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Thursday, 25 October 2012 08:13
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One of the biggest costs to small and medium sized businesses is employee wages and salaries. For business owners there is a need to limit expenditure on staff, yet there’s also a need to attract the right people with the necessary skills and retain them. To achieve this, remuneration decisions should reflect the strategic aims of the business.

When business owners determine salaries, the figure is often based on legal pay expectations, market comparisons and knowing what it’s necessary to pay in order to keep an employee motivated and committed to the objectives of the business.

Employees clearly want as much money as possible based on their skills and experience, their past performance and their time with your business. They want additional rewards for exceptional performance, a package that enables them to live a decent lifestyle and a
salary or wage that’s comparable to that of their colleagues.

There are many factors that business owners need to take into account when devising remuneration strategies. Get it right and your business will pay a fair rate to achieve your business outcomes. You’ll also have motivated employees who’ll feel they’re being appropriately rewarded for their contribution to the business goals.

The Dilemma

Giving new employees salaries that they command because they know you are desperate to fill a gap or giving existing employees pay increases because they say they are leaving are not the most strategic of approaches to manage wage and salaries within your business. If you don’t take a considered approach you may find that your salary outgoings each month are not aligned with the prices of the products and services you offer – meaning that either you have to up your prices or lose staff to cover costs, neither of which may seem enticing outcomes.

The Key Benefit

By establishing a pay structure that is aligned with your business objectives and which addresses the needs of the employees within your business, you will gain control of your salary commitments whilst keeping your employees happy.

Negotiating the Remuneration Package

Employees want more, there is no doubt about it, but having a higher salary than your competitors does not necessarily mean you will always attract the best employees.

Employees want flexible working options, increased training opportunities, a positive working environment and equity – they want to know that they are getting rewarded for their input and know that how their performance is measured is fair.

Variable Pay Programmes

Variable pay programmes base a proportion of an employee’s pay on their individual performance and/or the performance of the business. High achieving employees tend to like this option as they can enjoy attaining rewards for their high performance. Of course, it is not so popular with the poor performers who may not receive the same rewards. When pay is tied to performance, employee’s recognise it as a contribution rather than an entitlement.

Variable pay programmes include merit based pay, bonuses and profit sharing plans.

Flexible Benefits

This option is about developing a benefits package based on the individual situations of each employee. A major plus of personalised programmes is that they show you care about each employees needs and it helps to retain the employees due to the benefits provided. For example:

James is 22 years, very sporty and he wants to take over the world and be paid extremely well compared to his friends – for James ‘flexible benefits’ appropriate to him may be ongoing training and gym membership. A useful tip for Gen-Y’s – tell them the total cost of their remuneration package i.e. salary = $45,000; annual gym membership $1050; annual training $3000 – total: $4,9050. Gen-Y’s seem to love focusing on the higher figure and feel more valued.

Malcolm is married, has three children and his wife is at home full time. Priorities for him in terms of ‘flexible benefits’ may be life and medical insurance.

Many companies over modular approaches, combining core benefits and flexible options, which help to keep the process manageable.

Intrinsic Rewards

Over and over again, studies have demonstrated that employees want to be recognised for their successes and great performance, be this via a private thank you note or even publically at the weekly team meeting. Even better, praise is a free way to make your employees feel good and want to maintain high performance.

Think about what you can do to reward and recognise your employees. Is your remuneration as good as it could be? What methods could you introduce to help you better manage and monitor the wages and salaries and retain your best performers?

Thursday, 25 October 2012 06:37
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Entrepreneurs want early capital for their business with no equity in return. Most sources scoff at this idea, whether it’s an investor, grant or business plan competition. Not Arch Grants. They’re awarding $1 Million in early-stage capital to startups with no equity in return. So what’s the catch? A commitment to St. Louis.

Arch Grants is announcing today their 2nd Annal Global Startup Competition. The St. Louis-based non-profit is giving startups around the globe the chance to get $50,000 each to help build their companies. Applicants need to demonstrate innovation in product or service and scalability, can be from anywhere in the world and in any for-profit industry. Winners must move to St. Louis or remain here.

As part of its mission is to create the entrepreneurial culture and infrastructure to build successful companies in St. Louis, Arch Grants gave 15 companies $50,000 each to help grow the city’s startup ecosystem, and it has been a huge success. Startups moved from as far as Chile, Costa Rica, and Portugal to establish their businesses in St. Louis. Momentum is growing in St. Louis as an entrepreneurial-friendly city. Kiplinger’s named St. Louis one of the Top 10 Entrepreneurial Cities in the country and in 2011, Missouri was ranked sixth in the Kauffman Foundation’s annual index of entrepreneurial activity.

