Business Success

Balancing a Start-Up and a Baby

2011-02-27T22:39:00.000-08:00

Serial entrepreneur Jessica DiLullo Herrin designed her latest company, Stella & Dot, to provide her with greater work-life balance.

As told to Tamara Schweitzer | Sep 1, 2010 Hard at It Jessica DiLullo Herrin describes herself as the go-go-go type.

" href="http://www.inc.com/uploaded_files/image/feature-151-Herrin-pop_4934.jpg" alt="Hard at It Jessica DiLullo Herrin describes herself as the go-go-go type."> Mike McGregor

Hard at It Jessica DiLullo Herrin describes herself as the go-go-go type.

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Jessica DiLullo Herrin co-founded the prominent wedding website WeddingChannel at 24, and for the next few years, she devoted almost all her waking hours to her start-up. Her next business had to be different—because it had to accommodate a growing family. From the start, Stella & Dot has sold its custom jewelry through in-home trunk shows led by independent sales reps—stylists, in the company's vernacular. Today, Stella & Dot has 10,000 stylists and Herrin has, in her own fashion, learned to slow down.

I started working on the business model for Stella & Dot in 2003 when my husband and I were living in Austin, and I was working for Dell in the global e-commerce group. We moved from San Francisco after my husband graduated from Stanford business school and was offered a job at a venture capital firm in Austin. One of my mentors and board members at WeddingChannel told me that if I ever wanted to learn how to run a big company, I had better go work at one. All I had ever done in my career was work at start-ups, but as an entrepreneur who wanted to build a big business one day, I took his advice and went to work at Dell.

I learned a tremendous amount about managing in a large organization, and it was also the perfect maternity-leave job, because it offered a lot of balance. In fact, after working almost every weekend for four years building WeddingChannel, it felt so balanced that I had plenty of time on the nights and weekends to start another company.

I got pregnant with my first child during my time at Dell. I've always been one of those people who is very driven about work, but I also always wanted to be a mom. All your priorities change when you are shifting your career to accommodate a family. With Stella & Dot, I was looking to create the modern women's business. Women today are having kids later, and many had a career first before staying home. They have different wants and expectations out of life, and I wanted to cater the business to that. The home-based model is really what gives women the flexibility they want.

The original concept included DIY jewelry, and it evolved into strictly ready-made jewelry. The Internet has made everything accessible and convenient, so if you're going to do direct selling, it has to be a product that is enhanced by a person-to-person sales environment and is also a social, public-facing product. Women love jewelry and accessorizing with custom pieces, and so the product really sells itself. That's really important, because most people don't get up in the morning and say, "I want to sell something"—but they will be a brand ambassador for something that they truly love wearing and want to recommend to others.

I did my first trunk show when I was three months pregnant. I was pregnant or had a newborn the majority ofthat time starting up. After starting WeddingChannel, I knew how all-consuming that experience was, so once I had a family, I knew that I had to put Stella & Dot on a slower trajectory. For the first few years, I did a lot of testing of the product by doing as many trunk shows as I could. I was trying to create that one perfect stylist experience and build a business that could be duplicated by thousands of women. At the beginning, I was really committed to bootstrapping Stella & Dot. So I made every piece of jewelry, I made the website, I made the invitations, I did everything. Now we have an amazing design team in New York that creates all the jewelry for the Stella & Dot brand.

When I look back, I had no idea what I was really doing, but I am an extrovert, so I knew I could go into a room and talk to the women about the product. I'm wired to want to work hard. Balance is not my forte. I'm someone who can yell go, go, go and just start from scratch and do things. But a lot of women don't want to make all the sacrifices that it takes to do that or can't because they already have three kids or they already have a full-time job that they need to pay the bills.

When my first daughter was born, I took my maternity leave and stayed home with her for three solid months. I brought my second daughter on my hip back to the office when she was 1 week old, because by then I had it down. And people would say to me, "That's so hard-core to bring your daughter to work when she's a week old." But to me, it was hard-core to stay home with an infant and a toddler. What's easy is having a nanny and bringing one of your babies to work.

I feel like I've ebbed and flowed with building this company, but I always focused on my greatest need, which was my children. I work in an office like most CEOs, but I didn't do that full time until my second daughter was 2 and a half. I always joke that I created this company for women to work from home, but I go into an office. Make no mistake: I do work from home, but only after I work a full day in the office and come home and put my children to bed, and then I do the night shift.

I did my first round of financing in 2005. We had a fledgling stylist force at the time, but the company had over half a million in revenue. My children were a little bit older, and my family was a little bit more settled, and that's when I felt I could really check all the way into work. And when I did, that's when it started having this rocket-ship growth. When I took the external capital, it was an escalation of my commitment, because now I was accountable to other people. I went and really built a team; it was no longer just me driving the business forward.

Our company is growing because our stylists love what they're doing, and that translates to their success. It's not a new business idea, but it's about changing the lives of our sales force. There are so many women out there who are so accomplished, and then they get to this time in their lives where they want to become moms and they don't quite want to go on the mommy track. But a lot of them feel like they have to step out or step to the sidelines. With Stella & Dot, you can still be building something, and even if you choose to keep it part time, maybe until your youngest goes off to kindergarten, you're still building something that doesn't have a glass ceiling and that has an endless runway.

Stella & Dot is made up of all kinds of women—former corporate lawyers, dentists, PR reps—with all different needs. We have team leaders who are earning over $30,000 a month managing stylists all over the country. We have women who want to be independent stylists and make a few thousand in extra income a month. Then there are women who have turned this into a full-time career and are running million-dollar sales organizations on their own. And those are choices that Stella & Dot allows these women to make.

At this point, I'm in a couple of cities a week doing training and working with our leaders to help them grow. When you're running a hypergrowth start-up, there's not a lot of part time. But this is my company, and that means I am going to have lunch with my daughter every Tuesday and make time for vacations. I still control my own schedule. It's not a job where I have to choose between dropping my daughter off at preschool or being at a 7 a.m. meeting.

This year, we'll do over $100 million in revenue. In the first half of the year, we exceeded our entire revenue for 2009, so we are set to triple revenue in 2010. But, more than the company's revenue figures, the biggest source of pride for me is the amount of commission we are able to pay out to our sales force, in a time when people have really needed it most. We've paid out over $20 million to our stylists. And that's money that women are using to make ends meet. That's the reason I bound out of bed in the morning.

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How I Handled Myself During a Prison Riot

2011-02-27T12:54:00.000-08:00

Jerry B. Heftler showed a new client what he was capable of by jumping into action during a prison riot.

As told to Leigh Buchanan | Sep 1, 2010 Unflappable Jerry Heftler's entrepreneurial training included being a hostage negotiator.

" href="http://www.inc.com/uploaded_files/image/feature-140-Heftler-pop_4933.jpg" alt="Unflappable Jerry Heftler's entrepreneurial training included being a hostage negotiator."> Mike McGregor

Unflappable Jerry Heftler's entrepreneurial training included being a hostage negotiator.

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Arranging medical appointments is a trivial task, except when the patients are inmates who must travel under guard and without prior notice so they can't plot an escape. In 2006, Jerry Heftler ditched his old business model -- providing cardiac imaging services -- in favor of managing prisoners' outside care. Integrated Medical Solutions, based in Mansfield, Texas, contracts with hospitals and doctors around 13 client prisons, makes inmates' appointments, arranges for outside rehab and nursing services, and manages case files and insurance paperwork.

They were our second customer, and we'd had them only a couple of days: a federal prison in Texas with approximately 1,600 inmates. I'd made a preliminary call to the contracting officer -- our first point of contact -- and planned to conduct extensive conversations with the director of health services and other officials there the following week. Beyond that, we didn't even know who was who.

It was late on a Friday afternoon. My staff of three and I were phoning physicians' offices near the prison, setting up a network of providers willing to serve inmates. (That's not always easy. Some physicians resist exposing their regular patients to guys in handcuffs and jumpsuits. Even those who sign on with us often require that inmates be delivered through a back door and hustled straight to the examining room.) I was talking about the prison with one physician when he asked if I'd seen the TV. "There's a riot going on there," he told me.

The physician described the scene unfolding on his television and, sure enough, it was our new client's facility. He said there were medevac helicopters hovering overhead, so we knew there were injuries. I presumed chaos. Staff would be trying to account for every employee to make sure there were no hostages. Making sure there were no bodies. Working like crazy to secure the institution.

I immediately phoned the prison and worked my way through to the health-services director. I introduced myself and asked what we could do. Technically, our contract didn't kick in for another week, but she asked if we could start now. She and her small staff were triaging inmates (thankfully, no staff had been hurt, but one inmate died), then dispatching the worst cases on gurneys to the back gate, where they were being loaded onto helicopters and into ambulances. Many had head traumas and multiple stab wounds, but still they traveled in handcuffs. Whichever guards or other staff members were on hand jumped in alongside them. The emergency vehicles were transporting the injured to six hospitals in five cities as far as 75 miles away. In the chaos of those early hours, no one was sure who had gone where.

When you're new in a business, you want to impress customers with your experience. Probably few vendors could have reassured this client with, "Hey, don't worry. This isn't my first prison riot." But I'd spent 22 years at the Department of Justice, where among other things I practiced and taught hostage-negotiation skills. A cool head comes with the territory. I told the director of health services that we would track down the inmates, make sure the hospitals had authorization for surgeries and respirators, and arrange additional transportation and treatment at specialist facilities where needed. We would also alert the prison to everyone's whereabouts in an organized way so they could efficiently dispatch guards to take over for whoever had left with the injured. Even in their hospital beds, the prisoners would need guarding 24/7.

