Herbert’s start in business was anything but smooth. The son of a prominent inventor and engineer Herbert followed in his father’s footsteps as a young inventor himself. After graduating fromCaseUniversitywith a degree in Chemical Engineering, Herbert set up his first company to experiment in finding new and better ways of extracting Bromide from the brine water found underground in Canton Ohio and Midland Michigan. Unfortunately for Herbert and his investors, his first try at running his own chemical company didn’t fare well. Slightly more than a year after opening, Herbert was forced to go bankrupt. All was not lost. His associates who worked with him were so impressed with his work that they provided capital and help him start a new company, Midland Chemical, in Midland Michigan. Alas, even his new partners grew wiry of all of his research which produced only a thimble full of revenue. Failing to turn out saleable products and create meaningful revenue, his partners decided to change course and fired him. Herbert wasn’t discouraged. He knew his research would one day pay big dividends. 

Returning toOhio, he gave building a chemical company another try. With the backing of family and old college friends, Herbert Henry Dow found success with his third company, The Dow Process Company. This time his process for extracting chemicals from brine water was getting results. Within three years of founding his third company they were profitable. Dow returned to Midland Michigan with the renamed Dow Chemical Company and bought his old business, Midland Chemical. Midlands’s factory was sitting on top of vast rich deposits of brine, giving Dow access to the valuable highly concentrated brine.

Dow’s research and patents were paying off. The Dow Process for removing multiple chemicals from brine was allowing Dow the ability to manufacture and sell bromide cheaper than the cartel controlled supplies.  Up to that time the Germans controlled a cartel and had a government supported monopoly on the sale and production of Bromide. Dow’s new method was now threatening the German stranglehold on the worldwide market.  Dow’s process was underselling the cartel in Europe and the United States.  Not able to convince Dow to raise prices, the Germans were determined to force Herbert out of the business all together.

Their plan was simple. Lower the price of Bromide shipped to the United States until it was unprofitable for Dow to compete. Unfortunately for the cartel, Dow was quick on his feet. As the price of Bromide shipped into the United States slipped below Dow’s manufacturing costs he ordered his agents to quietly buy up all of the German Bromide they could get their hands on. The lower the price dropped the more Dow was buying. Dow didn’t hold on to the Bromide for very long. As fast as the imports came in, Dow Chemical would repackaged it and ship it back to the German market.  Dow was now competing with the Germans in Europe by selling their own product back to them at a substantial profit to Dow. At first the Germans couldn’t understand what was driving the huge demand of Bromide in the states. They also couldn’t find out who was selling cheap Bromide in Europe. They incorrectly accused members of their own cartel of violating the set fixed price of Bromide.

 It was some time before the cartel realized that the cheap Bromide flooding Germany was their very own product which they had shipped to the United States. Dow had single handedly broken the cartel and made a handsome profit in doing so. 

 - 

Stephen K. Troy 

Author – Business Biographies

When gold was discovered at Sutter’s Mill in the winter of 1848, John Sutter the proprietor and founder of Sutter’s fort did everything in his power to keep the news quiet. Gold was discovered at Sutter’s Mill by John Marshall. Sutter had partnered with Marshall to build a saw mill on the south side of the American River. While excavating   Marshall turned up large flakes of gold and quickly ran back to the fort to inform Sutter. Both agreed that if word got out about the discovery before they could secure title to the rest of the land miners would flood the area and disrupt Sutter’s plans for construction and farming.   

Those plans were dashed when a Mormon newspaperman and dry goods merchant named Samuel Brannan got wind of the discovery. Brannon was an early convert of Mormonism and a protégé of Joseph Smith and leader of the Mormon Church in New York before traveling to San Francisco in 1846.

