Bad things can happen to good entrepreneurs with fantastic ideas. This statement is not meant to burst your bubble – it’s meant to nudge you in the direction of being realistic about your planning efforts long before you’re left with nothing but a soapy residue on the floor because you failed to implement the best practices for protecting your personal assets.

Take the Proper Steps

 

It’s all too easy to get carried away with the thrill of being your own boss and finally pushing the results of your hard work onto the marketplace. There isn’t any serious entrepreneur that at some time has not put their own money on the line, but the cold, hard fact is you can lose your investment if something goes wrong and your business fails. If you have not taken precautions, you could lose everything you own, destroy your personal credit and be left with no choice but to start over.

 

Form a corporation. Most people start out as sole proprietors and register with the state as such, but eventually you will need to form a corporation. You’ll need to form a C Corp, an S Corp or a limited liability company (LLC). If you don’t know the difference, do the research or consult with a business attorney. Consider the tax consequences for the various types in incorporations, and most of all your protection from personal liability. Remember this point – you and your business are not one and the same. Your business is a separate entity with its own life and should be managed as such.

 

Build business credit. The moment you submit your incorporation papers to the state, apply for a federal tax identification number. Once you have that, register with Dun  amp; Bradstreet to start building a business credit score based on your business activity. Get your services and vendor accounts transferred into your name. Set up a bank account under your business name and Tax ID number. If you apply for credit cards or lines of credit for business use, put them in your name, not your personal name.

 

In the beginning you may be asked to provide a personal guarantee for some of your business needs but limit these to as few as possible. Taking these steps will help you remove the personal liability from your business affairs. It is also wise to consider getting a loan when you need financing rather than pulling the cash from your own pocket. If your business does fail, you have not lost all your money. You can learn from your mistakes and start over again – the most successful business people in the world have all experiences flops.

 

Use Business Credit to Get Financing

 

If you feel bad about losing someone else’s money, take heart. Business credit lenders are fully aware of the risks they take in lending money to small business start ups. You can use this to your advantage – they will insist on seeing a viable business plan before they fork over the cash you want and with a well.

The following is a post from Brabble director of business development Patrick Mackaronis. Patrick is a thought leader and subject matter expert in the fields of entrepreneurship, finance and startups, and has been a self-starting businessman for years.

The decision to start a new business can be an exciting moment. However, the moment soon passes and the it’s time to start working. An entrepreneur must not leap into the business start-up fray without building a strong foundation for success. Too often, new businesses omit the most important part of that foundation – good planning.

The planning process encompasses all aspects of a new business – financial stability, product or service marketing and branding, and administration and operations. All of these aspects interrelate with each other, and the entrepreneur will omit or downplay any one of them at her own peril.

Financial Stability

One of the most common reasons for business failure is the lack of capital to survive downturns as well as take advantage of emerging opportunities. Business environments are dynamic in nature and an entrepreneur who does not have the resources to adapt to changing conditions will ultimately fail.

What are the major pieces to financial stability?

  • Obtaining sufficient capital before opening the doors to the business is the first piece to the puzzle. Resources can be gathered from family or friends, personal resources, SBA Loans, or investors. Whatever the source, do not assume that capital will come along. Find it before starting the business venture.
  • The initial nest egg will probably not last through the entire life cycle of the business, so entrepreneurs need to build strong business credit. This can be accomplished by creating vendor accounts and then paying bills on-time and also by obtaining lines-of-credit and credit cards from financial institutions.
  • Track business expenditures to ensure that money is being allocated correctly and to identify any troublesome trends that could become compromising.

Product / Service Marketing and Branding

An innovative idea for a new business is great but, if there is no market for the product or service, it will never become profitable. In addition, if the business is not able to distinguish itself from the competition, it will not succeed.

What are the major pieces to product / service marketing and branding?

  • Identify what the business’ market is, whether it is local, regional, national, or global. Read local and trade publications or go onto the internet to determine if people want what will be sold. Depending on available resources, a market research firm can be hired to do this or just getting out and talking to people can be useful.
  • Examine the market to determine the level of competition. A great idea may not go far if the market is already saturated with competitors while an innovative idea with very few competitors may be very lucrative.
  • Study the number and type of competitors carefully to determine how the business’ product / service can be distinguished from them. Concepts such as quality, affordability, convenience, and customer service are often used to stand out from the crowd.
  • Create a marketing / advertising budget and stick to it. Generally, television, radio, and print advertising is cost prohibitive for a business start-up, and is often not as effective as networking, sponsorships, and volunteering anyway.

Administration and Operations

Many businesses fail because entrepreneurs did not understand adequately the costs of day-to-day business operations. Too often, the assumption is made that actually operating the business will come naturally and does not require planning.

What are the major pieces to administration and operations?

