After reading this article from www.entrepreneur.com, I thought about making an appointment with a local psychologist.  Perhaps I am a bit crazy-or maybe just an adrenaline junkie-but I am passionate about business start-ups. All of us at MBS are. If the motto of General Electric was “we bring good things to life, the MBS motto is “we love bringing new ideas to life.”

I don’t know if I feel comfortable having any aspect of my behavior described as “serial.” I suppose if the shoe fits, I should wear it…and then figure out a way to make a business from it!!

Along with almost everyone else I know who derives that special pleasure from starting up a new business, getting it running, and then moving on the next idea, I cannot think of going back to the predictable, the mundane, the rote and routine.

An elderly businessman I know in New York-who has the energy of a man half his age used to say, “if you look forward to Friday, you are a wage slave…if you look forward to Monday, you are probably an entrepreneur.”

It’s hard to quantify how much of their souls entrepreneurs offer up in exchange for bringing a company to life, but for most business owners, a one-time transaction is quite enough. Serial entrepreneurs, though, seem reluctant to stay on-board for the easy part, preferring to hand off the finished product and start over again.

A symptom of ADD? Major commitment issues? The real answer is simply this: Serial entrepreneurs love to start businesses, and they’re really, really good at it.

Stuart Skorman, 60, is in the middle of launching Clerkdogs.com, a concept that combines human intuition with web technology to create the ultimate movie recommendation engine. Although the economic environment isn’t in his favor, his extensive experience should be a powerful ally: This is his sixth startup.

Before striking out on his own at the age of 36, Skorman was a senior executive at Bread and Circus, now Whole Foods.

“I was fighting so much with the owner . . . and from that, I got the courage, or craziness, to start.”

Until then, he says, his own perceptions were holding him back. “Successful serial entrepreneurs don’t make decisions based on emotions like fear, greed or anger–only logic. Because I’m an extremely emotional person, I have to work extremely hard to make logical decisions.”

Skorman points to several motivators throughout his entrepreneurial career. “I feel a need to prove myself,” he says. “I have a lot of energy. I need a lot of stimulation, and for me, this means starting businesses that I feel will make a difference.”

He’s definitely done that. Among his accomplishments are Reel.com, which sold to Hollywood Video for $100 million, and Elephant Pharmacy, acquired by CVS Pharmacies in 2006. Even failure–losing $20 million on dot-com bust Hungryminds.com–didn’t deter him from starting over again.

“I deserved it,” he says. “So I took a year off and saw the world with my wife.”

Although Skorman devotes himself completely to each of his ventures, he does so knowing he will eventually have to give his companies up.

“I have mixed feelings about it,” he says, “but I’m an inventor, and I’m only good at that part. I’m the creative guy you want to start with, but I’m not the management guy you want to run it.”

Judy Johnston, 47, is six years into running her third startup. Like Skorman, she left behind a high-paying position in corporate America to start her own business..

At Hewlett-Packard, Johnston was frustrated that her proposal for a children’s printing kit wasn’t gaining any traction, so when a friend suggested they go into business themselves, she agreed.

“It had never occurred to me before to start my own business,” Johnston recalls, but with very little fuss, she quit her job, tapped her life savings of $50,000, and founded PrintPaks (which she sold to Mattel three years later for $26 million).

Knowing she’s now on her second startup and not averse to more, it’s easy to assume risk tolerance isn’t a problem for Johnston. “I thought, ‘At 32, if it doesn’t work, so what? I’ll earn more money.’”

Though she knows most people may not find the decision easy, she says it helps for entrepreneurs to be “addicted” to productivity. “I’m very comfortable with having a long to-do list, which cannot possibly get finished, but that I can attack daily. That makes me feel good.”

Blue Lake Publishing, which Johnston founded in 2002, is a company she hopes to sell in the next five years. Her children’s magazine, Tessie and Tab, will eventually need a video program, she says, but that’s for a successor to figure out.

“I know it has to be done, but somebody else needs to own the company when it happens,” she says. “There’s only so far I can take it, because I’m not motivated by just making more money. I’m not qualified or interested in running a really big company.”

Blue Lake will likely be Johnston’s last for-profit startup, but not her last startup endeavor.

“I want to do something that doesn’t involve having to return capital to investors,” she says. Nonprofits are still fair game.

Dan Steppe, 66, is the director of the Wolff Center for Entrepreneurship at the University of Houston’s business college. Since he arrived five years ago, the program’s enrollment has jumped from 35 students to more than 3,000. While certainly a great achievement, it’s hardly surprising for a man who founded seven profitable business ventures, ranging from an oil trading company to the Southwest Bank of Texas.

Steppe interacts with entrepreneurs daily, and the common thread he notices is curiosity. “To entrepreneurs, the world isn’t a big threatening place. They tend to understand by education or experience what is really going on,” he says. “Even when they don’t like the situation, they’re able to act without fear.”

A serial entrepreneur, he continues, doesn’t see a difference between the real estate business, the oil industry or teaching. “It’s a puzzle to unravel, and an opportunity to see if you can interpret the market the right way. I don’t run away from challenges, I kind of run to them,” Steppe says. “It is serious because you have employees, but at the same time, I always think we can do it.”

In fact, hearing Steppe recount his resume is like listening to a sing-along, where one easy decision led naturally to the next, and business opportunities “cropped up” at serendipitous moments. It’s as if from the moment he left his post at Exxon for the wilds of entrepreneurship, there were contacts willing to help him, and clear entry and exit signs posted along the way.

Most people would probably not have encountered the same prospects, but to serial entrepreneurs, these things seem instinctive. Steppe offers a simple explanation for his own successes: “It’s the big picture that interests me. I just liked ideas, so I hired the best people to do what I didn’t want to do.”

Technorati Tags: serial entrepreneur, entrepreneur, www.entrepreneur.com, General Electric, MBS Ltd., Anton Olff, business start-ups, New York, wage slave, businessman, Jennifer Wang, pyschology, ADD, Stuart Skorman, Clerkdogs.com, web technoology, Bread and Circus, Whole Foods, Clemson University, Wayne Stewart, risk-takers, Reel.com, Hollywood Video, CVS Pharmacies, Elephant Pharmacy, Hungryminds.com, Judy Johnston, business creation, corporate America, Hewlett-Packard, Mattel, PrintPaks, Blue Lake Publishing, Tessie and Tab, Wolff Center for Entrepreneurship, University of Houston, Southwest Bank of Texas, Dan Steppe, Exxon

As the global economic crisis continues to unfold, the word is finally filtering down to those most resistant to any sort of change: Ukrainian landlords. We recenty reported that rents for residential and office spaces throughout Ukraine have just started to decline, though many landlords had declined to participate in the decline. Many thought that the crisis would be shortlived as the dollar to the hryvnia seemed to be trending downward.

