Archive for September 2004

Should have read my lease

Our company employs hundreds of seasonal workers and managers, but most of these folks all work near or in the recreation facilities we manage. As a result, our corporate "world" headquarters is a 600 square foot office with me, my bookkeeper, a copier, and several printers. About a year and a half ago I signed a three year lease for this suite.

A few weeks ago, my landlord called and said that they needed to move me to another suite. I said, hey, you can't do that, I have a three year lease for this one. I have way to many vendors and contracts to hassle with changing an address. They patiently explained to me that, so sorry, but I had signed a lease that said they could move me. And they did.

Well, you know, after looking at the thing, I did sign a lease that had a clause in the back that said if I lease less than 2000 square feet, they can move me without my permission. The good news is that they did all the moving and actually got the new office looking nicer than the old one. So things are generally working out, though I am still sending out change of address letters.

Beware - I am told that this is a very common clause in most commercial leases. As part of this move, I actually got it negotiated out of my lease so they can't move me again.

Why can't I have a Workers Comp Insurance Deductible?

Today, we had another $300 workers compensation claim.

First, I will begin by saying "Thank God for the workers comp system in this country". Basically the philosophy of the system is this: Workers give up their right to sue their employer over workplace injuries in return for a guarantee of medical care and a defined benefit compensation system. Yeah, some states (like Florida, in particular) have some real fraud and management problems. In California last year, before reform, I was paying $20 in workers comp premiums for every $100 in wages -- and this despite having no claims the last few years. But, given the state of the lawsuit industry in this country, imagine the effect if workers could sue over every injury, large or small. Shudder.

As an aside, this issue has greatly affected the whole asbestos litigation situation, as detailed here. It can be argued that most workers' asbestos injuries are more likely due to poor protections on the job site, rather than any product problems from the asbestos makers. Asbestos using companies, after all, have known asbestos is dangerous since before WWII. In fact, navy shipyards in WWII were some of the worst offenders in terms of not using masks, poor ventilation, etc. But, since employers generally can't get sued over injuries (and its hard to sue the feds), lawyers concentrate on the "product labeling" argument and sue the asbestos makers into bankruptcy, which explains why litigation attorney's coach their clients like this.

Anyway, in many states, workers comp needs reform. Ahnold, for example, did a nice job of attacking this issue in California, and our company got an immediate 10% discount on our rates once the legislation passed. One thing that is never discussed and frustrates the heck out of me is the issue of deductibles. We get a lot of small claims (e.g. went to emergency room, got checked out, all was OK, went home). As with any kind of insurance policy, filing a lot of small claims this year is death on premiums next year. Workers comp is worse than most, as it has an experience mod system that guarantees that for every dollar in claims that goes out this year you pay an extra $1+ next year in premiums (in the next few days Coyote Blog will be starting a new series called "things they didn't teach me in business school" and the mechanics of workers comp will be one of the first posts).

Unfortunately, many states, such as Arizona, do not allow you to have a deductible on your workers comp policy. This is not an insurance company practice that might change with new competitors, but the law. So, we keep paying out small claims that probably drive up our premiums $2 for every dollar in claims.

ACME Product of the Day II

A regular feature, it is explained here. Many of our ACME products come courtesy of this site.

Today's featured product is the ACME jet powered pogo stick. Let's send one to Ralph Nader.



Buying a Company, Part 2

In the previous post on buying a company, I discussed what I have learned about finding and valuing a small company. In this post, I will discuss a second technique I used to find a seller, and then show how we conducted due diligence and selected the form of the deal (e.g. C vs. S Corporation, Asset vs. Equity purchase). In the next installment, we will get to the various legal documents and financing strategies.

Continue reading ‘Buying a Company, Part 2’ »

Spell Checking TypePad

So far, I have had a really good experience getting this site up on TypePad. The one problem I have had with an otherwise very well thought out tool is the lack of spell check. I am a completely dysfunctional speller, and HAVE to have spell check.

Another blogger recommended ieSpell, which can add a button to your IE tool bar, or, as I use it, add an option to the right click menu. So far, this tool has been a lifesaver. Highly recommended.

Buying a Company Part 1 (or how I got into this)

When I describe what I do, the most common reaction is for people to ask "So how did you get into that?" The answer, as they used to say in the old electric razor commercials, is that it interested me so much, I bought the company.

Now, at some level, corporate acquisitions were not new to me -- I had worked with acquisitions and acquisition analysis in many of my corporate jobs. But these were large acquisitions - at least $20-$40 million in sales, and it was funded out of a large corporation's cash flow.

One fateful day, I decided that A) I hated working for other people and B) I had no groundbreaking entrepreneurial ideas of my own so that C) if I wanted to own a decent sized business, I would have to buy one.

Unfortunately, I had NO CLUE how to go find companies that were for sale and that I could afford. In fact, I was not sure at that point such opportunities even existed (again, when the rubber met the road, my Harvard MBA let me down). And, if the questions I get asked all the time are any indication, I was not the only one who didn't know how any of this worked.

So, let me share how it all worked for me. This is part 1. Also see part 2 and part 3.

Continue reading ‘Buying a Company Part 1 (or how I got into this)’ »

The Coyote Always Buys ACME!

If you checked out our "about" section, you will see that one of the reasons this site is named "coyote blog" is to honor that great American businessman (err, thing) Wile E. Coyote and that most famous of all corporations: ACME. This site has a really funny and nostalgic catalog of those great ACME products.

This one was always one of my favorites:


Of course, none of the products ever worked right, but the good folks at ACME were WAY ahead of their time. They already knew to have good in-house lawyers plastering warning labels all over every products:


Avoiding Difficult Customers

This blog will often touch on the insanity that is the current American tort system. I don't think there is any greater threat to capitalism, due process, or democracy than the growing power of the litigation bar.

Via, which should be an essential part of your daily blog browsing, comes this story. Apparently, after being sued by Okaloosa County for making defective police cars, Ford refused to sell the county any more of this type car. The County sued again, this time to force Ford to sell it more cars of the type it is suing Ford for being defective:

One of Morris' attorneys, Don Barrett, has said the sheriff firmly believes the Police Interceptors are defective but he wants to buy new ones to replace aging cars because seeking other vehicles would be more costly.

lol. Unfortunately, in the service business, it is legally more difficult to exclude customers from the premises. We have several well-known customers who come to our campgrounds (plus Wal-mart and any other private retail establishment) desperately hoping to slip and fall and sue. In a future post, I will tell the story of a Florida campground that is being sued by a visitor for sexual dysfunction after the visitor allegedly stepped on a nail in their facility.