We spent the next eight hours and all of Saturday on the phone, first trying to convince hospital officials of who we were (they were deluged with inquiries from journalists and ambulance chasers, so they were understandably wary) and then struggling to put names to the 26 inmates who had been evacuated. Most had arrived at the hospitals unconscious, and the staff members with them often did not know who they were. And, of course, inmates don't carry wallets. In many cases, hospital staff had identified patients by their prison tattoos: "Inmate: knife through cross"; "Inmate: Mexican Mafia." To simplify things, I decided we would enter those same descriptors into our own system until we had better information. We used the tattoos to coordinate and track treatment with the hospitals, authorize procedures, and help health officials at the prison keep a handle on things while the corrections side contained the riot and brought life back to normal. For months afterward, we wrestled with the insurance snafus that predictably resulted from care administered amid such bedlam.

I had promised the director of health services I'd stay in constant touch. Once she finished triage, she was out and about in the facility. She gave me her cell number, which was useless since you can't bring cell phones into prisons. So I'd call the control center; they'd send her the message via radio, and she would rush to a phone. We had a lot to talk about. Most of the inmates required surgery -- some had more than 30 stab wounds.

We also found ourselves inundated with queries from the press. Once hospital personnel understood we were coordinating inmates' health care, they started giving our contact information to journalists. Family members started calling as well. I gave my employees a quick course in federal law-enforcement requirements for protecting information.

Today, we have 13 prisons under contract, but our relationship with that second customer is unusually close. We've been through the fire together and have a shared sense of perspective. When small problems crop up, no one breaks a sweat. They have confidence in us. We have confidence in us, too. When it was all over, we looked at each other and said, "If we made it though this, we can make it through anything."

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Why I Traded One Dream for Another

2011-02-27T07:38:00.000-08:00

Stewart Pisecco left academia for the uncertainty of a second career in business.

As told to Jason Del Rey | Sep 1, 2010 posinitiator();resizeFrame();Off Campus Stewart Pisecco left academia for the uncertainty of entrepreneurship.

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Mike McGregor

Off Campus Stewart Pisecco left academia for the uncertainty of entrepreneurship.

As a psychologist and a tenured professor who specialized in researching and devising strategies for teaching troubled children, Stewart Pisecco was doing the work he loved. But then he had an idea for something he thought could reach more children: software that lets teachers and school administrators easily track and manage the implementation of behavioral improvement strategies. And he had to decide: Is it worth risking one dream to pursue another?

I knew I wanted to be a psychologist from the time I took a psychology class as a junior in high school. And I knew as a sophomore or junior in college that I had a real interest in academia. I loved research and statistics and combining the ideas of research and social sciences.

I had been at the University of Houston for five years when I got tenure. I had my doctorate by 28 and was tenured by the time I was 34. At the time, I could never have imagined doing anything different. It was what I loved to do, and I had worked my entire professional career to get to that point.

I thought I'd be crazy to leave. I had pretty much a good job for life, was doing what I wanted to do, and had lots of security. At the same time, I was relatively young and thought I could take some risks.

The idea for our company came from one of those chance experiences. I was doing my taxes with TurboTax and just reading research literature on the typical reasons teachers struggle with behavioral intervention. And I thought, Why can't we come up with a software system like TurboTax that would guide teachers through the process of designing good behavioral strategies for their kids and then allow the administrators to monitor how the kids are responding to intervention approaches?

Most faculty members have a part-time private practice that they work on one day a week, but in 2000, I began committing that time to working on the business. I spent a couple of years researching the effectiveness of the software and then a couple of years working with teachers to refine the implementation process. But most of that work was getting crunched into the one day a week.

I thought it would definitely be a gamble to leave, but I read the market and got the sense that momentum was building. I always thought it was really important to chase your dreams, and this was my new dream. As I began seeing more results and as I felt like we were making a really good impact with kids, the decision became easier.

I always felt that we would do well. But I do remember driving out to an appointment about two years in and saying to myself, If we don't get this deal, it might be tough to get this thing going. A main struggle for us was dealing with the seasonality of cash flow. It's not a very transactional business, so it's very lumpy how we get our cash flow. Luckily, we had as a shareholder a group that did a bridge loan until the company got paid, and it didn't cost us equity. You don't find a lot of folks who will do that.

Now we're at the point where my vision has been laid out and is being embraced and adopted by customers. The excitement that comes with that far outweighs the sadness of leaving academia. So I've realized this is also something I really like to do. And it's very satisfying.

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As the Oil Keeps Flowing, a Gulf Coast Business Takes the Fight to BP

2011-02-26T22:16:00.000-08:00

Like many business owners, the BP oil spill has dealt a huge blow to fisherman George Barisich -- costing him thousands for every day his boat is out of the water. Now he's suing BP.

George Barisich, 54, has been fishing the Gulf Coast his entire life. First, as a kid, for fun, and eventually, for his livelihood, after taking over his father's fishing, crabbing, and shrimping business, which was founded in 1966.

A few months ago, business was looking pretty good. This past winter was particularly cold, which would make the spring good for shrimping. He invested more than $30,000 in a new shrimping boat, to prepare for the haul.

All that changed on April 20, after an explosion on a BP oil rig killed 11 workers and triggered the worst oil spill in U.S. history. Tens of millions of gallons of crude oil have poured into the Gulf of Mexico since then -- and the oil keeps flowing.

While the images of oil-soaked animals have been heartbreaking, and Gulf Coast states are working feverishly to protect their coastlines and beaches, the spill has also wreaked economic havoc on local business owners like Barisich -- who says he loses up to $5,000 for every day and a half he cannot fish and expects to lose a minimum of $150,000 because of the spill.

As president of the United Commercial Fisherman's Association, representing hundreds of commercial fishermen in Louisiana, Barisich says he is fed up with BP, describing the spill as the worst-case scenario for his industry. Barisich's organization and the Louisiana Environmental Action Network have slapped BP with a lawsuit -- over removal costs, property damage, and loss of wages. "Either they're gonna start doing something or we're going to make them do something," he says.
What was your reaction when you heard about the spill?Well, initially it was, you know, "Just another one." We didn't know any details about it. But three days later, we were interviewed for a little news story and said, "This isn't a little one. This is a big one! Let's get ready. Let's corral this stuff up before it gets much further 'cause the wind's getting ready to turn up the northwest and to come out the southeast and we're gonna be buried." And did anybody listen? When [BP] grabbed the boom material, the wind was already over 40 miles per hour. It was the biggest joke you ever seen in your life because the material only works in certain conditions. Y'all don't hear all that. The continuance plan was -- ugh, I don't know -- nonexistent from what I see.I'm getting as sick as I thought I would get when I told them it may happen. 'Cause we always gotta look at the worst possible scenario and prepare for it, and then pray and hope for the best. But now you're looking at the worst possible scenario coming down our back. Hey, this is here. It's on your ass and there's nothing you can do to stop it. And then the second worst fear is the pressure. We don't need a storm, we just get a depression and that stuff is gonna be everywhere. The boom material is gonna be everywhere. On my boat, in my nets. It's gonna be Nightmare on Elm Street. I don't see a decent outcome coming out of this unless God sends us a crazy fish that eats it up. And then for the government helping us? I want you to look back at history -- how many times they have promised to help the commercial fishermen and how many times they actually did. It's pitiful. So if I'm a little skeptical of the government helping us, it's understandably so. How have you been handling damage control? Well, up until two or three days ago, when the season opened, all I was doing was stuff like being interviewed, going on TV, going to meetings, going to other meetings, trying to educate everybody on what's going to happen to our industry and trying to get some governmental help. Trying to get BP to step up. Right now, I feel my place as the leader of the association is to be at every meeting I can be, to make people step up. But that's all I've been doing. There are a lot of other fisherman -- they decided to go ahead and work for BP. You know, clean-up programs. That's not for me.What is your Plan B, in case you can't fish for the rest of the season? I do have several options. I had purchased a couple of properties -- oh, 20 properties -- real cheap after Hurricane Katrina. I guess I'll try and make a loan and fix them. I really don't want to go to work for anybody. My wife asked me to do that after Katrina. She said, "Why don't you just give up all the boats and everything? We're gonna be screwed. Just go get a job." And I told my wife, "I am 51 years old. You think I could go take orders right now?" If we luck out and get a couple of grants with the association, [I would] work with the association to help find other people jobs. We're hoping to get a few grants out of this. We've been fighting this fight for over 17 years, so we have a good reputation for standing up for the fishermen. I can't retire. I can't just sit around and do nothing.
What's the worst effect of the spill you've seen?Part of this is the trickle-down effect. There's a net maker, the guy who makes and repairs the nets. He went to go work for BP and then someone went and squealed on him and said, "He's not a shrimper, he's not a fisherman," which technically he's not. But if he's not screwed just as badly, then who is? 'Cause he makes our net. And that's what's happening. We have friends fighting each other, 'cause you're working and I'm not. [BP] also has a bunch of part-timers who do fish, but they have a real job. So the way we look at it, they shouldn't be able to participate unless [BP] exhausts the real commercial fishermen in the area.Entrepreneur Spotlight

Name: George Barisich
Company: Barisich Inc.

Location: St. Bernard Parish, La.Tags: BP, BP oil spill, Entrepreneur Spotlight, fishing, Gulf Coast, Gulf of Mexico, oil spill, oil spill effects on small businesses, shrimping

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With Husband-Wife Team at the Helm, Belton Chalet Celebrates 100th Birthday

2011-02-26T12:27:00.000-08:00

Abandoned after World War II, Cas Still and Andy Baxter bought the historic Belton Chalet, rolled up their sleeves, and transformed it into one of Montana's finest hotels. This year, it turns 100.