Well…the holidays are almost over. The Ukrainain government is out of options to prop up the hryvnia, many workers lost their jobs at the end of 2008, often with months of unpaid salaries, and the news “on the street” is that the Ukrainian economy will be in a funk for many months to come.

All of this news has finally propelled landlords to offer deep discounts to compete in the rental market. Almost everyone I know-foreign expatraite or  Ukrainian-or looking for rent reductions or moving to new offices and apartments. Indeed my own landlord has reduced the rent by 45% for fear of losing what is probably the only source of real income.

Stay tuned…….. Technorati Tags: global economic crisis, Ukraine, MBS Ltd., Anton Olff, dollar, hryvnia, apartments, Ukrainian Government, salaries, wages, Ukrainian economy, rents, expatriates, landlords, tenants, offices

It is great news that the gas crisis appears to be ending. However, the dispute will have some lasting effects that are not good for Russia and Ukraine. More than anything else, the way the crisis unfolded, has prodded Europeans to do more than just talk about new energy policies. 

Both Russia and Ukraine could be sidetracked to a great degree if Europe gets serious about change. Of course, neither the current Russian or Ukrainian governments believe that will happen and that they can continue to use their leverage to carry on with current market strategies. This may very be their Achilles heel.Article below from www.guardian.co.uk sheds some light on this situation.

Energy battle leaves Moscow and Kiev out in political cold

• Harm done to economies and reputations abroad 
• Blame for crisis shared in eyes of European clients

·         Ian Traynor, Europe editor

In the gas war between Russia and Ukraine, both sides are licking their wounds after 10 days of fighting. Although it appears the pumping of gas will resume and the impact on the lives of hundreds of thousands shivering and worried in the freezing winter in southern Europe should quickly pass, the damage done politically and economically to both warring parties will resist any quick fix.

It has been a bad time to pick a fight, with both Russia and Ukraine in dire economic shape and the affected countries in Europe in the midst of the coldest winter for a decade. The 10-day war has been a lose-lose situation.

First Russia. Even before hostilities erupted on 1 January after months of skirmishing, Russia, Vladimir Putin and the Gazprom gas monopoly were feeling the pain from the contraction of the world economy.

For most of Putin’s nine-year reign, Gazprom has been both his cash cow - Russia’s biggest source of taxes - and a key instrument of domestic and foreign policy, buying up nuisance media organisations on the Kremlin’s orders for the purposes of repression at home, while also serving as a main vehicle for Russian power projection abroad.

But Gazprom sells 30% of its gas to Europe, on which it depends for its wealth. The company’s share price has slumped by three-quarters in recent months, it has debts of €40bn (£36bn), its profits are tumbling, and it desperately needs investment in the midst of a credit crunch when no one is lending.

Every day of the gas war it lost millions it badly needs by refusing to pump gas to its customers in Europe. This can only get worse. By spring, energy analysts say, the market price of gas will have halved from $450 (£300) to less than $250 for 1,000 cubic meters.

Gazprom’s business will suffer. And its reputation is shredded. Europe’s incoherent attempts to substitute other suppliers and types of energy for Russian gas will gain in traction. Even pro-Russian countries such as Bulgaria, Serbia, Slovakia and Hungary will try to escape the Gazprom embrace.

Coming on top of the serial disputes between the Kremlin and the west in the last two years, Russia’s credibility has been hammered again.

Ukraine, too, has next to nothing to show for its travails. The euphoria of the democratic Orange revolution of 2004 has dissolved to reveal a dysfunctional state mired in economic meltdown and political paralysis.

European diplomats complain they do not know who to speak to in dealing with Ukraine. While Mirek Topolánek, the Czech prime minister, at the weekend talked to Putin to secure the deal, he had to go to Kiev twice and negotiate alternately with the camp of President Viktor Yushchenko and then with the prime minister, Yuliya Tymoshenko, in order to get an agreement that might stick.

In previous disputes, the west broadly saw Russia as bad and Ukraine as good. This time the judgments are much more qualified and balanced. The blame is shared, in European eyes. This is why Chancellor Angela Merkel of Germany, Gazprom’s biggest client, proposed outside monitors on the pipelines - because nobody believes the Russians or the Ukrainians in their claims and counter-claims.

It is also why the Europeans, while desperate to get the gas pumping to Europe, refuse to mediate in the bilateral dispute between Moscow and Kiev over gas prices and unsettled bills. The Czech foreign minister, Karel Schwarzenberg, says Europe cannot be the referee because it does not know the rules of the game. No one fully knows what kind of secret, murky agreements govern the trade in gas between Moscow and Kiev, much of which is in the hands of post-Soviet mafias and middlemen.

Putin’s fierce denunciation of the political leadership in a neighbouring and historically close country is telling. At the height of the dispute last week, he described the Yushchenko leadership as corrupt and criminalised.

The Russian prime minister’s rhetoric recalled his visceral attacks on Mikheil Saakashvili in Georgia during and after last August’s war. The Georgian war and the Ukraine gas conflict appear to have achieved similar aims - left Russia victorious and the target countries in dire economic shape, their security dilemmas more parlous because of European reluctance to come to their assistance.

That may have been Putin’s aim - to damage and discredit Ukraine and President Yushchenko after having crippled Georgia. He may have succeeded. But at a heavy cost to Russia.

Technorati Tags: Russia, Ukraine, gas crisis, Europe, Anton Olff, Pyrrhic Victory, MBS Ltd., www.guardian.co.uk, Ian Traynor, gas war, Vladimir Putin, Gazprom, gas monopoly, world economy, Kremlin, credit crunch, Bulgaria, Serbia, Slovakia, Hungary, Orange Revolution, Mirek Topolanek, Czech Republic, Viktor Tyshenko, Kiev, Yuliya Tymoshenko, Angela Merkel, Germany, Karel Schwarzenberg, Soviet, Mikheil Saakashvili, Georgia, Georgian War

Steve Edger in the United States sent me this article from The Economist (www.economist.com). Steve is one of those people that is sensitive to political and economic changes and is constantly monitoring and analyzing to detect even the slightest shifts in the climate. This article made him a bit upset.