Backed by city and financial leaders committed to continue to strengthen St. Louis as an innovation hub, the 2013 Arch Grants competition is expected to bring even more innovation and entrepreneurs to the area. The organization is unveiling the competition at the annual StartUp Connection tonight in St. Louis. Applications can be submitted on the Arch Grants’ website.


Thursday, 25 October 2012 04:03
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The United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups.

Earlier this month, Leon Panetta, the Secretary of Defense of the United States, stood aboard the vessel that is the Intrepid Sea, Air, and Space Museum in New York City, and warned the audience of what he feared might become the next "cyber Pearl Harbor." Panetta's cyberdoomsday scenario hinted at a possible contamination of water supplies or shutdowns of U.S. power grids with clandestine hackers around the world having the ability to wreak havoc on our everyday lives.

"The most destructive scenarios involve cyber actors launching several attacks on our critical infrastructure at one time, in combination with a physical attack on our country," he said. "Attackers could also seek to disable or degrade critical military systems and communication networks."

Sure, plenty of critics did a collective eye-roll at Panetta's speech. But new statistics illuminate a sobering recent escalation of cyberattacks.

According to a recent McAfee poll of 200 IT executives, 80 percent have faced a large-scale denial of service attack (known often as DDoS) in the past year. Examples abound: On August 15, for instance, Saudi Arabia's state-owned oil company, Aramco, came under cyberattack. A hacker unleashed a virus that eviscerated data on about three-quarters of Aramco's corporate PCs, according to The New York Times. And earlier this week, the threat landed closer to home; Barnes and Noble announced its PIN pads had been hacked in store locations in nine states.

Kevin G. Coleman, a strategic cyberwarfare advisor and the author of The Cyber Commander's eHandbook: The Weaponry & Strategies of Digital Conflict, believes the United States could be on the bring of all-out cyberwarfare. "I think we're extremely vulnerable," he says.

The United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups.

So in an effort to protect both public and private infrastructures from cyberattacks, the United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups. In April, The Washington Post reported that, through the U.S. Cyber Command, the Pentagon was issuing a new type of "rapid plan," in which weapons could be "financed through the use of operational funds, in 'days to months,' and some steps that ordinarily would be required would be eliminated."

Unfortunately, much of that information is classified, says Coleman. After all, government-funded cyberweaponry is a notoriously secretive operation within the Department of Defense.

"There are a lot of labs that don't publish what they're working on and it's kind of like 'black funding,'" says Coleman.

In 2010, policy makers drafted legislation that would become the Homeland Security Cyber and Physical Infrastructure Protection Act. With the new legislation came an increase in federal spending, too. According to Deltek, a national research firm that focuses on federal contracting, government spending on cybersecurity could increase 40% to $14 billion by 2016.

But perhaps the government's boldest initiative was its creation of the U.S. Cyber Command, a branch of the Army based out of Fort Meade, Maryland. Part of the U.S. Cyber Command's mission is to expand the capabilities of the Department of Defense by contracting with civilian enterprises that focus on cybersecurity. In turn, the area around Fort Meade has become an unlikely hub for innovative cybersecurity start-ups, many of them clustering around incubator programs designed to act as feeders into government contracts.

The area around Fort Meade has become an unlikely hub for innovative cybersecurity start-ups, many of them clustering around incubator programs designed to act as feeders into government contracts.

In 2011, the University of Maryland, Baltimore County opened its Advantage Incubator, Maryland's first incubator dedicated to cybersecurity technologies and companies. Its inaugural class had 16 companies.

Some of those start-ups include KoolSpan, a mobile-security-encryption start-up, and Rogue Networks, a start-up that develops software for cybersecurity problems. To streamline these company's work, the incubator program at UMBC is also sponsored by Northrop Grumman, the giant U.S. defense contractor. That sponsorship, titled the Cync program, has already paid off: earlier this year, Rogue Networks earned Defense Advanced Research Projects Agency Fast Track award.

The start-ups are building a variety of tools that will help the government be better equipped to handle cyberattacks. Peter Coddington, the founder of PaRaBaL, a 14-person start-up based in the UMBC incubator facility, has built a plaform that provides mobile device security training to members of the government.

"We got our start with the government," he says. "The government is leading the charge; corporate America is way behind."

Another start-up in the incubator, Oculis Labs, has built software that jumbles whatever is on a user's screen when someone is looking over his or her shoulder. Bill Anderson, the company's founder and CEO, says the military uses the software for a variety of applications.