This year marks the centennial celebration for one of America's great treasures, Glacier National Park. Located in northwest Montana, the park consists of 1.4 million acres of some of the most pristine wilderness on the planet, with breathtaking views all along the 50-mile Going-to-the-Sun Road that climaxes at the 6,646-foot Logan's Pass. With all kinds of events and activities planned throughout the year, visitors might discover another treasure -- the Belton Chalet.

A lodge on the edge of the park in West Glacier with 25 rooms and two cottages, the Swiss-style chalet just happens to be celebrating its 100th birthday this year too. Constructed for the Great Northern Railway, the lodge -- which first opened its doors on June 27, 1910 -- has a colorful early history, but it was closed during World War II and didn't fully reopen to the public until 1999. Husband-and-wife duo Cas Still, 63, and Andy Baxter, 52, bought the Belton in 1996, set about restoring it, and today have one Montana's hotel gems and one of the state's best restaurants. (Try the emu. Seriously. It's delicious.)

As the Belton prepared for the 100-year mark on June 27, Baxter was out-and-about fixing up the property, so Still shared the ins-and-outs of running a historic hotel, the centennial happenings, and the importance of bear repellent.

Are you and your husband native Montanans?

No, we moved here from Key West in 1987. He was a charter sailboat captain and I held every type of tourism job you can have -- bartender, housekeeper, property manager. Our specialty in Key West had been restoring old Victorian buildings, so we had a lot of experience, although we had never run a hotel before.

Did you move to Montana to take over the Belton Chalet?

We were here 10 years before we bought the Belton. We had two small children and wanted an affordable place to live where we could have a garden and horses. Andy spent three years restoring a small cabin on Flathead Lake, then he continued doing the same type of work on other houses.

His skills must have come in handy when you purchased the Belton.

He's known around here as "Handy Andy." All our general contractors were guys he'd worked for in the past. He got to be the boss, though, which is kind of fun.

Can you give us a quick history on the Belton's previous owners?

The Great Northern Railway ran it until shutting down the hotel during World War II. After the war, motels became a lot more popular, so it didn't reopen to the public until we took it over. It was sold to private hands, and at some point, the Luding family purchased it. They ran the back-country chalets in the park and always thought they would get the Belton back up and running, but never did. Kay Luding saved the Belton, though. It was suppose to be torn down in the 1970s when the highway was expanded, but she got it listed on the National Registry of Historic Places. The bar and restaurant was open back then, and the Tap Room was known as one of the rowdiest spots in the area. Around 1990, Kay Luding went into a nursing home and the place was sold for back taxes. Everything was shuttered.

When did you purchase it and what was the sale price?

We bought it in 1996 for around six-figures. The price was low and we got a straight bank loan.

What kind of condition was the lodge in?

Structurally, it was in fine shape, but the restoration was a lot more complex that we initially thought. We expected just to do a clean up. The problems started that first winter, which had one of the worst snowfalls on record. The summer of 1997 was spent rebuilding the roofs. There were also huge problems with water runoff and the whole place needed an electrical upgrade because it was the same system that was put in sometime between 1913 and 1920. It needed all new electricity and plumbing. I estimate we put in $2 million.

Did you and Andy ever get into the mindset that the restoration wasn't going to work out?

Our mindset was that we've dumped a hell of a lot of money into the place and we have to get it done.

Was there a lot of old stuff that you hauled out of the Belton?

Tons. It was floor to ceiling in every room. I don't think anybody threw anything out. We made hundreds of trips to the industrial landfill. There was 60 years worth of stuff, everything from the oak antiques you see in the rooms today, to a really great pair of leather fringed rock-and-roll pants from the 1970s. There were scrapbooks, lithographs, paintings and receipt books -- all kinds of historical items that we display in the hotel. Cleaning out the Belton took an entire year.

What else went into getting it ready for the public?

We restored old furniture, built stained-glass windows, repaired the floor, excavated and reconstructed the stone pillars out front. It was an enormous process, so we opened the Belton in phases. The restaurant opened first. We served microwavable nachos. As far as lodging, we had a brief trial run in 1998. By 1999, it wasn't completely finished, but we were open to the public.

Was it a big deal locally when it reopened?

Yes. People in the community were always coming around, very interested in our efforts. It's been an important landmark here forever. It's been incredible. Most of our employees are people who live in the area and we have a low turnover rate.

When did you feel you reached the point where the Belton became what you envisioned?

I'd say about five years ago. Our people are loyal and stuck with our vision of what the Belton could be.

How have you been affected by the recession?

We all felt it the last couple of years, but this summer is looking a lot better. The centennial has energized people to come visit Glacier. Business is booming. We still have a few open rooms, but I don't think they are going to last long.

Does the Belton have a typical guest?

We get all kinds. We have outdoor lovers, hikers, skiers, bicyclists and fishermen. We also get train enthusiasts and those who just want to hang out on the porch. I'd also say 75 percent of people come for the restaurant, whether they're guests or not. We host a lot of weddings and once people come, they're hooked. We get plenty of repeat visitors. After Labor Day, we generally see a lot more retirees. The cottages and the restaurant are open in the winter. That's all locals, and it's a lot more laid-back. The weather can be brutal, snow removal is a major issue, but a lot of people like to just put their feet up and sit in front of the fireplace.

The restaurant is that big of a draw?

Our chef, Melissa Mangold, is amazing. She started as the sous chef and took over the kitchen in 2006. We serve all local meats and vegetables. Andy and I own a one-acre orchard called Still Back There, so we grow the cherries, apples, plums, raspberries and huckleberries. We use them in our homemade fruit pies and baked goods.

The Belton is technically outside of Glacier Park. Is there competition with the chalets inside?

I'd say we offer something different, but it is a congenial relationship. The red "Jammer" tour buses pick up and drop off guests here. Everyone connected to Glacier Park knows we're in this together.

What celebrations do you have planned throughout the year?

We held a big New Year's Eve party with more than 100 guests. It was such a big hit we may do it again. The actual birthday party is June 27, where we will be having cake, guest speakers like members of the Luding family, live music and a historic art show. We're also hosting various tours throughout the summer and an employee reunion in September. I also write poetry, so we're also having a free poetry reading on June 25 where contest winners will recite their work. Adding the things you love to your job makes it that much more enjoyable.

What's the biggest challenge in running the Belton?

For me, it's being open to change, letting go of my views as to how things should be and letting others contribute. It's a challenge, but the young people who help us run it are the best part. New ideas can revitalize the most historic of institutions.

Do you have trouble with wildlife on the property?

The deer love our tulips in the spring and the bears love our apple tree in the fall. We're always on the lookout, trying to beat the bears to the fruit.

I'm guessing a lot of tourists are curious about the bears.

We get a lot of interest about bears -- they are a Glacier park draw themselves. You can't take bear spray on airplanes anymore, so we rent it to guests. The park rangers are great about answering questions and keeping watch on the bear population.

What are your future plans for the Belton?

Our son works here now, and our daughter has in the past, and they're both interested in running it, as our are longtime employees. We'll figure out a way to keep it in the family. We want to add some rooms. We'll use recycled materials, so our new ones look like the old ones.

Entrepreneur Spotlight

Name: Cas Still and Andy Baxter
Company: Belton Chalet
Ages: 63 and 52
2010 Projected Revenue: Undisclosed

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Responding in a Time of Need

2011-02-26T05:35:00.000-08:00

When disaster struck in Haiti, entrepreneur Jean Orelien rushed to assist his homeland.

As told to April Joyner | Sep 1, 2010 Statistician to the Rescue Jean Orelien discovered many Haitians still had working cell phones after the earthquake. That allowed him to put his survey skills to work.

" href="http://www.inc.com/uploaded_files/image/feature-124-Orelien-pop_4928.jpg" alt="Statistician to the Rescue Jean Orelien discovered many Haitians still had working cell phones after the earthquake. That allowed him to put his survey skills to work."> Mike McGregor

Statistician to the Rescue Jean Orelien discovered many Haitians still had working cell phones after the earthquake. That allowed him to put his survey skills to work.

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Jean Orelien left his native Haiti in 1980 and later made his way to the U.S. to attend college. He stayed on, earning advanced degrees in statistics and public health. In 2001, Orelien founded SciMetrika, a public health consulting firm that works with agencies such as the Centers for Disease Control and Prevention and the Environmental Protection Agency. After a massive earthquake devastated Haiti last January, Orelien organized a nonprofit team to gather data on victims, with the goal of helping aid organizations more accurately target their relief efforts. Now, Orelien hopes to conduct similar studies around the globe.

As I heard the news reports on the earthquake, I realized there wasn't a good handle on what was happening. There were estimates on the number of the dead and the homeless coming from various news media, and they kept on changing. It wasn't clear who was helping to collect that data. I thought that as someone who knows the country and as a statistician, I could help. I felt a duty to contribute.

I reached out to the president of the American Statistical Association about providing volunteers. He told me it would take too much time to put together a proposal for the board to vote on. He recommended that I go to Statistics Without Borders, a member group within the organization. We exchanged a couple of e-mails, and they were on board.

In March, I went to Haiti with three members from Statistics Without Borders. Our goal was to gather data on displacement and the economic impact of the earthquake. The standard method of collecting data is to conduct a field survey where interviewers knock on doors, but that would not have been practical. Then we saw that pretty much everyone, especially in Port-au-Prince, had a cell phone, so that was the way to go.

I still have cousins and in-laws in Haiti. I brought along three tents for them. That's the most I could carry. I wasn't prepared to see people living in such substandard conditions. There were a lot of people who weren't even living under real tents -- they were makeshift tents. I saw people taking showers, and their privacy was not even protected.

I stayed in Haiti for nine days in March. We met with Voilà, one of Haiti's main cellular providers, and we talked to people in the Ministry of Planning. We were able to call about 200 numbers for a preliminary study to determine our sample size. Once we got back in the U.S., we finalized our questionnaire.