It seems that courts in the U.K. are globalizing their jurisdiction, and applying England’s libel laws beyond England’s borders. The effects of this, as well as possible new laws in the United States, could have a chilling effect on speech, even here in Ukraine.

One of the primary motivations for relocating ourselves and our company to Ukraine, were the freedoms-economic and political-that one enjoys here. While it may take generations before Ukraine has something akin to a Jeffersonian style democracy, they have made great progress since their Soviet days.

Ukrainians enjoy freedom of speech, the right to peacefully assemble (see Orange Revolution) as well as a press and internet that is free of government censorship. Despite widespread and endemic corruption, the Ukrainian government was insightful enough to set up special business incorporations for entrepreneurs. One of these is called an SPD. This is an entity for individual businessmen that encourages entrepreneurship and capital formation, while requiring only a simplified low flat tax.

If foreign libel laws can be applied here…is it not a stretch to assume that other foreign law could be applied here as well?

Libel tourism

Writ large

Are English courts stifling free speech around the world?

SEEN one way, it is nothing short of a scandal. Small non-British news outlets and humble non-British authors (in many cases catering almost wholly to a non-British public) are being sued in English courts by rich, mighty foes. The cost of litigation is so high ($200,000 for starters, and $1m-plus once you get going) that they cannot afford to defend themselves. The plaintiffs often win by default, leaving their victims humiliated and massively in debt.

There is another side to the story, of course. Attempts to collect damages for libel and costs from people outside Britain are rare and often fruitless. Just because someone is rich, or holds a foreign passport, or lives abroad, that does not mean that they should not seek justice in an English court. Sometimes the defendants are global news organisations with a substantial presence in Britain. Sometimes the plaintiffs are dissidents, complaining about libellous attacks on them by state-friendly foreign media; a lawsuit in London may be their only chance of redress.

Yet some cases are still startling. Two Ukrainian-based news organisations, for example, have been sued in London by Rinat Akhmetov, one of that country’s richest men. One, the Kyiv Post, had barely 100 subscribers in Britain. It hurriedly apologised as part of an undisclosed settlement. Mr Akhmetov then won another judgment, undefended, against Obozrevatel (Observer), a Ukraine-based internet news site that publishes only in Ukrainian, with a negligible number of readers in England. Judgment was given in default and Mr Akhmetov was awarded £50,000 (now $75,000) in damages in June last year. The best-known case is that of Rachel Ehrenfeld, a New York-based author. She lost by default in a libel action brought by a litigious Saudi national, Khalid bin Mahfouz, over allegations made in her book “Funding Evil”. It was published in America and available in Britain only via internet booksellers. Since then she has been campaigning hard for a change in the law.

Yet no attempt has been made to collect the £50,000 in costs and damages awarded against Ms Ehrenfeld, says Mr Mahfouz’s lawyer, Laurence Harris. He adds: “It doesn’t appear that we’ve had any chilling effect at all on her free speech.” (Even now, British booksellers are offering second-hand copies of Ms Ehrenfeld’s book over the internet.) Although Ms Ehrenfeld is sometimes portrayed as being unable to come to Britain because of the lawsuit, he says there is no reason why she can’t visit England “unless she is bringing a lot of money with her”. He notes: “We abolished debtors’ prisons some time ago.”

Nonetheless, cases such as these have outraged campaigners for press freedom in both Britain and America, who are trying to change the law in both countries. The states of New York and Illinois have passed laws giving residents the right to go to local courts to have foreign libel judgments declared unenforceable if issued by courts where free-speech standards are lower than in America. Ms Ehrenfeld sought such a ruling in late 2007 in New York state courts but failed; with the new law in place she may try again.

Now the campaign has moved to the American Congress. A bill introduced into the House of Representatives last year by Steve Cohen, a Democrat, sailed through an early vote but stood no chance of becoming law. A much tougher version submitted to the Senate, the Free Speech Protection Act, also gives American-based litigants an additional right to countersue for harassment. The bills have been strongly supported by lobby groups such as the American Civil Liberties Union, which fear that the protections offered by the First Amendment are being infringed by the unfettered use of libel law in non-American jurisdictions.

Similar concerns are being expressed in Britain. In a debate in the House of Commons last month Denis MacShane, a senior Labour MP, said that “libel tourism” was “an international scandal” and “a major assault on freedom of information”. Lawyers and courts, he said, were “conspiring to shut down the cold light of independent thinking and writing about what some of the richest and most powerful people in the world are up to.” He cited, among others, cases heard in London where a Tunisian had sued a Dubai-based television channel and an Icelandic bank had sued a Danish newspaper.

Mr MacShane also said the Law Society should investigate the actions of two leading British firms that act for foreign litigants, Schillings and Carter-Ruck, implying that they were “actively touting for business”. Neither wished to comment on the record, though both, like other big law firms, have websites promoting their services and highlighting their successes.

British members of a parliamentary committee dealing with the media are now broadening a planned inquiry into privacy law and press regulation. The chairman, John Whittingdale, says the committee has received a large number of submissions from people worried about libel tourism.

These go well beyond the usual media-freedom campaigners. Groups that investigate government misbehaviour say their efforts are now being hampered by English libel law. “London has become a magnet for spurious cases. This is a terrifying prospect to most NGOs because of legal costs alone,” says Dinah PoKemper, general counsel at the New York-based Human Rights Watch. It recently received a complaint from lawyers acting for a foreign national named in a report on an incident of mass murder. “We were required to spend thousands of pounds in defending ourselves against the prospect of a libel suit, when we had full confidence in the accuracy of our report,” she says.

The problem is not just money. Under English libel law, a plaintiff must prove only that material is defamatory; the defendant then has to justify it, usually on grounds of truth or fairness. That places a big burden on human-rights groups that compile reports from confidential informants—usually a necessity when dealing with violent and repressive regimes. People involved in this kind of litigation in Britain say that they have evidence of instances where witnesses have been intimidated by sleuthing and snooping on behalf of the plaintiffs, who may have powerful state backers keen to uncover their opponents’ sources and methods.