Brannan had apprenticed as a printer and by some accounts, became a Mormon for the sole purpose of becoming the publisher of The Prophet, the Mormon newsletter. After the death of Joseph Smith in 1844 leaders of the church directed Brannan to lead 240 people west, travelling by sea.    At the same time, Brigham Young lead the remaining followers west to California by land.  Brannan and pilgrims boarded the ship Brooklyn leaving New York in February 1846 for a six month journey which would take them around Cape Horn.  The first stop was in Honolulu. It took a while longer before Brannan and the others would finally disembark at the Mexican Port town of Buena Vista, known today as San Francisco.

The arrival of Brannan and the 240 Mormon settlers tripled the population of this small Mexican city on the bay. Brannan was charged with setting up the first Mormon outpost in this new city. He eventually established a religious settlement to the east along the American River on what they would call Mormon Island.  An ambitious Brannan lost no time building a flour mill on the island, along with the first English speaking newspaper in San Francisco.  The California Star utilized a Franklyn printing press and the flour mill he had brought from New York. He then, along with the others, waited for the arrival of Brigham Young to California by land.

As Brigham Young and his 15,000 followers got ever closer to California in early 1847, Brannan rode out to meet him at Green River, Wyoming, with the idea of convincing Young to settle in San Francisco. Young however dismissed the idea of going to California, deciding instead to turn south to a desolate area of Utah where he would establish a settlement near the Great Salt Lake. Young feared that the abundant fertile land of California would eventually attract too many settlers to the area, again disrupting his followers, forcing them to move once again.

Brannan returned to San Francisco and opened what would be his first dry goods store. A year later in 1848 Brannan noticed that employees, many who were Mormon were coming into his store paying for supplies with gold. Curious and representing the church Brannan traveled out to Sutter’s Mill to see firsthand where the gold was coming from.

After seeing firsthand his Mormon followers finding as much as $250 in gold a day, Brannan ordered his Mormon followers to pay him, as head of the Mormon Church, a ten percent tithing on all of the gold they found in the ground. The extra gold Brannan received was spent buying up every shovel, pick, pan, horse, mule and other mining supplies he could find in California. He also opened additional stores in Sacramento and at Sutter’s Fort. When he was convinced he had secured every available item he filled a quinine bottle with gold dust extracted from the American River and traveled back to San Francisco. As Brannan stepped off the Ferry he waived the bottle in the air and run through the streets yelling “Gold, Gold, Gold from the American River”. Brannan himself had to print the news of the gold find in his own paper, since even his employees had abandoned their jobs heading to the mountains with gold fever.

The price of mining supplies increased a hundred fold or more. By 1849 most of his dry goods stores were doing well over $5,000 each a day, (equivalent to $125,000 in today’s dollars). Brannan was on his way to becoming the richest man in California. Brannan used his new found wealth to buy large tracks of land throughout California and Hawaii. At one point becoming San Francisco’s largest land owner, owning twenty percent of all available land in the city. He owned a like amount in Sacramento.

It wasn’t long before Brannan received a message from Brigham Young asking for the churches money. As Brigham Young saw it, Brannan had use Church money to enrich himself and the money rightfully belonged to the Lord. Brannan is reported to have responded back to Young saying, “I’ll give up the lord’s money, as soon as he sends me a signed receipt by the lord.” Brannan was shortly thereafter excommunicated from the church.

Brannan continued to invest and spend his vast new wealth on banks, railroads, telegraph companies and even establishing towns. When Brannan visited the hot springs in upper Napa valley he bought the 2,000 surrounding acres to build a resort. He announced that he was going to build the famous New York Saratoga Springs right here in California. In his excitement instead of saying I will make this the Saratoga of California he mistakenly utters I will make this the Calistoga Sarifornia. Thus he created the town of Calistoga.

Brannan abandoned his Mormon roots rather quickly after being thrown out of the church. Gambling, womanizing, and drinking he got into many drunken brawls. In one with his employees he was shot eight times. Although he nearly bled to death,  he did manage to survive. It was the last straw for Ann Eliza Brannan, his wife of twenty five years. Filing for divorce in 1870 the court awarded her half of her husband’s fortune payable in cash. Since most of Brannan’s wealth was tied up in real estate and other property Brannan was forced to liquidate his holdings at a low point in the California economy.