In June, I went back for seven days to collect more data on things such as marital status and household structure. We had 10 university students from Haiti serve as interviewers. We're analyzing the data now. With all the problems with latrines, with sewage, certainly there are diseases that have broken out. Public officials need to be aware so that they can take action in a timely fashion.

We're in the process of creating a nonprofit organization to pursue projects in global public health. There is often resistance among aid organizations to working with for-profit companies, and we don't want our status to prevent us from consideration. After the earthquake hit, we received information that the CDC was planning to help rebuild Haiti's health infrastructure. We want to be part of the solution there, and we want to get involved in other countries as well.

My connection to Haiti is a big part of my desire to work globally. Certainly, there's a greater need there than in the U.S. when it comes to public health. I also feel that I have not paid my dues. I had gone back to Haiti a couple of times since coming to the U.S., but not as much as I should have. I'm living a normal life, in a suburban area with my wife and four kids. I think my work with SciMetrika thus far is a start, but it's just the tip of the iceberg, and I'm looking to give even more.

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From the Ashram to the Strip Mall

2011-02-25T20:38:00.001-08:00

After living 20 years in an ashram, a scandal caused Michael Penny to start over and create a new life for himself selling organic mattresses.

As told to Lindsay Silberman | Sep 1, 2010 Past Life For 20 years, Michael Penny lived without TV, newspapers, and material pleasures.

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Michael Penny had never been interested in business. For two decades, he lived in an ashram, a secluded spiritual compound in which he practiced yoga and sought purity and simplicity. But when a scandal rocked his community, Penny was forced to reevaluate his life. He moved out and started over. At age 41, with little money and no formal work experience, Penny struggled to support his family. He eventually found a new path to fulfillment by launching Savvy Rest, a Charlottesville, Virginia, maker of organic mattresses. His products are sold by dealers across the country.

I took my first meditation course when I was in college. It felt so good. I felt relieved and centered. Meditation got me away from everything everybody else was doing, which back in the '70s was drinking and smoking pot. I majored in psychology, because I was interested in helping people. I didn't want to have anything to do with the business world.

Usually people strive for money, power, fame, or sex. I didn't see myself becoming fulfilled by any of those things. I graduated college in 1975 and moved into an ashram in Pennsylvania. I don't know if it was just anxiety about stepping into the world or an inability to make a decision, but I felt like I really wanted to experience going deeper within myself and having a deeper experience with yoga.

The ashram was demanding in a lot of ways, but to me it felt like home. We woke up every day at 4:30 a.m. We dressed in white and practiced yoga, meditation, breathing exercises, and chanting. We all had jobs within the community, which grew from a group of 70 to hundreds of people. My jobs ranged from bookkeeping to managing the kitchen. I was a good yoga teacher.

We lived very simply. The ashram provided a small allowance as well as food and clothing. Everyone shared the common understanding that we were spiritual seekers on a path of enlightenment and self-discovery.

While living there, I met my wife, Heather. We married in 1982 and had two sons, Gopal and Santosh. We felt we had found what we were looking for. We planned on staying in the ashram for the rest of our lives. But in 1994, everything changed. It came out that our guru had been sexually abusive with some of the women who lived there.

We didn't understand how we could have allowed ourselves to be so misled. We wanted a clean break, so we picked up and moved to Virginia. We didn't know who we were separate from our life in the ashram. But I believed we would land on our feet. We were willing to work hard. And we had lived for so long on nothing that we had nothing to lose. I think we were overconfident.

We had enough money for a few months' rent. I believed that the universe would provide for us. My wife worked as a massage therapist. I took the first job offer I got, which was selling satellite dishes. I said to my wife, "Well, it must be meant to be. I'm supposed to sell satellite dishes." I lasted only three weeks. I was awful at it—I hadn't watched television in 20 years!

I needed to make a living. I worked for a while at a senior center and then delivered newspapers for a few months. I just did whatever I had to do. It was overwhelming emotionally, but I didn't have time to process all of that.

Eventually, I got a job from someone who had lived in the ashram. He had a futon store, and he needed a manager. He wasn't a very organized person, but I was. I worked at the futon store for about six years.

In 2003, I decided to start my own mattress store, the Savvy Sleeper. People were constantly coming in asking for all-natural mattresses. I tried a few different kinds, and they tended to be either really hard or really soft. They just weren't good-quality products.

I met with a natural latex manufacturer from India, and we began manufacturing organic latex mattresses. Today, we have about 60 dealers and 15 employees. My youngest son works in our warehouse part time, and my older son handles our website and marketing.

When you have a need for something—whatever it is—then you put more energy into it. In this case, I had a personal need for my company to be successful. Sometimes, people say you create your own reality or that if you believe in something hard enough, you can make things happen. I think there's some truth in that. But I also think there are a lot of forces at work, like grace and luck.

After living in the ashram, I believe that I know how to listen to what my customers need on a deeper level. For example, I've learned that trying out a mattress in a store for a few minutes isn't a good-enough test. That's partly because of the nature of the situation. The customer testing out the mattress is often stressed—and often hovered over by a salesperson on commission. The customer is usually wearing constrictive clothing and feeling muscle tension from the day.

We designed our mattress in layers. Each layer can be firm, medium, or soft, and there are many possible combinations. If a customer doesn't like what she chose the first time, she can swap layers for 90 days. For example, she could exchange a firm layer for a soft one. Sleeping on a mattress for a few weeks is the real test. We've made it so people can do that in their home, where they feel most comfortable. About 10 to 12 percent of our customers will do an exchange; for the rest, it's comfort and relief that feels right from the get-go.

When I started my business, I wanted to create an environment that was safe, warm, and inviting to everyone, including employees, suppliers, dealers, and customers. I always tell every new employee that all customers must feel safe, warm, and welcomed. I'm not particularly demanding about anything else.

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The Body Jewelry Magnate

2011-01-29T00:56:00.000-08:00

With Vanessa Nornberg at the helm, Metal Mafia, a supplier of body jewelry, has not felt the effect of the recession.

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Mark Hartman

Vanessa Nornberg, President of Metal Mafia

What recession? Sales at Metal Mafia, a New York City–based company that supplies body jewelry -- nose rings, belly rings, and more -- to 4,000 retailers in 23 countries, surged more than 30 percent over the past year. Indeed, growth has been steady since Vanessa Nornberg founded the business in 2004. Metal Mafia brought in $3.5 million in 2008, sending it to No. 258 on the 2009 Inc. 500.

I think body jewelry is like chocolate or cigarettes: It's something that gives people comfort even in the worst of times.

I have a tattoo and multiple piercings; I've had a nose ring since I was 17.

My first job out of college was working as a sales rep for a business that sold sterling silver body jewelry. I quit after a year to get my master's and eventually moved to France. A few years later, my old boss hired me back to run the company for him. Two years later, I started my own business.

We started with the idea that we could do things for our customers that weren't being done by our competitors.

We do all our own designs. While we offer a lot of basic products like a plain tongue or navel barbell, we also have products that are more decorative and innovative. Our ball-bearing tunnels are earrings for people with stretched earlobes; they contain actual ball bearings that spin. We also use interesting materials, such as olive wood and crocodile wood.

All 15 of our employees are based in one office in Midtown. We stock 7,000 products there. I am a control freak, so I like to have my people and products in my line of sight.

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The High Fives: The Top 5 Minority- and Woman-Run Companies

2011-01-28T20:38:00.000-08:00

A look at some of the most interesting people and places on the Inc. 500

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Raj Prasad
WDFA Marketing • No. 5
Prasad was born in Fiji and moved to the U.S. at 2. He landed his first advertising job at 16 and at 25 founded WDFA -- which runs microadvertising campaigns. "It's all about buzz."

Kevin Paul
KPaul • No. 10
Paul moved from India to Indianapolis at 8 and joined the Army straight out of high school. His business, KPaul, sells supplies to the government. Paul says 14 years in the service taught him how to handle clients. "Just give them the facts -- don't sugarcoat anything."

Siva Kumar
TheFind • No. 12
Kumar's grandfather started one of India's major movie studios, and his relatives operate theaters and produce movies. But Kumar chose to forge his own path. He moved to the United States in 1981 and started the e-commerce site TheFind.com in 2004. "I just want to do things on my own."

Michael Evangelista-Ysasaga
The Penna Group • No. 13
Evangelista-Ysasaga started a general contracting firm at 18. When he became a lawyer, his clients were builders. Now he manages construction projects for federal agencies. "Contractors don't always generate good paperwork. But for the government, documentation is critical."

Amit Raut
Digital Advertising • No. 14
Raut, the son of Indian immigrants, launched Digital Advertising in 2000. The company does just what its name suggests: manages online marketing and lead generation campaigns. "It's all about delivering superior service."

29 San Francisco Bay Area

23 Dallas-Fort Worth-Arlington, Texas

27 Los Angeles-Long Beach

48 New York metro area

48 Washington, D.C., and Maryland and Virginia suburbs

Jamie Arundell -- Latshaw
Lexicon Consulting • No. 4
A West Point grad and former officer in the U.S. Army's Transportation Corps, Arundell-Latshaw founded Lexicon in 2005. The company creates mock Iraqi and Afghan villages used to train military personnel. "Service members need the most realistic training possible."

Maria Vogt
Ayuda Management • No. 22
Vogt learned the ropes of government contracting at her father's IT business. In 2002, she launched Ayuda Management, which provides construction management services to government agencies. "I thought, I might as well win work for myself and hire good people to do the work."

Marie Diaz
Pursuit of Excellence • No. 26
Diaz puts family before work. In the early days of Pursuit of Excellence, the human-resources firm she founded in 1994, she often turned away work to spend time with her three sons. "Now, it's easier to focus on the business."