Private matters

A further concern is what Mark Stephens, a London libel lawyer, calls “privacy tourism”, arising out of recent court judgments that have increased protection for celebrities wanting to keep out of the public eye. In December alone he has seen seven threatening letters sent by London law firms to American media and internet sites about photos taken of American citizens in America. “Law firms are trawling their celebrity client base,” he says.

The more controversial and complicated international defamation law becomes, the better for lawyers. The main outcome of the proposed new American law would be still more court cases, with lucratively knotty points of international jurisdiction involved. Prominent Americans with good lawyers may gain some relief, but for news outlets in poor countries it is likely to make little difference. And as Floyd Abrams, an American lawyer and free-speech defender, notes, a book publisher, for example, will still be nervous about an author who has written a “libellous book”.

Mr Stephens, the London lawyer, is taking a case to the European Court of Human Rights, where he hopes to persuade judges that the size of English libel damages is disproportionate. If you get only around £42,000 for losing an eye, why should you get that much or more from someone writing something nasty about you, he asks. But even limiting damages is not enough. For reform to have any effect, it will have to deal with the prohibitive cost of any litigation in London.

Technorati Tags: Steve Edger, United States, Anton Olff, MBS Ltd., The Economist, www.economist.com, United Kingdom, Ukraine, libel laws, free speech, democracy, government censorship, flat tax, entrepreneur, libel tourism, English courts, Kyiv Post, London, Rinat Akhmetov, Obozrevatel, internet news, Rachel Ehrenfeld, New York, Saudi, Khalid bin Mahfouz, Funding Evil, Laurence Harris, debtors prisons, Britain, America, Illinois, U.S. Congress, House of Representitives, Senate, Free Speech Protection Act, American Civil Liberties Union, House of Commons, Denis MacShane, Labour MP, independent thinking, Dubai, Icelandic bank, Danish newspaper, foreign litigants, Schillings, Carter-Ruck, John Whittingdale, NGOs, Dinah PoKemper, Human Rights Watch, Mark Stephens, privacy tourism, defamation law, Floyd Abrams, European Court of Human Rights,

There must be a special place in purgatory reserved for entrepreneurs. Julie Jargon’s article in the Wall Street Journal (www.wsj.com) describes the pain a U.S entrepreneur has been enduring amidst the current economic situation.

Although this story is not directly related to events here in Ukraine or in any other emerging market, there are issues and challenges that are common to entrepreneurs everywhere. 

If large companies-who may have cash reserves or access to some credit- are having a rough time in the current environment, then those without are going through the type of hell replete with bankruptcy, divorce, estrangement, stress, depression and that special brand of punishment reserved for those who take the risks in this world that sometimes make our lives better: the evaporation of dreams.

Let’s just hope the “creative-destruction” process that seems to be a necessary component in the expansion of human progress, is mitigated by positive events.

On Front Lines of Debt Crisis, Luggage Maker Fights for Life

By JULIE JARGON

ST. PAUL, Minn. — When Chuck Bidwell and Jennifer Guarino took over J.W. Hulme Co. a few years ago, their plan was to transform the tiny maker of duck-hunting gear and fishing-rod bags into a luxury luggage company.

They applied the modern American business playbook: Borrow heavily to grow fast. The strategy worked — until the credit crisis threw out those rules.

Now the two business partners are struggling to pull their company, and their lives, out of a spiral. The pain is rippling through a broad circle of investors, employees, suppliers and family members.

Mr. Bidwell, a 63-year-old serial entrepreneur and collector of vintage Buicks, is selling his beloved cars, is about to lose his house and is getting divorced from his wife of less than two years, partly due to their financial nightmare. Ms. Guarino has drained her savings, had her credit cards shut off, and is fielding phone calls “weekly,” she says, from a frustrated relative who loaned her money.

How the Credit Crunch Caused a Ripple

Ms. Guarino, 46, says her dream was to build a business “that was not just a job, but was a passion.” Instead, she and Mr. Bidwell have had to lay off employees, stop paying investors, and renegotiate bills with their suppliers. Still, there’s no guarantee the 104-year-old business will survive.

At small companies nationwide, a similar cycle is playing out. This is bad news for the U.S. economy: In recent years, small employers — the typical one has a staff roughly Hulme’s size — accounted for most U.S. new-job creation, according to the Small Business Administration. Small companies of 500 or fewer people employ more than half of the country’s private-sector workers.

Many relied too heavily on lending, whether from banks or credit cards, says Bill Dunkelberg, chief economist at the National Federation of Independent Business. “That’s why bankruptcies are up,” he says.

In fact, business bankruptcies rose 49% to 38,651 in the fiscal year ended Sept. 30 from a year earlier.

Mr. Bidwell and Ms. Guarino’s aggressive borrowing was “pretty typical of small businesses,” says their main lender, Fizal Kassim of Maple Bank in Champlin, Minn. He loaned Hulme more than $550,000 over five years.

The two owners have eclectic résumés: Mr. Bidwell has worked at Target Corp., Tonka Toys Inc. and a cigarette distributor. He once started an air-filtration company, and about a decade ago helped launch a local “currency” in Minneapolis, the HeroCard, designed to let people earn credits for volunteer work that could be spent like regular money.

As for Ms. Guarino, she was a handbag designer in California before more recently running regional magazines including Minnesota Parent.

She also worked with Mr. Bidwell at CHC Data Inc., maker of the HeroCard. That’s when the two made a pact: If they ever spotted a business they both liked, they would consider buying it.

Like many entrepreneurs in recent years, J.W. Hulme’s co-owners, Chuck Bidwell and Jennifer Guarino, borrowed heavily to fuel growth.

Over the years, Mr. Bidwell suggested various businesses, including a maker of robotic arms for assembly lines. “I was like, ‘Robotic arms? No thank you,’” Ms. Guarino says.

But when he found J.W. Hulme, she was on board. “I heard ‘leather’ and loved it,” she says.

Founded in 1905, Hulme at first made World War I military tents, and later, canvas awnings, car covers and, for a time, travel bags for upscale retailers including Orvis. But by 2003, Hulme was losing $150,000 a year on about $450,000 in revenue.

Mr. Bidwell and Ms. Guarino bought Hulme that year in a transaction that will total $600,000 when final payments to the previous owner are made next year.