"You could have a special operator out in the hills of Afghanistan, and he's allowed to look at that," Anderson says. "The trouble is, the local liason and the translator, they don't have a right to see that information. The problem we have to solve is how do we deliver important stuff to the guy in the field when he's in a non-ideal situaton where someone else could get a look."

Anderson also says that being in Maryland helped Oculis Labs scale in the early phase of the company's growth cycle.

"Being here next to the NSA and not far from the DOD and intel space has been crucial to us because we've been able to have conversations and draw on expertise about government," he says. But with government comes bureaucracy.

"It's a different conversation, and it's a different pace," he says.

Anderson's frustration with the pace of the federal procurement process is echoed by several industry experts, as well as by the Pentagon itself.

"The U.S. government does not take sufficient advantage of innovative technology except, possibly, within 'black' budgets," wrote Daniel Greer, Jr., in Center for a New American Security, in June 2011. "The U.S. government is missing a river of innovative technology, and it is both broad and deep. No one technology missed is a crisis, but in the aggregate, the U.S. goverment is falling behind in what it could do and what it is expected to do to protect the nation from cybersecurity threats."



Thursday, 25 October 2012 04:03
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The United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups.

Earlier this month, Leon Panetta, the Secretary of Defense of the United States, stood aboard the vessel that is the Intrepid Sea, Air, and Space Museum in New York City, and warned the audience of what he feared might become the next "cyber Pearl Harbor." Panetta's cyberdoomsday scenario hinted at a possible contamination of water supplies or shutdowns of U.S. power grids with clandestine hackers around the world having the ability to wreak havoc on our everyday lives.

"The most destructive scenarios involve cyber actors launching several attacks on our critical infrastructure at one time, in combination with a physical attack on our country," he said. "Attackers could also seek to disable or degrade critical military systems and communication networks."

Sure, plenty of critics did a collective eye-roll at Panetta's speech. But new statistics illuminate a sobering recent escalation of cyberattacks.

According to a recent McAfee poll of 200 IT executives, 80 percent have faced a large-scale denial of service attack (known often as DDoS) in the past year. Examples abound: On August 15, for instance, Saudi Arabia's state-owned oil company, Aramco, came under cyberattack. A hacker unleashed a virus that eviscerated data on about three-quarters of Aramco's corporate PCs, according to The New York Times. And earlier this week, the threat landed closer to home; Barnes and Noble announced its PIN pads had been hacked in store locations in nine states.

Kevin G. Coleman, a strategic cyberwarfare advisor and the author of The Cyber Commander's eHandbook: The Weaponry & Strategies of Digital Conflict, believes the United States could be on the bring of all-out cyberwarfare. "I think we're extremely vulnerable," he says.

The United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups.

So in an effort to protect both public and private infrastructures from cyberattacks, the United States has essentially doubled-down on its cyberdefense spending--and much that funding is fueling the next generation of cybersecurity start-ups. In April, The Washington Post reported that, through the U.S. Cyber Command, the Pentagon was issuing a new type of "rapid plan," in which weapons could be "financed through the use of operational funds, in 'days to months,' and some steps that ordinarily would be required would be eliminated."

Unfortunately, much of that information is classified, says Coleman. After all, government-funded cyberweaponry is a notoriously secretive operation within the Department of Defense.

"There are a lot of labs that don't publish what they're working on and it's kind of like 'black funding,'" says Coleman.

In 2010, policy makers drafted legislation that would become the Homeland Security Cyber and Physical Infrastructure Protection Act. With the new legislation came an increase in federal spending, too. According to Deltek, a national research firm that focuses on federal contracting, government spending on cybersecurity could increase 40% to $14 billion by 2016.

But perhaps the government's boldest initiative was its creation of the U.S. Cyber Command, a branch of the Army based out of Fort Meade, Maryland. Part of the U.S. Cyber Command's mission is to expand the capabilities of the Department of Defense by contracting with civilian enterprises that focus on cybersecurity. In turn, the area around Fort Meade has become an unlikely hub for innovative cybersecurity start-ups, many of them clustering around incubator programs designed to act as feeders into government contracts.

The area around Fort Meade has become an unlikely hub for innovative cybersecurity start-ups, many of them clustering around incubator programs designed to act as feeders into government contracts.

In 2011, the University of Maryland, Baltimore County opened its Advantage Incubator, Maryland's first incubator dedicated to cybersecurity technologies and companies. Its inaugural class had 16 companies.

Some of those start-ups include KoolSpan, a mobile-security-encryption start-up, and Rogue Networks, a start-up that develops software for cybersecurity problems. To streamline these company's work, the incubator program at UMBC is also sponsored by Northrop Grumman, the giant U.S. defense contractor. That sponsorship, titled the Cync program, has already paid off: earlier this year, Rogue Networks earned Defense Advanced Research Projects Agency Fast Track award.