Eileen Gittins
Blurb • No. 47
Gittins is the founder of Blurb, a website on which writers and artists design, print, and sell books. She attributes Blurb's success to the rise of social media. "People who are not authors now have audiences that want to see their books."

Mindy T. Withrow
CSS Distribution Group • No. 55
Withrow and her husband, Daniel, were packaging-industry veterans when they launched CSS, a warehouse supply business, in 2006. Mindy got the CEO title thanks to her sales experience. Being a certified woman-owned business helps CSS land key accounts. "Clients can get tax breaks for dealing with companies like us."

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A Supplier of Film Extras Now Trains Military Troops

2011-01-28T14:00:00.000-08:00

Jamie Arundell-Latshaw's company Lexicon Consulting creates mock villages to help train troops who are headed overseas.

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Lexicon Consulting, in El Cajon, California, got its start by providing extras for big-screen military battles. Now CEO Jamie Arundell-Latshaw's company creates mock Afghan and Iraqi villages to help train troops who are headed overseas. She spoke with Inc.'s Jason Del Rey about Lexicon (No. 4), the top woman-run company.

What are the most radical circumstances your employees replicate?

At Fort Irwin, in California, as troops and medics drive up to a village, a rocket-propelled grenade goes off, a car explodes, and we have role players screaming and chanting. We hire amputees who fall out of vehicles. The wounds look realistic, and they're set up in a way that the medics have to put pressure on the wounds and stop the bleeding. Our goal is to make the simulation as real as possible.

Where do you find your role players?

One of the reasons we have our office down in El Cajon is that there's a big Iraqi population there. Our recruiters know what we're looking for.

So, what do you look for in a role player?

We want people who can speak the language and understand the culture. And we also want people who have a passion for training troops the right way. Without that, you're not going to be motivated to go above and beyond to provide a better service.

What is your biggest challenge going forward?

We're growing so fast, so our challenges are hiring people who share our goals and having liquid cash. We don't always get paid by the government within 30 to 60 days, so we have to balance trying to get new work with making sure we have money to perform the work.

And the most rewarding part of the job for you?

When troops return from multiple deployments overseas, the role players and managers who worked with them often get feedback like, "Learning what to do in each scenario made a difference in how I performed over there."

To learn more about Lexicon's military training work, "Lexicon Consulting," and to browse the complete Inc. 500/5000 list online, go to www.inc.com/inc5000.

Inc. Live: Ask Top Entrepreneurs Your Questions

Check out our new series of live video chats featuring accomplished entrepreneurs such as Inc. columnist and 37signals co-founder Jason Fried, Zappos CEO Tony Hsieh, Mint.com founder Aaron Patzer, and Method co-founder Eric Ryan. To view the schedule of chats and watch archived chats, and to pose a question during our next chat, go to www.inc.com/live.

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How Bill Bartmann Lost It All and Got It Back

2011-01-28T10:27:00.000-08:00

Bill Bartmann lost $3.5 billion and his company. Some people would have been discouraged by that.

As told to Darren Dahl | Sep 1, 2010 Ready for More Bill Bartmann says losing $3.5 billion really wasn't so bad.

" href="http://www.inc.com/uploaded_files/image/feature-94-Bartmann-pop_4927.jpg" alt="Ready for More Bill Bartmann says losing $3.5 billion really wasn't so bad."> Mike McGregor

Ready for More Bill Bartmann says losing $3.5 billion really wasn't so bad.

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Bill Bartmann has known great success, but he is best remembered for losing some $3.5 billion in paper wealth and his status as one of the richest people in the U.S. That was 12 years ago, when his debt-collection company, Commercial Financial Services, collapsed in scandal. But Bartmann has been climbing back, using Bill Bartmann Enterprises first to tell his story through books and on the speaking circuit, then to teach other people how to make money collecting debt the way he did with CFS. And now, at 61, he has yet another big idea.

In October 2008, I was watching television with Kathy, my wife of 38 years. We were watching C-SPAN at the moment Secretary of the Treasury Henry Paulson stood up on a podium and asked Congress for $700 billion. After he said that, we just looked at each other with stupefied looks on our faces that said, "Is this really happening again?"

What Paulson was doing was running the same plays the government did back in the 1980s with the Resolution Trust Corporation after the failure of the savings and loan associations. We had built our company, Commercial Financial Services, at that time by buying up debts from the government on the cheap and then collecting on them. After we experienced that sense of déjà vu, I asked Kathy if she wanted to go do it all again. She said no, that was a lot of work and we're older now. That's when we decided to do it a different way. We would show other people how to do it.

We started CFS in 1985. It was phenomenally successful and was a four-time Inc. 500 company. We also had a lot of fun. I once leased 27 Boeing 747 jets to fly our 3,900 employees and their guests to Disney World for a weekend. Another time, I dressed up like Caesar and was carried on a throne into a Las Vegas casino, where I then wrestled Hulk Hogan in front of 6,000 people. In 1997, I was called the 25th richest person in the U.S. Then I lost it all.

CFS ceased to operate after an associate of mine was convicted of a crime. Everything came to light after someone sent an anonymous letter to the credit rating agencies. When I confronted my associate about it, he didn't deny it. He eventually went to prison for five years, but our reputation was ruined.

You can't imagine how hard it is as all of your friends start running away from you. The words of those people who accused me and made allegations have faded. But when I think back to the friends who weren't there -- that hurts more than strangers accusing me. It's easy to forgive strangers since they don't know any better.

It got worse when the federal government decided to indict me on 58 felony counts. That's a world-class problem. That's not like having a bad-hair day or losing a deal with a customer. When the government indicts you, it's calamity time.

Fortunately, Kathy and I mustered the courage and strength to deal with the adversity. I was innocent of the charges and refused to take the misdemeanor deal they were offering. I challenged them and went through a full-scale trial. Eventually, I was acquitted. I even received an apology from the government for prosecuting me, which rarely happens.

But I was bankrupt, and I wondered why all this bad stuff was happening to me. But what could I do? Blame someone else? Cry in my beer? It wasn't the first time I had lost everything. I needed to find a way to crawl out from the hole I was in, to come back one more time. I have always gotten back up after someone knocks me down. I grew up in a rough neighborhood and pulled myself up time and time again. I'm not sure why. Maybe I'm still trying to prove something to my third-grade teacher.

I took a good look at my personal inventory by asking questions like, Who am I? What do I know? What am I good at? What am I not good at? From that, I figured out I had a great story to tell about overcoming adversity and challenges. I decided what I should be doing is teaching my story so that when other people suffer their own calamities, my experiences might encourage them. So, I wrote a book and started traveling on a speakers' tour with people like Steve Forbes and Colin Powell. It was called the Get Motivated! tour. And so I stood onstage in front of 50,000 people and told my story.

I got to tell about what it was like to go broke, something most people don't like to admit. But I would tell them with a smile that I went from the 25th richest person in America to the 25th brokest person. I let them see that you can survive anything. It is every bit as bad for people suffering from losing jobs and their homes as it was for me to lose $3.5 billion. My job was to give them hope and inspiration that they could overcome their challenges.

But then there was Paulson on C-SPAN. Lo and behold, I recognized the same economic gaps that existed in the 1980s were back. I thought, Wow, this is too coincidental. There must be a purpose to this. At 59 years of age, I didn't want to build another billion-dollar company. But I could teach other people how to do what we did at CFS, to buy people's debts for nickels on the dollar and then treat them with dignity and respect. People want to pay their debts, but not everyone has to for you to make money. Now, we teach people how to create their own businesses during these tough economic times, which helps them make money and overcome adversity at the same time.

Our program is like going to school. We offer a two-day seminar in Palm Springs that introduces the topic and the industry. We also offer a five-day program where I'm the instructor. When people pay you money, they want to learn from you, not a surrogate or substitute. We have had more than 2,000 people go through the program.

As we saw how well our students were doing, Kathy and I looked at each other again. And this time, we said, "This is too good an opportunity to pass up. We need to do this." So, we launched a new company on July 1, 2010, called CFS II. We hired eight former CFS employees to get started and then started talks with hedge funds on raising $400 million, which we will use to build a new debt portfolio.

We are about to see history repeat itself. I see a great future coming out of this bad economy. I really feel bad for all the people on the wrong side of the coin. But if we help those people come out of it and we get paid, that's a great thing.

Going broke has helped me by providing me with opportunities to succeed. What separates successful people from those who aren't is the way you deal with problems. And, as an entrepreneur, there will inevitably be problems. It's the nature of the beast. I do understand that there could be another challenge in front of me, something I accept and embrace. But I do work hard every day to make sure it doesn't happen. I want my two daughters, who both work in the business, to succeed me and have a thriving business to manage in their lifetimes. You have to be a masochist not to hope for a happy ending this time.

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For These Business Partners, Age Is Just a Number

2011-01-28T06:39:00.000-08:00

Amy Gonzales and Kelly Caldwell didn't allow their difference in age to stand in the way of their partnership.

As told to Darren Dahl | Sep 1, 2010 Good to See You Kelly Caldwell (left) and Amy Gonzales get together once a month or so.

" href="http://www.inc.com/uploaded_files/image/feature-128-AKEnviro-pOP_4929.jpg" alt="Good to See You Kelly Caldwell (left) and Amy Gonzales get together once a month or so."> Mike McGregor

Good to See You Kelly Caldwell (left) and Amy Gonzales get together once a month or so.