They took over a tiny factory that employed three people mostly making hunting gear.

Their strategy: Expand into luxury goods with wider appeal — briefcases, backpacks, women’s handbags — and develop a high-end, in-house catalog. By expanding the mailing list tenfold, to 10,000 households, and more than doubling their product line to 250 items, they calculated that within five years Hulme could reach revenue of $2 million with positive cash flow.

It required upfront investment. Ms. Guarino and Mr. Bidwell hired six workers, upgraded their sewing machines, leather-splitting equipment and computer server, and bought mailing lists.

Borrowing became crucial. Mr. Bidwell took a $130,000 second mortgage on his house — no sweat, because, like houses across the U.S., his was increasing in value.

Hulme’s primary financial backer was Maple Bank, the lender run by Mr. Kassim. In 2003, Maple loaned Hulme $70,000 and gave it a $200,000 line of credit, the first in a series of ever-larger loans.

Mr. Kassim, 51, calls himself a conservative lender. Maple, which he founded, has never done home loans, but instead focuses on business lending and consumer banking — CDs, checking accounts. “We are not a bank involved in exotic stuff like derivatives and hedges,” he says.

Hulme got off to a strong start. Sales grew 89%, to $1.4 million by 2006, and the company turned a profit, Mr. Bidwell says. The owners declined to disclose net profit, but say earnings before taxes and other items that year totaled $325,000.

Little Delay, Big Trouble

But little setbacks can have big consequences when a strategy relies heavily on debt. That October, Hulme sought a $700,000 Small Business Administration loan from St. Stephen State Bank, another local lender. SBA loans are typically 75%-guaranteed by the government, and are easy for banks to sell (at a profit) to other investors down the line.

Expecting its loan quickly, Hulme cranked up production. But the money got delayed six months amid management changes at St. Stephen.

At a coffeeshop one evening in April 2007, Hulme’s two owners met to talk debt. Ms. Guarino told Mr. Bidwell they should slow their growth.

Mr. Bidwell says he reminded her that orders from their previous catalog mailings had met or exceeded projections. If they stuck to the plan, he said, they could bring in enough cash to service debts.

“I didn’t have enough information to constructively argue the point,” Ms. Guarino says now. “I thought, ‘He’s done this before…maybe I’m just out of my league.’”

Sticking to the plan meant borrowing more money — and fast. Big chunks of cash are needed at certain times to pay for catalogs. Late mailings aimed at Mother’s Day, for example, mean missed sales.

Mr. Bidwell borrowed about $500,000 from past business associates, friends and relatives, including his daughter. Still, Hulme missed key mailing dates in mid-2007.

As the 2007 Christmas selling season loomed, Hulme was scrambling. That November, Ms. Guarino left her $130,000-a-year job at the magazine publisher to focus solely on Hulme. She, too, approached a family member for a loan. She vowed to repay the relative, whom she declined to name, in 90 days.

By year’s end, Hulme rang up more than $1.5 million in revenue, well short of the owners’ $2 million projection. Capital spending was up 27% to $935,000, and the $1.2 million worth of new debt from the SBA and other investors had pushed Hulme’s total debt past $2 million.

That put the company’s ratio of debt to equity at 5.53, compared with 2.94 a year earlier. A ratio of three or greater is typically frowned upon by lenders, says Sean Egan of credit-rating firm Egan-Jones.

And Hulme needed to borrow more. Last January they went to see Mr. Kassim at Maple Bank to ask for $250,000 to get out the next round of catalogs.

Mr. Kassim was no longer in a lending mood. The U.S. financial crisis was starting to bubble up. Economists were talking about recession. Mr. Kassim worried about the market for Hulme’s $1,200 leather rolling duffles and $500 garment bags.

“Chuck said that because he deals in luxury goods, he wouldn’t be affected by the slowing economy, because his customers are affluent,” Mr. Kassim recalls. “But I wasn’t so sure.”

He was most concerned about Hulme’s $1 million inventory. Mr. Kassim says he likes to see inventory at less than 50% of sales, whereas Hulme’s was two-thirds. Reduce inventory, he said, then come back.

The two owners stopped paying themselves their $40,000 annual salaries and laid off almost half their 14 employees.

The layoffs didn’t surprise Martha Didio, who had been a Hulme seamstress since 1984. “They had been running out of supplies, like the hardware that goes on the bags, because they didn’t have the money,” she recalls. “We were all sitting on pins and needles.”

Painful Phone Call

One February day, Ms. Guarino had to call the relative whom she’d promised to repay in 90 days, to say she didn’t have the money.

Mr. Bidwell put his house up for sale. He also stopped paying the mortgage in an effort to renegotiate the loan, a move that would have unanticipated consequences.

His family and friends who had loaned Hulme $500,000 the year before stopped getting interest payments. “One month, we got a letter instead of our check,” says Cinnamon Bidwell, Mr. Bidwell’s daughter. She and her husband had invested $20,000, two-thirds of their savings.

In May, the Hulme owners went back to Mr. Kassim. “If we don’t have the money, we’ll have to close the business down,” Mr. Kassim recalls Mr. Bidwell saying.

“I’m thinking, ‘Oh my God, what do I do?’” Mr. Kassim says. Still, he didn’t commit more lending.

In the car outside, Ms. Guarino says she broke down and cried.

Later, back in the office, Mr. Bidwell said he still felt “optimistic” that Maple Bank would help them. Ms. Guarino disagreed: “Chuck, in case you didn’t realize it, that’s a ‘no’ we heard,” she told him.

As J.W. Hulme grew, the company invested in improved stitching equipment and computer servers — and expanded its factory staff in Minnesota. Now, some workers have been laid off.

As a key September catalog-mailing deadline approached, Hulme’s printer, John Roberts Co. of Minneapolis, demanded upfront payment because Hulme had fallen behind.

For Hulme, the printer’s ultimatum was potentially catastrophic. Ms. Guarino and Mr. Bidwell had to get catalogs into shoppers’ hands. They went back to St. Stephen, which advanced them $75,000 on a new $210,000 SBA loan.

Days later, the SBA denied the loan, citing Mr. Bidwell’s late mortgage payments. Mr. Bidwell says he didn’t think his mortgage would affect his ability to get a business loan.

Mr. Bidwell hit up friends and family again. This time, his daughter told him, “Sorry.”

