure that all products are routinely assessed for the physical, chemical, organoleptic and/or microbiological analyses per specified parameters and frequencies Ensure that all suppliers and distributors have annual third party sanitation facility audits, recall programs and all relevant food safety and product quality programs”

So you are probably asking yourself, so what does this have to do with the change in quality control issue from the last visit. Simply, in my opinion, when a food company goes global the distribution of ingredients, consistency of product availability and above all prime costs are factors that may have precedence over the quality of the product. Looking over several quarterly reports issued by Brinker cost of sales increased from 27.9 percent in the prior year to 28.6 percent in the fourth quarter of fiscal 2008, August 05. By the end of the Second Quarter Fiscal 2009 on January 22 Brinker reported “Cost of sales, as a percent of revenues, decreased from 28.3 percent in the prior year to 28.2 percent in the second quarter of fiscal 2009. During the quarter, favorable menu price changes more than offset the negative impact on cost of sales of unfavorable commodity prices primarily related to chicken, produce and oils and sauces.”

Yes, we can have the same entrée in Charlotte and Dubai, but that does not mean that the entrée will please both Ricky Bobby’s and the Sheiks taste buds.
In summary something had changed in this ethnic restaurant’s recipe of quality assured preparations, it was not the cook in the restaurant, the server, our even the menu. It was the marginalization of the mass produced sauces, and preparations. Shaving pennies from the cost of food budget has probably caused this company to reformulate their base recipes, which of course could affect the final product. A company can only succeed if it exceeds its guests expectations, altering the production standards may help for a few financial periods, but in the long run marginalization of production ruins the brand.

Resources
1.Tiess, Frederick. The Culinary Reference Guide. 2nd. Matthews: Le Guild Culinaire, 2006.
2.JoAnn & Jim Carland (2005) Catching the American Dream: New Venture Growth, Whitney Press.
3. www.mcdonalds.com
4. www.brinker.com
5. Robinson-Jacobs , Karen . Brinker counts on international restaurant growth as U.S. economy sags.” The Dallas Morning News October 30, 2008 , ‘natl. ed
6. Arabian Food Supplies Launches Popular Mexican Restaurant Locations In The Middle East.” UAE NEWS. 2 Mar 2009 .
7. “QA / Food Safety Manager – Dallas, TX.” The Comprehensive Food Safety Website. Aug 2008. FoodHACCP.com. 2 Mar 2009 8. www.businessdictionary.com
9. www.youtube.com

Navigating the 4 C’s of Credit around the Perfect Economic Storm.

Posted in Entrepreneur by ftiess on the February 24th, 2009

Getting your bearings straight. To state it simply the 4 C’s of credit are Character, Capacity, Capital, and Conditions. All of these factors are used in the evaluation by a prudent loan officer to develop an extension of credit from a lender to a borrower. Besides being the most important factor Character also hold the distinction of being the hardest of the factors to accurately measure. Capacity refers the borrower’s ability to repay the loan. Capital evaluation involves looking over the financial strength of the borrower by determining his or her Net Worth. Finally, the economy, national security, and unemployment rates are all Conditions that may affect a borrower’s ability to secure a loan.

In Irons – to head in the wind and refuse to fall off
Character evaluation is the single most difficult measure of a person’s ability to repay a loan. Has the person been bankrupt before, has their car ever been reposed, have they attended college, do they own a home? These are all questions, plus many others that a loan officer must use to determine if a person is of good character for a loan consideration. In my opinion character must be developed at a rather young age, and rarely develops past the stage of pre-pubescence. When morals, ethics, and values are instilled in a child, he or she will have the ability to make the tougher choices when they are older.

Waterline -the line along the hull at which a boat floats.
Capacity to repay a loan is the second factor in a loan evaluation. How much does the borrower owe, own, and earn? This is one of the problems associated with today’s housing crisis. In the October 13th 2008 issue of Time Magazine Niall Ferguson wrote “when families and banks tip into bankruptcy, more assets get dumped on the market driving prices down further and necessitating more deleveraging This process now has so much momentum that even $ 700 billion in taxpayer money may not suffice to stop it.”
So with our current figure of bailout dept reaching a trillion how can we expect to stay afloat?
Ferguson stated the cause “Much of the increase in debt was used to invest in real estate. The result was a bubble….as bubbles always do- it bursts” All of the mortgage telemarketers, Di-Tech commercials and snail mail loan offers in the world will not fix the storm that we have created for ourselves. How will the government fix it, sorry to tell you but they can’t. We have to start thinking a little more for ourselves before taking that “Live Now Pay Later” refinance deal that in some cases have place the value of the principle mortgage more than the home is worth. Why are some people sinking in this mortgage crisis, they have consumed so much that their boats waterline is now below sea level.