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Amy Gonzales, a geologist and wetlands scientist, played mentor to Kelly Caldwell, a biologist, at their former employer, for which they did environmental-impact studies of proposed gas pipelines and other energy projects. When Gonzales grew frustrated with her bosses, Caldwell, who was 17 years her junior, suggested they start their own company. The result is AK Environmental, which performs environmental surveys and manages construction projects nationwide. The women run their company virtually—Gonzales lives in New Jersey; Caldwell, in North Carolina.

Kelly Caldwell: I think people thought we were nuts to quit our jobs and start our own business. I think they also said, "Is Amy crazy to trust this kid?" I was just 26 at the time. She was the one with all the experience.

Amy Gonzales: I didn't even think about her age. If people can do their job, it doesn't matter how old they are.

KC: People would always tell me that it was strange that Amy and I never worked in the same place. But we never did. She mentored me, but I was in New Jersey, and she was in Pennsylvania. I call her 10 times a day and e-mail constantly. Communication has never been an issue between us.

AG: I own 60 percent of the business, and Kelly owns 40 percent. In the beginning, we both worked from our homes. In 2004, we hired my husband, Ed, who is an engineer. That's when I moved my office out of the house, because we couldn't work together very well.

KC: Around that same time, I had my first daughter and stopped doing fieldwork. We were doing other hiring as well, and as we started to grow—from six employees to 11 and then to 40—it became increasingly important for me to focus on the business side of things anyway, like payroll, invoicing, and insurance. When I had my second daughter a few years later, I did payroll in my hospital room as the nurses went in and out.

AG: I focus on the technical and marketing aspects of the business, and Kelly does an amazing job focusing on issues like banks and payroll. There isn't a lot of overlap.

KC: I admit that I miss doing the fieldwork from time to time. But this role was what I needed to do. Now, I don't think I could trust anyone else to do this.

AG: I've had employees ask me why they have to carry a business card around that says our company is a woman-owned enterprise. And I tell them, "Because it is." We work in a male-dominated industry, and we're proud of how quickly we can turn projects around and cut through the red tape. And, while we are serious about our business, we like to be lighthearted, too. Sometimes when we're in meetings with clients, it's like they have never heard anyone laugh before.

KC: The funny thing is that Amy and Ed are very well known in the industry. I have had employees or customers ask if I'm Ed's daughter. I even had an employee tell me he didn't know I was one of the owners. It makes me laugh to think about it. Ed actually reports to me, but mostly just for technical reasons. The three of us work well together.

AG: Kelly makes a real effort to visit the staff out in the field, so she sees more of them than I do. We have done work in 20 states, so we have staff all over the place. We encourage everyone to call and talk to us. We also try to do marketing things together so that our clients can see the face of AK. They always seem excited when they figure out that, Oh, AK comes from Amy and Kelly.

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Inc. 5000 Update: Dirt Pros

2011-01-28T01:41:00.000-08:00

Business lessons from the basketball court.

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Jeffery Salter

Marcell Haywood of Dirt Pros

Marcell Haywood, a former point guard for the Florida State Seminoles, says most of what he knows about business came from sports. In particular, Haywood, now 30, stresses teamwork at his 280-person company, Dirt Pros, which provides maintenance services for businesses in South Florida. Dirt Pros brought in $2.6 million in 2008 and captured the No. 232 spot on the 2009 Inc. 500.

I got the idea for Dirt Pros back in 2003, when I was still in school. Before a game against Georgia Tech, I met a gentleman who had just sold a janitorial business for $6 million. As I sat there icing my elbow, I knew I wasn't going to play basketball forever. Starting a business like his seemed like the way to go.

On the court, I was a point guard. My job was to facilitate and distribute and get everyone involved. I use those same skills now as a CEO.

My responsibility is to give the people the resources they need to be successful and then get out of the way.

We made the decision to switch to using only environmentally friendly chemicals and products, because we didn't want our employees exposed to anything that would harm them. We stopped using bleach, for example, because it causes upper respiratory problems. It cost us a mint to make the switch, and we got pushback from some of our customers. But it was the right thing to do, and it has paid off for us since.

One of our missions as a company is to create 1,000 quality jobs in South Florida. Part of that is doing our best to engage our employees as much as possible. Rather than tell them what to do, I ask a lot of questions about what we should be doing. Our turnover rate is one-third of what is typical in the industry. I'm proud of that.

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How Google Cost Me $4 Million

2011-01-27T20:47:00.000-08:00

Being penalized by Google made Ryan Abood’s company stronger.

As told to Nitasha Tiku | Sep 1, 2010 Take Your Medicine Ryan Abood fessed up, then made big changes.

" href="http://www.inc.com/uploaded_files/image/feature-102-Abood-pop_4947.jpg" alt="Take Your Medicine Ryan Abood fessed up, then made big changes."> Mike McGregor

Take Your Medicine Ryan Abood fessed up, then made big changes.

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When Ryan Abood looked at the books for his parents' New Hampshire flower shop, one number popped out. Without a bit of advertising, sales of gift baskets had grown 400 percent. For a year and a half, he worked a hundred hours a week to make his spinoff, GourmetGiftBaskets.com, into the third-largest player in his niche. Then, one day, he woke up to find that Google, the source of 80 percent of the company's revenue, had banished his site from its search results. His company ended up the better for it.

On November 11, 2008, I woke up at 6 o'clock and did a Google search on my phone, like I do every morning. We're usually one or two for just about every industry keyword. But we were nowhere to be found. I opened up my laptop. We weren't in the first thousand results. This was right before the holiday season, when we typically make 40 to 60 percent of our annual revenue. It was really, really devastating.

We weren't sure what had happened. Occasionally, Google will drop a site from the index -- just algorithmically forget about you for a few days. People said, "You either have some type of temporary exclusion, or you have a penalty."

I called the two companies we hired to improve our ranking. In the past, I'd done all our search-engine optimization myself. But as we grew, we started paying companies to reach out to relevant sites and ask them for links. Instead, one of the companies admitted it was paying for links. Google looks at that like buying an election.

Google has a form called the re-inclusion request. We call it the Google confessional. We said, "These are the links that were paid; these are the links that weren't paid. We've obviously violated your trust, and we're taking steps to remedy it."

That holiday season, we pay-per-clicked out the wang. We spent a lot of money. They penalize you organically, but they still let you buy ads. We leaned on our affiliate channel. Meanwhile, we were slashing inventory, letting people go, getting neat and trim. It ended up costing us $2 million in sales that winter and another couple million in 2009.

Before the penalty, we had zero social media presence. We sort of looked at it like, "It must be nice to have the time to do that." Now, as part of our whole strategy of never buying a link again, we blog about anything. We're up to 3,200 Facebook fans. We Twitter every day.

This March, we also hired a manager of comparison shopping, a social media manager, an affiliate marketing manager; and we have someone in-house to watch our link portfolio. If somebody might misinterpret a link as paid, we take it down. We're not messing around.

We didn't see the kind of ratings we had before the penalty until Google's Caffeine update, this June. That was our final pardon. Now we're back at the top.

Without the Google penalty, we wouldn't be anywhere near as far along as we are. You have two choices: You can roll over and die, or you can grow beyond it.

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Why I Stepped Down

2011-01-27T17:11:00.000-08:00

Why the former CEO of Eco-Products, Steve Savage, thought the family business would be better off with a more experienced leader.

As told to Jason Del Rey | Sep 1, 2010 Letting Go Steve Savage wondered if the family business would be better off without him.

" href="http://www.inc.com/uploaded_files/image/feature-186-Savage-pop_4942.jpg" alt="Letting Go Steve Savage wondered if the family business would be better off without him."> Mike McGregor

Letting Go Steve Savage wondered if the family business would be better off without him.

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During a summer hike with his son, Steve, in 1990, Kent Savage proposed they start a business that would distribute products made from recycled content. Over the next decade, they built Boulder, Colorado–based Eco-Products into a profitable distributor of items such as earth-friendly disposable cups and cutlery. After Kent died, Steve oversaw an ambitious shift in the business model. The change spurred phenomenal growth. But with that growth came a startling realization for Steve: Perhaps the best thing for the business would be for him to step aside.

My dad retired in 1999. That's when I became president and CEO. For 15 years, we were a retail distributor for other manufacturers. We started to have abnormal success in restaurant supplies and realized if we ever really wanted to grow the brand, we needed to start manufacturing the products ourselves.

In 2005, we began a two-year process of transforming into a manufacturing wholesaler. We wanted to expand into new sales channels, such as office supplies and retail, but I didn't have any experience in those areas. We also wanted to start making acquisitions.

At first, we tried to hire a CFO who had the experience we needed. It was during that process that I thought, You know, I don't think having a CFO is going to solve our problem. I realized that we needed to look at my position. The company is very special to me. It's a family business, so I wanted what was best for it, and I thought it may be best to hire a more experienced CEO.

I mulled over the decision for three or four weeks. My siblings and mom own stock in the company, but they aren't involved in business decisions. My wife was supportive, though she was more nervous than I was about the move. I also had lunch with Aaron Kennedy, the founder of Noodles & Company. He told me that going from CEO to executive chairman of his business was the best decision he ever made. That helped.

It was definitely emotional, but by the time I made up my mind, I was 100 percent certain it was time to step down. I led the process to find a replacement, with the help of three board members. We notified our management team, and they interviewed our final two candidates. One of them was Bob King, who had taken Corporate Express from a $50 million business to a $4.5 billion business. It was obvious that he would be a great replacement.

I announced the news to the rest of the company at 8 o'clock in the morning on Bob's first day in July '09. The team was a little nervous at first, but when Bob stood in front of the group and started to talk about his background and the future of Eco-Products, they responded very well.

As expected, Bob has expanded Eco-Products into new channels with ease. Today, our products are available on the Staples and Costco websites. I'm chairman of the board. I go to the executive meeting every week, so I know what we're doing and why; I'm just not involved in rolling it out. I spend 10 percent of my time on Eco-Products and the rest on National Eco Wholesale, a distributor of eco-friendly products, and Ellie's, a retail store. Eco-Products was my firstborn, but I love what I'm doing now.