In September, Messrs. Bidwell and Kassim managed to hammer out another $125,000 loan, but only because Mr. Bidwell lined up some friends to put up bank CDs as collateral.

Catalogs went out more than a month late. Hulme wound up mailing 175,000 catalogs last year, versus 600,000 the year before.

Sales figures provided by Mr. Bidwell suggest demand for Hulme’s products remains strong. Sales per catalog mailed were up 24% through November, but total sales were down 20% because fewer catalogs went out.

Mr. Bidwell is now trying to sell five of his seven Depression-era Buicks, including the jewel, a 1932 Buick Town Car that could be worth well over a half-million dollars.

J.W. Hulme’s business woes led to strains in Mr. Bidwell’s marriage. He and his wife, Julie, were high-school sweethearts back in the 1960s but didn’t reunite until a few years ago. They married in May 2007.

Ms. Bidwell says she voluntarily invested all her own savings, more than $50,000, in J.W. Hulme. “There were times when I said to him, ‘Get out of this company, just let it go,’ but he’s not ready to do that,” she said in a phone interview from her home in Manly, a Sydney suburb, where she moved in April. The couple’s divorce is nearly final.

Late last year, Hulme renegotiated its payments to suppliers with an agreement that, for now, will keep it out of bankruptcy.

Mr. Bidwell draws a simple lesson from the mess. “If we’d had the proper financing in place and been able to mail our catalogs on time,” he says, “we would have had a very successful year.”

Technorati Tags: Julie Jargon, Wall Street Journal, www.wsj.com, Ukraine, United States, Anton Olff, MBS Ltd., www.medblacksea.com, cash reserves, creative-destruction, debt crisis, luggage maker, entrepreneur, St. Paul, Chuck Bidwell, Jennifer Guarino, J.W. Hulme Co., duck hunting gear, luxury luggage, American business playbook, Buicks, credit crunch, business cycle, U.S. economy, Small Business Administration, private sector, Fizal Kassim, Maple Bank, Champlin Minnesota, Target Corp., Tonka Toys Inc., Minneapolis, air-filtration, HeroCard, Minnesota Parent, CHC Data Inc., robotic arms, World War I, mortgage, St. Stephen State Bank, SBA, Christmas selling season, Sean Egan, Egan-Jones, John Roberts Co., Depression era, divorce, bankruptcy,

If there were ever a time for Europe to revise its energy policy, it would be now. To be so dependent on Russia as a main supplier of energy is bad policy. Looks like people will have to freeze for a time,  before the politicians get serious about resolving both the short term crisis, as well as the longer term energy needs of Europe.

From Reuters:

18 countries affected by Russia-Ukraine gas row

Russian gas flows via Ukraine were halted for a second straight day on Thursday, hitting 18 countries ranging from large European Union members such as Germany to small ex Soviet Moldova, Reuters reported.

 AUSTRIA - About 60 pct of gas for domestic use from Russia*

Gas flows stopped on Jan. 7.

 No rationing of supply to Austrian firms before next Monday. Oil and gas group OMV (OMVV.VI) was drawing on reserves, domestic production and other imports to guarantee supply.

GERMANY - About 42 pct of gas for domestic use from Russia*

German energy groups E.ON AG (EONGn.DE) and Wingas (BASF.DE) are relying on gas stores and a transit route via Poland. Gas shipments to Europe via Ukraine have been massively reduced since early on Tuesday, and no Russian gas has arrived into Germany via Czech Waidhaus border point for a second day. Energy firms warned of gas shortages if the dispute lasted much longer and sub-zero temperatures endured.

 TURKEY — About 67 pct of gas for domestic use from Russia*

Production at three Turkish power stations stopped on Thursday. Russian gas supplies from a western pipeline passing through Ukraine were cut on Tuesday. The country has raised supplies of Russian gas delivered via a pipeline under the Black Sea. Gazprom`s Blue Stream pipeline to Turkey is working at full capacity of 45 million cubic metres (mcm).

 GREECE — About 82 pct of gas for domestic use from Russia*

 All Russian gas supplies via Ukraine to Greece were halted on Tuesday. Turkey`s gas exports to Greece were below the contract level on Wednesday with low pressure on the pipeline.

 ITALY — About 28 pct of gas for domestic use from Russia*

 Russian gas imports via the TAG pipeline were substantially interrupted from 1 a.m. on Wednesday, with supplies reduced by 90 percent. Italy has tapped its gas reserves.

 FRANCE — About 24 pct of gas for domestic use from Russia*

 Russian shipments dropped by more than 70 percent on Jan. 6. French Energy group GDF Suez (GSZ.PA) guaranteed supplies.  France does not rely on gas in the same way as Germany or

Italy because 80 percent of its electricity is produced by nuclear energy.

 HUNGARY — About 60 pct of gas for domestic use from Russia*

 E.ON Ruhrgas is to supply Hungary with 2.5 mcm of natural gas per day via a pipeline from Austria. Hungary limited natural gas consumption by industrial users.

 CZECH REPUBLIC - About 80 pct of gas for domestic use from

Russia*

 Russian supplies halted on Jan. 7. The Czech Republic has tapped reserves and imported gas via an alternative pipeline.

 SLOVAKIA - About 100 pct of gas for domestic use from

Russia*

 Slovakia declared a state of emergency after Russian supplies stopped on Jan. 7. It may restart a nuclear power plant it shut down to comply with the EU accession agreement if Russian gas supplies remain halted for a longer time.  The Slovak gas transit and distribution company SPP said it had reduced supplies to around 1,000 Slovak companies.

 BOSNIA - Nearly 100 pct of gas for domestic use from Russia*

 Russian deliveries stopped on Jan. 6. Bosnia uses around 350 million cubic metres of gas annually. It has no gas reserves. Consumption in the past two days rose to 1.6 million cubic metres because of low temperatures.

 SERBIA - About 87 pct of gas for domestic use from Russia**

 Supply from Russia was cut off on Jan. 6. Serbia has gas reserves of 100 million cubic metres, which could last for about 10 days under normal daily consumption of about 10 cubic metres.

 BULGARIA - About 96 pct of gas for domestic use from

Russia**

 Russian supplies via Ukraine, halted on Tuesday, have forced dozens of Bulgarian industrial companies to cut production. The Neftochim Burgas refinery, controlled by Russia`s LUKOIL

(LKOH.MM), halted all exports of heavy fuel after a cut in Russian gas supplies prompted a switch to oil.