  • Issues such as office space, staffing, equipment and supplies, telephone and internet, and signage must be planned out in advance, with reasonable budgets established and evaluated regularly. Entrepreneurs often find themselves wearing multiple hats when the business opens which is reasonable when resources are tight. However, that same entrepreneur may become overwhelmed if proper staffing is not built into budget formation.
  • Proper tracking is essential in managing a business successfully. This is accomplished through financial tracking software and spreadsheets which can be used to determine where resources are going and what product / services are generating the most income. Tracking of supplies and costs for telephone / internet are also important to determine expenditure levels and ways to better manage them.
  • Evaluate and re-evaluate staffing and other operational issues to better match emerging priorities to available resources.

A Well Constructed Business Plan is an Entrepreneur’s Best Friend

A comprehensive business plan can serve to better understand and track financial, marketing and branding, and administrative and operational variables / priorities. A well designed plan will document the entrepreneurial idea that serves as the motivation for the business and market conditions that can make the idea profitable. It also addresses administrative and operational requirements including staffing and infrastructure costs and how much money will be needed to sustain the business short-, mid- and long-term.

There are numerous resource books / software available on the market to help entrepreneurs develop a successful business plan. Business plan creation can also be performed by business and management consultants. Whatever avenue an entrepreneur uses to obtain a comprehensive business plan, this document is essential for proper business management and ultimate success.

If you would like to move to Canada to live permanently and do not want to work but have money you can invest in starting a business in Canada, you might qualify for immigration under the Canadian Entrepreneur Visa program. The Canadian Entrepreneur Visa is technically a business visa and is part of the Canadian Entrepreneur Immigrant Programme and the Canadian Business Immigration Programme. The Canadian Entrepreneur Visa program is designed to attract people that want to move to Canada to live on a permanent basis that have attractive business skills and business experience. The Canadian government sees the Canadian Entrepreneur Visa program as a way to strengthen the Canadian economy.

The Canadian Entrepreneur Visa program provides the qualifying applicant permanent residence in Canada. This means that once you are approved for the Canadian Entrepreneur Visa program you can come to Canada straight away with no need for a specific job offer. By having the Canadian Entrepreneur Visa you are also able to apply for Canadian citizenship after only 3 years of being a permanent resident. Remember that you are automatically granted permanent residence status when approved for this program.

To qualify for the Canadian Entrepreneur Visa program, you should be prepared to offer proof that you possess at least two years of business experience. You will also need to provide proof having a net worth of $300,000 CDN (that is in Canadian dollars.). If you are curious of what your current net worth is in Canadian dollars, you can check it out on currency exchange site XE.com. Since the purpose of this visa is to attract immigrants that will start businesses and create more jobs in Canada, you must commit to managing and owning at least a third of a business for a minimum of one year. In addition to that requirement, the business must also create at least one job that a Canadian resident or citizen can fill.

Like the Canadian skilled worker visa, the Canadian Entrepreneur Visa program relies upon a point based skills assessment to find qualified candidates. The assessment asks questions about and ranks the applicant on business experience, educational background, language proficiency, age and more. The minimum pass mark is 35 points. By having a master’s degree or PhD you get 25 points, which means you only need 10 more to qualify for the Canadian Entrepreneur Visa program.

You can bring your spouse to Canada with the Canadian Entrepreneur Visa program. You can also bring unmarried children under the age of 22 as dependants.

From humble beginnings in Southern California, Jane Wurwand’s Dermalogica skin care line has grown into the world’s most widely used professional brand. Wurwand’s success is based on result-oriented products, an “education first” philosophy, and professional product recommendations.

Dermalogica Founder Jane Wurwand Arrives in the U.S.

In 1983, native Briton Jane Wurwand arrived in California to join her now-husband Raymond, who was attempting to sell advanced skin care equipment to an industry obsessed with pretty packaging rather than science.

Wurwand was already a licensed skin care professional in England, a country with considerably more rigorous standards for becoming a skin therapist than the U.S. Realizing that her chosen industry was neither particularly well-respected nor strict in its licensing standards, Wurwand began teaching weekly classes in skin care techniques.

Dermalogica’s Origins: International Dermal Institute

Wurwand’s weekly classes became so popular that she opened a classroom in Marina Del Rey, California, naming it The International Dermal Institute. From the start, the IDI emphasized skin care as a health concern rather than a cosmetic fix.

Wurwand was unsatisfied with the skin products available to her students, finding that they caused as many problems (like irritation and dryness) as they solved. In 1986, with the help of a chemist, Wurwand developed the first products that would become the foundation of Dermalogica skin care.


With a “no junk” approach, Wurwand shunned industry-standard filler ingredients such as mineral oil, lanolin, artificial color, synthetic fragrance, and denatured alcohol in the Dermalogica line.