True Wind -the direction and speed of the wind felt when stationary, at anchor or on land.
Capital has been for years been based upon the value of one’s home, as collateral. Today though, one’s net worth is really based upon liquid assets, stock, bonds, and securities. It is for that reason that the credit market has been frozen, and yes beginning to thaw these past few months. With a dead housing market, diminished holdings no wonder we have seen so many commercials concerning selling and buying of gold. After all it is really the only stable capital .

Jibing – changing direction with the wind aft; to change from one tack to another by turning the stern through the wind; also spelled gibing.
Conditions have affected the credit market for the last few months and will continue to in the long run. Our current state, we are at war on at least two fronts, we are in the biggest economic recession since the depression, our invest securities market is less than half the value that it was last year, we are bleeding millions of jobs. Today Jeannine Aversa, an AP Economics Writer quoted Federal Reserve Chairman Ben Bernanke “Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Bernanke told the Senate Banking Committee. So just when the wind picks up, the seas are getting a little rough, the sails are trimmed and we have a new helmsman, gibe ho. Lets hope for the best. By way the markets did go up based Bernanke’s comments.

So what is the most important thing to remember about the 4 C’s of creditConcerning Consumer Credit- Common Sense

Resources
1. JoAnn & Jim Carland (2005) Catching the American Dream: New Venture Growth video series.

2. Fox, Elizabeth. “BASIC SAILING: Sailing Terms.” 1997. Rutgers University School of Communication

3. Ferguson , Niall. “The End of Prosperity.” Time Magazine 13 Oct 2008: 36-39.

4. Jeannine Aversa . “Bernanke: economy suffering ’severe contraction’.” Associated Press Tue Feb 24, 4:59 pm ET 24 Feb 2009

5. Rosland Capital Commercial

Extreme Makeover- the E-commerce Edition

Posted in Entrepreneur by ftiess on the February 14th, 2009

Goooood Morning Sears Family

Are the typical brick and mortar Sears storefront and iconic images of past Wishbooks are being replaced by the “softer side” of commerce? When thinking of an adaptation in commerce I was reminded of the success of Sears.

Past and Present
Sears Roebuck, in business since 1887, started as a catalog company offering jewelry adapted to market needs during the roaring twenties to open its first store in 1925. Through the depression and several wars Sears continued to grow because of its commitment to expand its brands and marketing efforts. Ten years ago Sears ventured into e-commerce by developing Sears.com. The current marketing program features a sponsorship of Ty Pennington’s Extreme Makeover Home Edition.

After over a hundred years of growth, decline, growth, and now again decline businesses, like Sears are reaching reluctant shoppers through on-line point of sale and store pickup transactions, an advantage over on-line only retailers.

Sears has several marketing advantages over other on-line retailers like Amazon.com and Overstock.com. With over 3800 stores and a annual revenue exceeding 50 billion dollars Sears is physically accessible to most Americans. Unlike e-commerce retailers that only sell on-line, retailers that have adopted the best practices of an on-line format, like Sears can capture and complete transactions within an hour as opposed to days. The customer can also return the product without the cost of shipping the item back.

The Shopper

Since on-line shoppers are researching products more and more, before venturing into a store the reassurance that a high ticket product is accessibly tactile is becoming more important. In this baby boomers perspective companies like Amazon and Overstock are located some where in cyberspace, I know they are out there, yet I can not see it. Therefore I must have faith that they will complete a transaction based upon a perceived reality of existence. I need to do the on-line research work to get the best price, and to actually see if the product is for me I need to visit a showroom, I am a tactile shopper, not a very efficient way of shopping.

What will the future hold for e-commerce?

Recently Mukesh Chatter, President and CEO of NeoSaej discussed the future of e-commerce with radio host Larry Webber, of Market Edge.