Although both left the marriage millionaires Brannan keep gambling his wealth in unprofitable ventures trying to ignite is old glory days in business. By 1887 Brannan was a broken man living in Arizona and selling pencils trying to earn enough money to travel back to San Francisco. Brannan died in 1889 while living on a fruit farm just outside of San Diego, California, leaving just a few dollars to each of his children.

 - 

Stephen K. Troy 

Author – Business Biographies

One name absent from almost everyone’s list was Hetty Green. Hetty was well known by her male peers as “The Witch of Wall Street.” She was a miserly woman who dared to play in an all male game. In fact her large cash war chest and cunning brought many of these same men close to financial ruin. Hetty’s knack for figures and her keen eye helped her build a fortune estimated at over $100,000,000 ($2 billion in today’s dollars). Her estate was almost double that of the great financer, JP Morgan. Hetty loaned money, several times bailing out New York City with million dollar loans, controlled railroads (enabling her to rob the robber barons), invested in Real Estate as far away as Texas and of course manipulated stocks and bonds.

Hetty was different than the famous families of the gilded age. Hetty got her enjoyment from making and saving money, not spending it. She wore plain black dresses until they wore out, used carriages until they fell apart, and moved regularly to keep the local taxman at bay.  At one point she brought her only son Ned to a free clinic for treatment of a leg infection and herself suffered in pain for years due to a hernia, because she refused to spend the $150 for an operation.

As frugal and conservative as Hetty was, her son was not. Shortly before Hetty’s death in 1916, Ned moved to Texas to manage the family properties. To Hetty’s disapproval Ned returned with an ex-prostitute who he employed as his housekeeper, before eventually marrying her.  Ned’s inheritance after his mother’s death would eventually allow him and his new bride to live the lifestyle of the rich. Even Ned’s spendthrift ways couldn’t deplete Hettys legacy. Upon his death Ned’s $100,000,000 inheritance passed to his sister Sylvia. Sylvia died in 1951, still with the original $100,000,000 Hetty had left behind. This time the taxman would be the big beneficiary of Hetty’s money, taking over half. The balance was left to 64 different charities, thus closing the last chapter in the life of the richest woman in the world.

Article source: http://www.aerofund.com/blog/index.php/2011/09/witch-wall-street/

The most common cash flow problem occurs because customers exceed their credit terms and take longer to pay. Companies routinely give customers 30 days to pay their bills, but due to economic conditions, some clients may stretch their payment terms to 60 days. If a company has to wait almost two months to receive payment for invoices, it needs to find funds to meet current expenses. Usually, these payments are generated from reserves which are replenished by paid invoices. Problems start when reserves dwindle as expenses mount.

Two ways exist to protect reserves. One approach is to delay the company’s expenses until they match the payment cycle of the business’s customers. The other is to attempt to accelerate customer payments. Ideally, both approaches should be taken to achieve the most optimal solution.

The most common way to delay expenses is to contact vendors and ask for extended terms. If your company has been a loyal and timely payer, your request should be granted. However, if you do renegotiate payment terms, assure that all future payments are made on time. Do not risk your vendor relationship or you may be forced to pay COD for your goods or look elsewhere for new vendors. Avoid missing payroll and payroll taxes. If these situations are imminent, seek the help of a qualified advisor.

There are two easy ways to accelerate the payment of invoices. Offer customers a discount to pay quickly. The “2%/10″ is an industry standard that allows customers to take a 2% discount if they pay an invoice within 10 days. If this approach is not sufficient to solve a cash flow shortage, consider the process of factoring. Invoice factoring accelerates your revenues by using a financial intermediary to advance funds against outstanding invoices. The factoring company quickly sends you a large percentage of an outstanding invoice and settles the transaction with your company once the customer has paid in full. The factoring fee is based on volume, credit quality, and invoice age among other variables.