My father passed away in 2003, so he didn't witness the transition. But people who know my family often say, "Your dad would be proud." I know he would be.

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The Case for the Virtual Company

2011-01-27T13:25:00.000-08:00

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jQuery.event.add(window, "resize", resizeFrame);jQuery.event.add(window, "scroll", reposition);var startpos;var startpos2;function posinitiator() {var offset = $("#inctv-player-wrap").offset();var offset2 = $("#incsharebox").offset();startpos = offset.top;startpos2 = 0-(offset2.top - offset.top);}function resizeFrame(){ var w = $(window).width(); $("#incsharebox").css('float','left'); $("#incsharebox").css('margin-left','-98px'); $("#incsharebox").css('border-color','#CCCCCC'); reposition();}function reposition(){var s = $(window).scrollTop();var w = $(window).width();$("#incsharebox").css('position',(s>startpos) ? 'fixed' : 'relative');$("#incsharebox").css('left',(s>startpos) ? '50%' : '0px');$("#incsharebox").css('top',(s>startpos) ? '0px' : startpos2);$("#incsharebox").css('margin-left',(s>startpos) ? '-575px' : '-98px');}The Case for the Virtual CompanyStephen Felice | Dec 9, 2010 ' /> Tweet
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Ten years ago, technology made virtual companies possible. Today, advances in everything from virtualization to cloud computing will change not just where business is done but also how. Entrepreneurs are ideally positioned to extend their reach and effectiveness while maintaining the humblest of physical presences. Experience firsthand this new workplace, and learn best practices to take your company virtual.

Stephen Felice, president of Consumer, Small and Medium Business at Dell, discusses these trends.

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Educating Customers

2011-01-27T09:50:00.000-08:00

George Siemon, CEO of the Organic Valley Co-op of 1,600 farmers, is not worried that consumers trying to save money will abandon organic milk and other products for lower cost non-organic foods. While sales growth did slow during the recession, Siemon says demand for organic products is connected less to the business cycle and more to how educated customers are about food. “Organics is an education issue, not a recession issue,” he says in an interview at Bloomberg’s offices in New York today.

“Educated women drive our business,” Siemons says, particularly new mothers who want to provide the healthiest food for their children. That demand is growing despite the recession, because consumer interest in organic food is growing — see Michelle Obama’s vegetable garden and the sales of Michael Pollan’s books. Organic Valley had revenue of $527 million in 2009 and is estimating $600 million this year. The co-op is both tapping into and perpetuating the movement that’s growing demand for its products. Siemons is confident that science will bear out the benefits of organic food, and a growing number of educated customers will allow more dairy farmers to switch to selling more profitable organic products.

Education is a part of marketing, but it’s something broader too. Marketing is creating awareness about a product or positioning a brand. But education is about teaching people something that benefits them — and also turns them into potential customers. Gary Vaynerchuk has helped educate thousands of wine lovers, which benefits his business even though most probably never bought a bottle from him. You can take free software workshops at the Apple Store or learn home improvement techniques at Home Depot. Bookstores host reading clubs and some bike shops offer repair clinics. All these things expand the universe of educated customers while delivering benefits to those people.

Part of Siemon’s strategy is to reach more consumers with information about organic food, including a barnstorming bus tour planned for this summer. “We have a society that is very distant from food and farming now,” he says. “There’s tons of educated, well-off people who are not trying organic food.” He might call them future customers.

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More Recognition and Capital for Inner City Business

2011-01-27T05:39:00.000-08:00

If you picked up a copy of this week’s magazine, I hope you caught our story and Michael Porter’s commentary about doing business in the inner city. The two pieces were pegged to this year’s Inner City 100, a ranking of fast-growing companies located in America’s inner cities. The annual roundup is compiled by the Initiative for a Competitive Inner City, a nonprofit Porter founded in 1994 to foster economic growth. (We also published an online special report in early May that includes a slide show with profiles of the top 25 companies in the 2010 ranking and video snapshots of a selection of 10 of them.)

What didn’t make it into our coverage was a mention of ICIC’s call for nominations for its 2011 ranking. So here goes: The nomination period is open now through the end of September. Private, for-profit companies in poor urban areas are encouraged to apply via this form on the ICIC website. More info about the ranking is available on this page.

In addition to the ranking, ICIC runs a financial education and capital matchmaking program called Inner City Capital Connections that is also looking for participants. Companies can apply using this form.

Both programs are free.

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Seeding New Farm Businesses

2011-01-27T02:33:00.000-08:00

By many measures, the iconic family-owned farm seems endangered, at least as a sustainable business. The average farmer was 57 years old in 2007, and half of all current farmers are expected to retire in the next 10 years, according to the Department of Agriculture. Less than half of the nation’s 2.2 million farms turn a profit. Most farm operators (1.2 million) have another occupation and use other income to cover farm expenses.

At the same time, Americans are rethinking how and what we eat. The number of farmers’ markets has grown by 42 percent from 2004 to 2009. There is growing demand, coming from restaurants and home cooks, for food from small, local farms.

The question is how to create farm businesses that can profitably meet that demand. Tanya Mohn at Daily Finance reports on an effort in Pennsylvania’s Lehigh County to incubate new farm businesses by teaching aspiring farmers both agricultural and business skills. From Mohn’s story:

The incubator gives prospective farmers the opportunity to see whether they want to pursue farming full-time without making a huge investment in land and equipment. Among the apprentices there are mid-career switchers looking for new opportunities, people who have always dreamed of farming, and immigrants who farmed in their native countries but don’t have the resources to start farms here.
…
First-year apprentices, who attend the program for free (they do have to pay a $40 application fee), commit to 20 hours a week of class time and hands-on experience from February though November. The training covers technical topics like what crops to grow, disease and pest management, and what tools and equipment to use, and visits to local farms. Classroom instruction on the business of farming — with a strong focus on marketing and management — is provided by the local extension branch of Penn State University.

These aren’t hobbyists or back-to-the-land types starting communes; they’re entrepreneurs learning how to run businesses. Incubators in the technology industry and others give first-time entrepreneurs technical assistance, shared resources, and mentoring—all of which improve their odds of success. Farms that want to be sustainable businesses need similar support.

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Senate Clears Way for $30 Billion Small Business Fund

2011-01-26T22:01:00.000-08:00

Washington is poised to launch its most direct attempt to revive small business lending since the financial crisis with a plan to invest up to $30 billion of federal money in small banks and give them incentives to re-lend that money to Main Street companies.

The Small Business Lending Fund, outlined by President Obama in his State of the Union speech six months ago, cleared a key Senate vote to end debate July 22 as two Republicans broke with their caucus to support the measure.

The full bill, which includes business tax breaks and enhancements to Small Business Administration loan programs, could come to a vote as soon as July 27, according to Richard Carbo, spokesman for the Senate Committee on Small Business. The House passed a version June 18.

The fund would invest in small banks—those with less than $10 billion in assets—by purchasing preferred stock, which would pay the government a dividend of 5 percent. The cost of that money would decrease to a dividend as small as 1 percent if banks boost their small business loans over 2009 levels by 10 percent. For banks that do not increase their small business lending, the capital would become more expensive, with the dividend rising to 7 percent.

Bank lending to small businesses has dropped to $670 billion from $710 billion since 2008, according to data filed with regulators. Obama and Federal Reserve Chairman Ben Bernanke have connected the drop in small business credit to weak job growth and urged banks to increase the flow of loans to creditworthy businesses. “The formation and growth of small businesses depends critically on access to credit,” Bernanke told a forum on small business July 12. “Unfortunately, those businesses report that credit conditions remain very difficult.”

Banks say lending is down because fewer companies want to take on debt and fewer borrowers are good credit risks. “Loan demand has fallen dramatically since the start of the recession,” the American Bankers Association noted in a recent fact sheet. The lobby group supports the Small Business Lending Fund.

Analysts like Raj Date question whether the money will be effective, however. Date, a former managing director at Deutsche Bank who now runs the Washington research group Cambridge Winter Center, calls the program “well-intentioned” but says it won’t work as well as lawmakers claim. While the bill’s authors say the $30 billion in federal money invested in banks would spur $300 billion in private lending to businesses, Date estimates that the Small Business Lending Fund would support only $70 billion in new credit. Banks will use most of the money to cover losses on existing commercial real estate loans, he says.

“The amount of help is relatively small to the size of the problem,” he says in an interview with Bloomberg Businessweek. Date also says that taking government money will be most attractive to the banks in the most trouble. Originally conceived as a part of the Troubled Asset Relief Program, the Small Business Lending Fund was separated from TARP to avoid discouraging banks from participating because of restrictions and the stigma associated with the bailout.

Republicans opposed the measure on the grounds that it mirrors the Troubled Asset Relief Program and “injects capital into banks with no guarantees they will actually lend,” according to a policy statement. Senate Small Business Committee Chair Mary Landrieu (D-La.) said in a statement that the bill has strong protections for taxpayer money and is expected to raise $1.1 billion in dividend income over 10 years.

The bill includes other provisions intended to aid small businesses such as $11.7 billion in tax breaks on things like investing in new equipment or the sale of small business stock. The SBA provisions would increase the limits on government-guaranteed loans to $5 million from $2 million, and extend the reduced fees and higher guarantees passed last year in the stimulus bill. The law would also allow self-employed workers to fully write off their health insurance costs in 2010.