 POLAND — About 47 pct of gas for domestic use from Russia**

 Russian deliveries via Ukraine halted on Jan. 7. Imports continue via Belarus. The government has approved a motion to cut gas supplies to industrial clients, the deputy primeminister said.

 Its gas distributor PGNiG said on Wednesday Poland was receiving 84 percent of contracted Russian gas in spite of the halt in deliveries.

 SLOVENIA - About 64 pct of gas for domestic use from Russia**

 Russian supplies stopped from Jan. 7. Deliveries to customers have not been disrupted.

 CROATIA - About 37 pct of gas for domestic use from Russia**

 Russian flows halted again late on Jan. 6. Croatia declared a crisis on Wednesday, making distributors cut gas flows to industry and give priority to homes, schools and hospitals.

 Croatia consumes about 12 million cubic metres of gas each day during winter. It produces 4.8 million cubic metres and imports the remainder from Russia.

 MACEDONIA - About 100 pct of gas for domestic use from

Russia*

 Russian gas supplies to Macedonia halted on Tuesday.

 ROMANIA — About 28 pct of gas for domestic use from Russia*

 Russian supplies to Romania were cut early on Jan. 7. Underground storage and gas production by Romgaz and Petrom SNPP.BX(OMVV.VI) were being used to make up the shortfall. Romania, less reliant on Russian gas than other ex-communist counterparts, produces around 65 pct of domestic consumption.

 MOLDOVA

 Moldova is no longer receiving Russian gas via Ukraine, the country`s government said in a statement on Wednesday. Northern regions of Moldova had adequate gas reserves only for 48 hours, while southern regions could last for seven days on existing reserves.

Technorati Tags: Europe, Gas crisis, energy policy, Ukraine, Anton Olff, MBS Ltd., European Union, Germany, Soviet, Reuters, Moldova, Austria, domestic gas production, gas reserves, gas imports, EONGn.DE, BASF.DE, Poland, Czech Republic, sub-zero temperatures, Turkey, Black Sea, Gazprom, Blue Stream pipeline, Greece, Italy, TAG, France, GSZ.PA, GDF Suez, nuclear energy, Hungary, Slovakiaa, Bosnia, Serbia, Bulgaria, Neftochim Burgas refinery, LUKOIL, LKOH.NM, PGNiG, Slovenia, Coatia, Macedonia, Romania, Romgaz, Petrom SNPP.BX, OMVV.VI,

If you ever wondered what it was like to drive through Europe…both Western Europe and Eastern Europe, then you will enjoy this diary of a recent journey to Ukraine by our Italian Director-Marco Pippo. 

Un Viaggio lungo ma bellissimo

                           In Auto dalla Liguria ad Odessa

Bisogna innanzitutto armarsi di molta pazienza perche, anche se si viaggia in Europa, si incontrano davvero alcune difficoltà legate alle diverse mentalità dei Paesi che si attraversano.

Ho fatto questo viaggio molte volte negli ultimi anni, ad ogni viaggio ho incontrato “avventure” diverse; interessanti e in qualche modo stressanti.

In queste righe voglio dare le indicazioni e le informazioni di base che la mia esperienza mi ha lasciato.

Ok, partiamo!

Da Genova si prende la A 7 verso Milano, dopo circa 80  Km. C’è lo svincolo per prendere la Torino Piacenza Brescia, questa va percorsa tutta fino a Brescia dove si incrocia la Milano Venezia; una volta a Venezia si deve percorrere la Tangenziale in direzione Trieste Udine, prendere direzione Udine fino alla frontiera con L’Austria.

In Austria, direzione Graz e Vienna. A Vienna è stata recentemente realizzata una “bretella” che consente di non entrare in città e di andare direttamente sull’autostrada in direzione di Budapest.

Non ci sono “bretelle” per “saltare” Budapest si deve quindi attraversare la città passando proprio dal centro; tenere la direzione “Dobrecen” , ci si lascia la stazione dei treni sulla sinistra e si arriva dopo circa due Km. Alla svolta per Dobrecen. Presa questa autostrada si cominciano a vedere le indicazioni “UA”. Hanno nell’ultimo anno finito l’autostrada fino quasi al confine con l’Ucraina.

Siamo finalmente alla frontiera tra Ungheria e Ucraina. Passati i controlli di frontiera di deve prendere in direzione Ushgorod e poi L’Vov, Kiev e Odessa.

Note per il viaggiatore: la benzina è più costosa in Italia ma attenzione in Ungheria se si paga in Euro fanno un cambio tale per cui il costo al litro risulta più caro che in Italia. Suggerimento: fare il pieno subito prima di entrare in Ungheria; si arriva comodamente fino all’Ucraina.

Autostrade: l’Italia si distingue per le costosissime autostrade (circa 30 Euro per percorrere la tratta da Genova al confine con l’Austria)

Austria: si compra all’Autogrill italiano la “Matrica Vignette” per l’Austria con un costo inferiore ai 10 Euro; ha validità 24 ore. Si deve attaccare l’adesivo al parabrezza e conservare la matrice in macchina. Attenzione la Polizia Austriaca fa spesso posti di blocco deviando tutto il traffico in aree di parcheggio allo scopo di controllare i pagamenti dei pedaggi.

Nelle autostrade austriache la Polizia si posiziona molto sovente alle uscite delle gallerie dove il limite di velocità e di 80-100 Km/h. Consiglio: rispettate quel limite in galleria anche perché dopo sono molto più tolleranti nei tratti diritti. L’eventuale multa deve essere pagata immediatamente ai poliziotti ed è di circa 75 Euro.

Anche in Ungheria si deve comprare la “Matrica Vignette”, costa circa 6 Euro per un giorno e si compra proprio al confine con l’Austria. Accettano gli Euro anche in moneta. Hanno abbandonato gli adesivi e danno soltanto uno scontrino. I controlli sono rarissimi, i limiti di velocità sono come in Italia ma non ho mai incontrato la Polizia stradale.

In Austria ci sono autogrill lungo l’autostrada ( c’è anche la sorpresa di trovare nei menù il “fattoria” o il “Camogli” perché il groppo Benetton ha acquistato alcuni punti ristoro…), sempre in Austria si possono trovare molti Motel confortevoli e non molto costosi.