Factoring is easier to obtain than conventional business receivable financing, but it is more costly. It is important that your company has quality receivables from credit worthy customers. Factoring can work well if a company has small cash reserves but large receivables, again from high quality customers.

Most cash flow shortages require a comprehensive strategy to manage both income and expenses to ensure liquidity. Factoring is a good tool which can help accomplish this goal.

Article source: http://www.aerofund.com/blog/index.php/2011/05/alleviate-cash-flow-shortage-invoice-factoring/

When looking at invoice factoring, consider it as outsourcing your company’s receivable’s collection. Invoice factoring works by allowing companies to sell their customer’s unpaid invoice to a financing company. In return, the financing company will extend credit based on the value of the invoice and the ability of the customer to pay that invoice. Companies secure the business credit they need, without the burden of having to wait for their customers to pay. This improves cash flow and allows the company to use the money to finance whatever business plans they have.

Integrating invoice factoring means your company must be in constant contact with the financing company in order to provide them with the necessary information relative to the customer’s ability to pay. Invoice factoring has become so popular amongst businesses today, that it’s essential to be available when the financing company needs input. To do their job efficiently means to have access to the type of information only your company can provide them with. Otherwise, the financing company will simply move on and work on other account. This means your company should provide them with a working phone number, email address and contact names in case they need vital information when collecting.

When looking to benefit from your relationship with a factoring company, be sure to be available when they need access to essential information. Integrating invoice factoring into your business is relatively simple, if and only if, you help the financing company help you. The service is an impactful way to finance a business and it’s those companies that work alongside the financing company that come out on top.

Article source: http://www.aerofund.com/blog/index.php/2011/04/integrate-invoice-factoring-business/

One of the more impactful forms of business financing in today’s economy is invoice factoring. Factoring programs allows small businesses to secure working capital through their existing assets. These assets are essentially the company’s receivables. Factoring companies allow small businesses to use the liquidity within these assets as collateral. As such, they provide small businesses with what amounts to an advance on the value of their customers’ unpaid invoices, allowing the small business to secure the financing they need to meet their debt obligations. Factoring companies can help small businesses with their 2011 taxes by sending advances on these invoices directly to the IRS. Or, if the small business prefers, the money can be provided to them directly. In essence, factoring plays a vital role in allowing small businesses to avoid costly penalties from the IRS.

Not only does invoice factoring help alleviate issues pertaining to tax bills, it also helps small businesses in terms of cash flow management and ultimately allows them to avoid having to finance their customers’ business. Because of the recent financial crisis, more and more companies are taking longer to pay invoices. The effects are felt throughout the economy as late payments force banks to raise interest rates. Higher cost of capital kills small business owners and having customers take too long to pay invoices does nothing other than to exacerbate the problem. However, invoice factoring provides small businesses with the capital they need to finance their operations. They can use this money to pay any late or incorrect tax filings, or can use the money to finance their day to day operations.

Article source: http://www.aerofund.com/blog/index.php/2011/04/factoring-small-businesses-pay-2011-taxes/

Article source: http://www.aerofund.com/blog/index.php/2011/04/entrepreneurs-factoring-tactic-recession/

How can you minimize such difficult scenarios? First, check the credit of a business who wants to purchase goods or services from you, before deciding to accept that business as a client. Then, implement a sound strategy for billing and handling late bills efficiently.

Companies such as Edgar Online and Equifax can provide important financial information. Knowing a company’s payment history can show you how that company pays other vendors…and how the company is likely to pay you.

Dealing with your invoices effectively can start with something as simple as sending a statement immediately after goods or services are delivered to a customer. Be consistent in your actions. It helps to have some sort of method, available in various software programs, of keeping track of the aging of your unpaid invoices. Is the invoice 30, 60, or 90 days past due? Take appropriate action regarding these aged invoices.

A courteous and calm phone call a few days after an invoice becomes overdue can help bring in some cash. Be polite and try to find out when the check will be sent.