Future of ECommerce

Mukesh Chatter, President and CEO of NeoSaej, discusses the future of ecommerce, and MoneyAisle, a next generation online auction marketplace where consumers find great rates on bank CDs and High Yield Savings accounts.


Show Host:
Larry Weber

Show: Market Edge


Channel: Internet Marketing



In a two words the future of e-commerce for a successful retailer is competitive efficiency. The disintermediation in the cost of advertisement will reduce the overall competitive cost to the consumer. Variations in retail prices has become an individualized commodity market for e-commerce participants, therefore both seller and buyer compete for the best selling price. In a traditional commodity market buyers compete for a price. Chatter has developed a technology called SAEG- seller automated engines which permits a reverse auction of sale. Simply stating the future of e-commerce will be as simple as “googleing” for a product and then the retailer “bids” on the lowest price. Retailers will become aggregators of our personalized “Wishbook”, collecting data to optimize the sale.
E-commerce is about to have an Extreme Makeover.

Move that BUS!!!

Resources – Sears.com , webmasterradio.com

A Diamond in the Rough – Purchasing an existing business

Posted in Entrepreneur, Hospitality by ftiess on the February 1st, 2009

Source Flickr

Have you ever walked in a business and wondered why it was not busy. You notice that the design and concept are unique, that the product and or service is interesting, but still customers simply walk on by. Perhaps it is a great concept that is sustainable through any given market fluctuation, but where is the return. Maybe you have found a diamond in the rough.

Be careful of what you are getting yourself into, assess the liability of the business.

Should you desire to purchase a business like this you really have three options. First option- recreate what you like about that venture in a market that will sustain it. The second option is to offer that owner the opportunity to turn the business over to you by purchasing the business as a going concern, if it is a corporation, or purchasing the business as a collection of assets, continuing the business as it transfers to you in a sale. The third option requires a little more tact and risk, waiting for the business to fail or for the owner to give up. In this case, you could purchase the assets of the business for your own startup. The transfer of sale for the second option really depends upon the type of ownership that the venture is engaged in. Purchasing the business as a corporate “going concern” brings an assumption of liability risk because the liability transfers to the new owners just as the physical property and assets do.

What is the value of the concept, intellectual property or distinctive competency?

Many factors are involved in the valuation of a business for resale. Assessment of physical property is the easy part of this equation. Appraising the value of the business’s life or “Good Will” is a more difficult task. But even more difficult is appraising the value of the intangible assets like territorial rights, franchise agreements, and exclusive permits of defined services.

During the period of due diligence an inquiry is made and values are established to allow both parties the time to determine the value of the tangible and intangible assets. A third party should be contracted to perform a physical inventory
of all physical assets for the transfer. Real estate representatives can provide an opinion of the real property value and certified public accountants can justify the set value at the time of transfer in relation to the flow of goods.

Good will is really the perceived value of the sellers collective work based upon the sustainability of potential earning beyond the point of transfer. In some cases like the acquisition of an independent pharmacy the good will value is placed on the transfer of each prescription from seller to buyer. The value of that business is not in the inventory,it is in the potential sales of those prescriptions. Based upon a passed personal experience the number of prescriptions held by a pharmacy owner may cause the resale value to be assessed in the millions for an inventory of less than half a million.
The valuation of “Good Will” may also account for the value of a human asset, and in some cases an agreement may be contingent upon the continuation of employment by valued employees within the business. Let look at the pharmacy again, the pharmacist may have served his or her clients for many years, there is a certain trust in that relationship, and therefore an agreement may be reached with the pharmacist, in order to capture the patronage of those clients. Perhaps the pharmacy owner will need to sign a non-compete clause to ensure that the customers stay with the business as opposed to the another business.

Whatever the reason for the sale someone believes that they, owner or buyer, can benefit more from the sale more than the other person. Hopefully both sides, buyer and seller, feel that way. The seller may feel that his or her maximum potential has been achieved. The buyer recognizes that the business has potential to return his or her investment. The buyer may even see a hidden asset that the seller does not, and for that reason purchase the business.
One person sees a lump of coal , the other sees what is inside of the coal.

Source Inmagine

Resources – Youtube, exclusiverights.net, flickr, entrepreneur.com, RGIS, ezinearticles.com

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