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Weekend Links: Independents Week; Senate Jobs Bill Highlights; IRS Paperwork

2011-01-26T17:58:00.000-08:00

To trumpet the economic benefits of buying from locally-owned shops, the advocacy group American Independent Business Alliance kicks off its seventh annual “Independents Week” in communities across the country, including Fayetteville, Ark., as the Fayetteville Flyer reports.

Robb Mandelbaum, writing in the NYT You’re the Boss blog, highlights the proposals in the Senate small-business jobs bill introduced on June 29.

Back in May, Bloomberg Businessweek’s John Tozzi wrote about a clause buried in the health-care reform bill that requires companies to report to the IRS payments of more than $600 a year to any vendor, starting in 2012. Now, the agency wants suggestions on how to best put this provision into practice, WebCPA reports.

In his latest Infectious Talk podcast, Paul Kedrosky chats with Mark Cuban about startups, life on the roadshow, and reforming Wall Street.

Sarah McLachlan’s Lilith Fair festival, which just got underway, will donate $1 from each ticket sold to three social ventures, Alter Eco Fair Trade, Better World Books, and To-Go Ware, Bloomberg’s Patrick Cole reports.

And over on our Businessweek.com Asia channel, contributor Shaun Rein explains how not to run a business in China.

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America's Most Promising Social Entrepreneurs: Readers Vote

2011-01-26T14:14:00.000-08:00

Three weeks ago, we posted profiles of 25 social ventures on this blog and asked readers to vote for the one they felt held the most promise. The profiles were part of our second annual round-up of businesses from across the country that aim to both turn a profit and do social good.

Now, nearly 4,500 votes later, the results are in.

No. 1. Hello Rewind took top spot, with about 17 percent of the vote. The New York City-based company makes custom sleeves for laptops out of old t-shirts, but its underlying mission is to help sex trafficking victims prepare for jobs.

No. 2 Morrisville, N.C.-based insurer The Redwoods Group pulled in just under 16 percent of the vote. Its founder, Kevin Trapani, says he started the company to cater to organizations like YMCAs, which are underserved by most insurers.

No. 3, No. 4, and No. 5 With just over 13 percent of the vote, Philadelphia biodiesel equipment maker BlackGold Biofuels took third spot. Rural development bank Southern Bancorp and Palo Alto, Calif. irrigation systems maker Driptech, shared the fourth, with 8.5 percent of the vote each. Cambridge, Mass.-based Global Cycle Solutions, which makes bicycle attachments intended for farmers in the developing world, took fifth, with 7.5 percent.

Hearty congratulations, all. You can read profiles on each of the top vote-getters as well as the rest of the finalists in our slide show.

Be sure to check our blog for follow-ups on this year’s alums, and keep your eyes peeled for candidates for next year’s roundup.

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Startup Activity at Record Low: Challenger

2011-01-26T06:14:00.000-08:00

The share of high-level job-seekers exiting an outplacement program who start their own businesses dropped in the first half of 2010 to the lowest two-quarter rate on record, according to data from the outplacement firm Challenger, Gray & Christmas released July 19.

Challenger, which provides training and counseling to job seekers, says just 3.7 percent of job seekers leaving its outplacement program are going into business for themselves in the first half of 2010, compared to an average of 8.6 percent in the full-year 2009. The data is based on a quarterly survey of 3,000 people, including 75 percent to 80 percent former managers or executives, Challenger spokesman James Pedderson says in an email.

Scarce financing and improving job prospects are steering more of these workers away from entrepreneurship, says Daniel Cohen, a lecturer at Cornell University’s ILR School. “Whether you’re starting a small business or you want to make a more scalable business and raise venture funding, either way the capital is harder to come by,” Cohen says.

But the lower startup rate might be a good sign. The unemployment rate, at 9.7 percent, remains high, but job losses have abated and some companies resumed hiring in 2010. The private sector added 593,000 jobs in the first half of 2010, compared to a loss of 968,000 in the last half of 2009, according to seasonally adjusted data from the Bureau of Labor Statistics. “For those that were thinking of doing a startup as a last resort…there’s more opportunity now,” Cohen says.

Startup activity tends to drop at the beginning of a recession, spike at the end when unemployment is highest, and drop when hiring resumes, Challenger CEO John Challenger says in a statement. (See chart below.) “Right now, we are in the early stages of recovery when the fundamentals of the economy are still pretty shaky, but employers are just starting to add workers back to their payrolls,” he says. Startup activity increases again as the economy improves, he said.

The Challenger survey, which began in 1986, showed the highest rate of startups over two quarters in the first half of 1989, when the unemployment rate was under 5.5 percent. At that time, 21.5 percent of Challenger’s exiting job-seekers opted to start businesses, the group says.

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New York Fed Survey Shows Credit Gap for Small Business

2011-01-25T20:33:00.000-08:00

Small businesses in the New York area show “unabated demand” for loans and “widespread reports of unmet credit needs,” according to a new survey by the Federal Reserve Bank of New York. Of the 59 percent of businesses responding to the poll that applied for credit in the first half of 2010, only half got any loan approval at all, and three quarters said their full borrowing needs were not met. (The PDF of the report is available here.)

The online poll, which surveyed 426 small businesses in New York and neighboring states in June and July, adds some useful data points to what has become a central question of the recovery: Why has borrowing declined among small businesses? The volume of outstanding loans to small businesses has dropped by $45 billion, or about 6 percent, since 2008, according to data from bank regulatory filings.

The New York Fed survey suggests that the contraction isn’t driven by lack of demand from borrowers. Deteriorating business conditions for applicants may play a role. Two-thirds of business polled reported that their sales declined since 2008. Companies that successfully got credit tended to be more established, showed sales growth through the recession, or were able to use their profits to fund their businesses in 2008.

While the health of businesses influenced whether or not they succeeded in getting loans, it didn’t influence whether or not they applied for credit. “High sales performers and businesses that were having either stagnant sales or declining sales applied at roughly similar rates,” says Claire Kramer, a senior analyst at the New York Fed’s Community Affairs group, who co-authored the report. That finding, the report says, “casts doubt on suggestions that smaller, younger, financially weakened, or underperforming firms are drivers of credit demand.”

The forms of credit with the highest approval rates were financing for vehicles and equipment (63 percent of applicants were approved) and personal credit cards (46 percent approved). The forms that were approved least often were applications for business loans (20 percent approved) and new business credit lines (27 percent approved). Companies that had obtained credit successfully in 2008 were not any more likely to be approved, the survey found.

The survey concludes that the “second look” reviews that some banks have started, along with technical assistance for businesses, could help more applicants become viable borrowers.

The New York Fed’s findings about credit demand contradict other survey evidence, including from the National Federation of Independent Business, that suggests lending is down because businesses don’t want to borrow. The NFIB’s latest monthly member survey said that 91 percent of respondents reported that their credit needs were met, including 53 percent that were not interested in borrowing.

The survey, along with an earlier one from the Atlanta Fed, adds to the limited set of data about small business lending. The New York Fed plans to release a second report based on the same data in early 2011, and similar surveys are planned by other Federal Reserve Banks, including Boston and Cleveland, says Jeffrey Smith, a spokesman for the New York Fed.

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Fed: Small Business Credit Card Reform Not Worth Costs

2011-01-25T16:48:00.000-08:00

Giving small businesses the same credit card protections that consumers now have is not worth the potentially higher costs and reduced credit, the Federal Reserve Board said in a report issued late last week.

Small businesses typically have higher credit lines than consumers, and it’s harder for banks to evaluate the risk of business borrowers, the Fed report said, so restricting banks’ ability to raise interest rates could mean higher costs and tighter credit up front:

[C]redit card issuers have more difficulty assessing the creditworthiness of small businesses than consumers. Therefore, the willingness of issuers to extend the relatively large credit card lines that small businesses require may depend importantly on issuers’ ability to adjust prices in the future, as they learn through experience about businesses’ ability and willingness to pay. Restricting the ability of card issuers to adjust interest rates may lead to higher initial interest rates, which would harm those firms that borrow on small business credit cards.

The report was due to Congress May 22 as part of the CARD Act, the consumer protection law passed last year. The CARD Act limits some practices by credit card companies most criticized by consumer advocates, like raising interest rates on existing balances and applying payments in a way that maximizes interest costs to the borrower. Those changes do not apply to small business credit cards, which account for about 15 percent of payment card spending, according to an estimate by Ken Paterson of research firm Mercator Advisory Group.

Bank lobbyists praised the Fed report. The American Bankers Association opposed the original credit card reform, warning that parts of the law “will undermine the availability of credit.”

Still, it’s not clear how much restricting banks’ ability to raise rates on old balances will curtail credit. Bank of America announced in April that it would voluntarily give small business cards the protections extended to consumers under the CARD Act. The bank doesn’t expect the change to hurt its ability to extend credit, spokeswoman Betty Reiss told me in April.

There’s some evidence small businesses could benefit from a ban on retroactive rate hikes. Advanta, the now-bankrupt credit card lender which once had 1.3 million small business customers, last year settled with regulators over accusations of “unfair and deceptive practices” involving repricing balances. That settlement affected at least 138,000 borrowers who signed up for cards at low interest rates that later jumped after they had run up balances. Some of them are still paying off charges at APRs over 30 percent.

Some more useful context from the Fed report: Most small businesses pay their cards off each month, rather than using them as a source of credit. Only 18 percent of firms with fewer than 50 employees carried a monthly balance on their credit cards in 2009, the report says (citing a survey by the NFIB). That’s about the same as in 1998, and less than the 23.6 percent that borrowed on credit cards in 2003, according to Fed surveys. The share of business owners that carry a balance on small business credit cards (rather than personal cards) has more than doubled from 5.9 percent to 12.3 percent since 1998, the report says.

Still, the Fed doesn’t recommend giving that growing share of business card borrowers the same protections consumers got through the CARD Act.

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