If continued follow-ups by phone prove ineffective, consider invoice factoring. Typically, you can sell late invoices to a factoring company for a fee. This gives you some immediate cash flow while the factoring company awaits the customer’s payment. Fees can vary based on the payment history and credit worthiness of your client. If a client has too bad a credit history, the factoring company may refuse to purchase the invoice.

Article source: http://www.aerofund.com/blog/index.php/2011/03/how-to-manage-your-companies-accounts-receivable/

1. Survival of the Fittest. A recession can be viewed as proof of Darwin’s theory, as businesses without tight structure, excess capital, and plans for rainy days will inevitably fail, leaving those that remain the ability to expand among a much minimized pool of competition. To be the one on top, service oriented businesses would do well to strive for efficiency in fulfillment of their service. Product oriented companies will survive if they provide their buyers with the easiest system for purchase.

2. Effective human relations. Economic recessions bring an abundance of workers, but only the businesses with the best hiring practices will be able to take advantage of this increased labor pool. Businesses who are able to think long term with their hires, instead of simply hiring people to plug holes caused by the recession, are the businesses that will thrive after the recession abates.

3. Going virtual. Businesses able to streamline by taking advantage of virtual help have a definite leg up in a recession environment. Hiring virtual employees cuts down on operating costs drastically, as well as allows for greater expansion potential. Also, online meetings are by definition more efficient; it allows businesses to focus solely on getting the work done most cost efficiently without geography being a concern.

4. Brand management. Most businesses falter by trying to offer more and more in an environment of less and less. Customers in a recession are looking for efficiency, not endless add ons. The business that uses a recession to showcase the strength of its product or service niche is the business that will bounce back afterwards, with increased reputation to boot.

5. Necessity is the mother of partnership. Egos go out the window in a recession. Lean times allow for partnerships that would usually not occur, which can take the pressure off of all involved, giving much needed leverage to wait out the bad times.

As the economic recession has created quite the obstacle for businesses, we would love to hear how you, as a small business owner has managed to weather the economic storm.  Did any of the strategies stated above seem to work for you?  Feel free to post comments below.

Article source: http://www.aerofund.com/blog/index.php/2011/03/member-bbb-bounce-back-businesses/

Speaking at a promotional event at Cleveland State University, Obama’s visit follows on the heels of an exclusive private dinner last week. Steve Jobs, Mark Zuckerberg and Eric Schmidt were in attendance, among other huge US technology executives. Whether the President’s subsequent switch to playing to the needs of small business owners will be well-received is yet to be seen. His pro-education, pro-infrastructure, pro-research plans are intended to provide these small American companies with advantages that will boost them ahead of stiff foreign competition.

The Ohio visit was not an entirely solo affair, members of the administration accompanied the President. Tim Geithner, Treasury Secretary, along with other officials, led smaller sessions with the small business owners. Giethner spoke of different advantages the administration has promoted to help small businesses, including tax cuts and easy access to capital. Small Business Administrator Karen Mills talked about helping entrepreneurs, while the Commerce and Energy Secretaries also held specific sessions.

Obama did focus on the fact that it was harder for smaller firms to borrow money, a problem that has only compounded the plight of Ohio businesses. The state has been hit hard by the poor economy, with a 9.6% unemployment rate, higher than the Labor Department’s reported national average of 9%.

During the individually led sessions, Obama attended some, and it was announced that eight future round table meetings are in the works. As part of the Startup America Partnership campaign, these discussions in cities from Boston to Silicon Valley, California will provide entrepreneurs with a forum to discuss ways to make their work easier.

Ideally, these meetings and initiatives will all come together as large companies like Facebook, Hewlett-Packard Co. and IBM Corp. invest more in startups. If, as Obama claims, small businesses are the key players in the economy of the future, rerouting cash to them from larger industries should promote increased prosperity.

Article source: http://www.aerofund.com/blog/index.php/2011/03/according-to-obama-small-business-drives-us-economics/