The start-ups are building a variety of tools that will help the government be better equipped to handle cyberattacks. Peter Coddington, the founder of PaRaBaL, a 14-person start-up based in the UMBC incubator facility, has built a plaform that provides mobile device security training to members of the government.

"We got our start with the government," he says. "The government is leading the charge; corporate America is way behind."

Another start-up in the incubator, Oculis Labs, has built software that jumbles whatever is on a user's screen when someone is looking over his or her shoulder. Bill Anderson, the company's founder and CEO, says the military uses the software for a variety of applications.

"You could have a special operator out in the hills of Afghanistan, and he's allowed to look at that," Anderson says. "The trouble is, the local liason and the translator, they don't have a right to see that information. The problem we have to solve is how do we deliver important stuff to the guy in the field when he's in a non-ideal situaton where someone else could get a look."

Anderson also says that being in Maryland helped Oculis Labs scale in the early phase of the company's growth cycle.

"Being here next to the NSA and not far from the DOD and intel space has been crucial to us because we've been able to have conversations and draw on expertise about government," he says. But with government comes bureaucracy.

"It's a different conversation, and it's a different pace," he says.

Anderson's frustration with the pace of the federal procurement process is echoed by several industry experts, as well as by the Pentagon itself.

"The U.S. government does not take sufficient advantage of innovative technology except, possibly, within 'black' budgets," wrote Daniel Greer, Jr., in Center for a New American Security, in June 2011. "The U.S. government is missing a river of innovative technology, and it is both broad and deep. No one technology missed is a crisis, but in the aggregate, the U.S. goverment is falling behind in what it could do and what it is expected to do to protect the nation from cybersecurity threats."



Thursday, 25 October 2012 03:00
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Premium underwear retailer Flint and Tinder just raised $850,000 of venture funding. Find out why venture capitalists are dropping their drawers over this start-up?

Flint and Tinder, an upstart men's underwear brand, just raised $850,000 of venture capital from an impressive list of investors, including Tony Hseih and Fred Mossler from Zappos, Lerer Ventures, and David Tisch, formerly of TechStars. Flint and Tinder made news earlier this year when it raised $291,493 on Kickstarter, after originally targeting $30,000.

Venture capital is most commonly associated with tech start-ups, especially Internet-based businesses. At first blush, it's surprising that VCs would be interested in funding an underwear brand. But this deal highlights some of the biggest myths of venture capital. Venture capitalists, like any investors, are not looking for sexy or trendy business models. They are focused on making money. And making money is primarily about limiting downside risk and maximizing upside option value. In this context, Flint and Tinder is an attractive start-up.

Here are three reasons why these VCs invested in an underwear brand:

1. It's a Proven Business Model

Underwear has been around for, oh, around 7,000 years. Men need it, use it, and will pay for it. Internet start-ups are often the opposite. Many businesses are created without certainty that there's a customer segment willing to pay for the product or service. Some Internet start-ups don't even have a clear revenue model, and it's possible that they never will. This uncertainty has a major effect on valuation and the ability to attract funding. A business like men's underwear, on the other hand, is fairly certain. An analyst can look at historical trends around supply, demand, and willingness to pay for various features. All of these data points give an investor assurance that the product will sell. Maybe not for the premium price that Flint and Tinder is hoping for, but enough to ensure that the investors will get a return on capital.

2. It's Low Risk

Venture capitalists have developed a reputation as risk takers, but most are successful by limiting their downside risk. In this case, investors understand that there are many backstops if the business turns out to be less successful than everyone expects. Our firm, Avondale, recently invested in an ice cream company. We joke that if the business doesn't pan out, at least we can throw a big ice cream party. In Flint and Tinder's case, the investors know they can unload unsold inventory at lower prices or potentially sell the inventory to discounters if necessary. This should provide some downside protection.

3. It Has a Lot of Profit Potential

Flint and Tinder's competitors in the premium underwear segment, including Calvin Klein, Armani, and Ralph Lauren, are selling underwear for around $19 a pair. Even though Flint and Tinder intends to manufacture in the U.S., with higher labor costs than developing countries, we have to believe that the production cost is a small fraction of that price. They hope to garner a price within the same ballpark as the premium brands, but if they don't, they have a lot of room for error, while still earning a healthy profit.

In the final analysis, this business received funding because it meets the fundamental requirement of investors: a high probability of return with low downside risk. When you build a good business model, investors are happy to fund it.

What are your thoughts on this VC deal? Share your thoughts and questions with us at karlandbill@avondalestrategicpartners.com.



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