Le aree di servizio in Ungheria non sono molto attrezzate a parte una dopo Budapest dove si trova un Mc. Donald….Strano ma vero….

Indicazioni a parte, questo viaggio ha la caratteristica di offrire panorami incredibilmente belli e diversi tra loro… In Italia attraversando verso l’Austria con autostrade che sono dei capolavori di ingegneria incastonati in spettacoli naturali incredibili… Boschi, montagne e cascate in ogni dove, passata Vienna cominciano infiniti campi di enormi e un po’ spettrali “ventilatori” per l’energia eolica.. e poi… Budapest… Fantastica Budapest.. Piena di luci che si riflettono sul Danubio…  arte, vita, edifici sfavillanti.. Davvero è una città che prende il cuore…

Dopo Buda…il paesaggio si fa un po’ “piattino” fino al confine con l’Ucraina..

Vorrei a questo punto dare ancora qualche informazione inerenti ai doganieri in particolare ucraini… Dopo il controllo ungherese si attraversa un ponte che, a dire la verità, sembra uscito da un film Soviet…Attenzione!!! Ora incomincia il primo approccio con la famosa burocrazia dei Paesi ex Soviet… Ci si DEVE fermare alla fine del ponte, aspettare che i soldati prendano il numero della targa e consegnino un foglietto insieme alla dichiarazione doganale!! Questo foglietto va presentato alla polizia di frontiera insieme al passaporto e ai documenti della macchina! La macchina DEVE essere intestata ad uno degli occupanti la stessa.. se no.. fanno tornare indietro!!! Messi i timbri sul passaporto e sulla dichiarazione doganale si DEVE conservare una parte della stessa nel passaporto per tutta la permanenza in Ucraina e  riconsegnarla quando si esce. I controlli non sono finiti… Sempre con tutti questi documenti in mano si va alla dogana; normalmente controllano che non ci siano cose strane nel bagagliaio e in particolare agli italiani controllano vino e pasta…una bottiglia al doganiere è sempre gradita…

Fate timbrare dal doganiere il “foglietto” e avviatevi verso l’ultimo controllo… consegnate il “foglietto” ai soldati e… Siete in Ucraina…

Non cambiate i soldi da quelli che cercano di fermarvi appena fuori la frontiera.. fanno una cambio 20% più svantaggioso dei cambi ufficiali!

Per dormire ci sono molti alberghetti lungo la strada, spesso hanno parcheggi custoditi…In questa parte del Paese è molto difficile trovare qualcuno che parli inglese ma a gesti noi italiani ci facciamo sempre capire…

Incomincia un viaggio decisamente diverso, un viaggio nel tempo! Anche se stanno rifacendo un po’ tutte le strade, dimenticate le lisce autostrade europee, vi state avventurando nelle UKRAINSKY DAROGA!!! Strade ucraine…Queste attraversano i paesi, limite di velocità da 40 a 60 Km/h e sono piene di insidie come buchi enormi ecc… Ma in cambio avrete una vista di come vivevano in campagna i nostri molte generazioni fa!

Qua sui Carpazi quasi nulla è cambiato, ci sono i carri trainati da cavalli che trasportano fieno e le immancabili “Babushke” sopra, aratri trainati da buoi e stili di vita antichi! I paesaggi sono meravigliosi con dolci colline, boschi con abeti altissimi e bianche betulle, si può vedere bene in questa parte del Paese che una delle sue ricchezze è l’acqua!! Laghi, e fiumi, piccole cascate un po’ dappertutto.. Mi raccomando prendetevela con calma e fermatevi in uno dei numerosissimi posti dove fanno lo Shashlik” E’ uno spiedino di carne incredibilmente gustoso!!!

Se avete fretta sappiate che in più o meno tutti i paesi che si attraversano c’è un poliziotto (DAI) con il suo bravo laser! Se vi fermano, tenete pronte almeno 50 grivne per pagare la “multa”. Tenete d’occhio le macchine che incrociate, normalmente segnalano lampeggiando la presenza della DAI!

Dopo circa 400 Km. Arrivate al L’Vov (Leopoli), prendete direzione Kiev percorrendo una strada che vi fa evitare il centro del L’Vov, dopo 650 Km. Arrivate a Kiev, dovete entrare nella tangenziale della capitale che è trafficatissima… Tenete d’occhio le indicazioni per Odessa!

Da Kiev ad Odessa ci sono 470 Km che si percorrono quasi tutti sull’unica autostrada ucraina! Attenzione che è consentita l’inversione ad “U” e che in alcuni tratti ci sono passaggi pedonali! Il limite di velocità in questi tratti è di 70 Km/h!

L’Ucraina vi sorprenderà per le differenze di paesaggi, per la diversa gente da nord ovest verso sud, per i suoi paradossi come i carri trainati dai cavalli e le Porche Cayenne numerose come le Panda in Italia ma anche per la cordialità della gente e l’ottimo cibo!

Le persone sono in genere sempre pronte a dare una mano, mi è capitato qualche volta di essere in difficoltà e, nonostante parlassimo lingue diverse, ho sempre trovato aiuto.

Bè.. forse in un altro blog vi racconterò della “magica” Odessa intanto aspetto domande e commenti…. Buon viaggio a tutti…..

Technorati Tags: Europa, Marco Pippo, avventura, Paesi, mentalita’, viaggio, incontri, esperienza, partenza, genova, A7, Torino, Piacenza, Brescia, Venezia, Tangenziale, Trieste, udine, Frontiera, Austria, Milano, Vienna, Budapest, Ungheria, UA, Ucraina, Dogana, Carpazi, Macchina, autostrada, L’Vov, Leopoli, kiev, Odessa, strade, Euro, Grivna, Aurogrill, Polizia, stradale, Limiti, velocita’, panorami, Danubio, Soviet, passaporto, documenti, vino, pasta, inglese,

Don’t pack up those Christmas decorations just yet!!! The 7th of January is when Orthodox Christians celebrate Christmas. We at MBS believe that every holiday should be honored-especially if someone else is picking up our champagne tab-so in the true spirit of the season, have a Merry Christmas.

P.S.- there is also another “New Year’s Eve.” According to the Julian Calender it falls on 13/14 January in 2009. This is the so called “Old-New Year….” so Happy New Year!!!