Dermalogica’s First Products

The Dermalogica brand began with five products: Special Cleansing Gel, Multi-Active Toner, Active Moist, Skin Smoothing Cream and Dermal Clay Cleanser. These first Dermalogica products are still strong sellers.

From these foundational products, Wurwand has grown Dermalogica, Inc. (a privately-held company d/b/a The Dermal Group) into a multi-national phenomenon with a dedicated and expanding customer base.

Dermalogica’s Focus on Professional Skin Therapists

A key component of Dermalogica’s brand identity is the professional skin therapist. Through IDI’s continuing education, Dermalogica focuses on training its representatives in Dermalogica-specific skin care techniques and deep knowledge of the product line.

For many years, Dermalogica took the official stance that customers should only purchase their products through their professionals after receiving a consultation or analysis. “[W]e support the licensed professional skin therapist 100% by not selling on the Internet or through mass market…[D]ue to the importance of prescribing our products to meet individual skin needs, we do not sell our products online, nor do we recommend that you purchase them online.”

Times have changed, however. Dermalogica, in response to competition from product resellers on the Internet during lean economic times, has begun officially selling its products online. The website has introduced Speed Mapping (a highly-abbreviated interactive form of its in-person Face Mapping) to assist first-time customers in selecting Dermalogica products.

Dermalogica’s Expanding Empire

Dermalogica is now headquartered in Carson, 18 miles south of Los Angeles. Dermalogica ships 44 million products each year from its Southern California base.

In addition to expanding its customer base by selling product online, Dermalogica’s skin care line is distributed through 6,500 skin care shops in the United States. Globally, Dermalogica has a presence in 48 countries, including “concept stores” located in Los Angeles, New York City, London, Dubai, Auckland, Berlin, and Mumbai. Over 75,000 professional skin therapists utilize Dermalogica products worldwide.

As a privately-held company, Dermalogica is not obligated to disclose their financial information, but experts estimate their earnings at over $100 million.

The IDI and Dermalogica Education

Since its humble 1983 single-classroom debut, Wurwand’s International Dermal Institute has expanded into 40 locations worldwide. In addition to acting as a training facility for current and future skin therapists, the IDI still serves as the research-and-development facility for Dermalogica products. Products are branded with the tagline “a skin care system researched and developed by The International Dermal Instutite”.

Dermalogica also maintains an online Education Center, through which qualified employees of Dermalogica-sanctioned companies can take classes in technique and product knowledge.

Jane Wurwand has maintained the single-minded focus on quality that revolutionized the skin care industry over 25 years ago. She arrived in the U.S. during the recession of the ’80s, and the Dermalogica empire continues to grow during our current recession. English emigrant Jane Wurwand embodies the American dream.

One of the biggest problems facing small to medium sized businesses is the issue of cash flow. Every business must pay its vendors and creditors, pay its employees, and hope that its customers pay them on time to make these payments. It’s not easy, and many businesses struggle with cash flow on a daily basis. It’s a reality of today’s business. However, is there something that small businesses can do to improve their cash flow?

Small businesses have two outlets to improve their cash flow. First, they have their customers, and second, they have their vendors. So, how can both improve cash flow? Well, in the case of customers, would getting them to pay sooner, improve cash flow? Certainly it would! In the case of vendors if they extended a business longer credit terms, or even discounts on prompt payment initiatives, would these improve cash flow? Surprisingly, both would. While it may seem strange to bring up prompt payments when discussing cash flow issues, many companies still pursue discounts on prepayments with their vendors even though they can’t make those prepayments right away. They do this to plan for the future. In those cases when cash flow is no longer a concern, that discount for prompt payment can provide significant savings. So, how does each of these by themselves improve cash flow?

Which Customers are able to Pay Sooner?

For a number of businesses, the easiest customers to get prompt payments from are typically those customers that can’t get any credit. Companies use these customers to promote dead stock or obsolete stock at discounts in order to incentivize them to prepay. When a company does a credit check on these businesses, it’s more than likely that nobody would extend them credit. By promoting dead stock, or obsolete stock, a company can not only get paid faster, but alleviate a huge impact on their daily cost of money by selling inventory that might otherwise not be sold. Inventory costs money, and by selling dead stock to customers that are not credit worthy, a businesses can get immediate payment and alleviate their inventory holdings.

Can Extended Terms With Vendors Improve Cash Flow?

By negotiating extended terms of credit with vendors, a company can extend the period they must pay their invoices. Ideally, getting 45 to 60 day terms with vendors allows a business to extend the period they must pay their vendors, and preserves important cash reserves for other payments and payroll. While negotiating these terms isn’t easy, the point is not to worry about getting extended terms with all vendors. Getting extended terms with a company’s largest vendors is a realistic goal, especially if those vendors value and appreciate the business. Since the largest invoices require the most money, getting extended terms has a tremendous impact on cash flow.

Can Prompt Payment Initiatives With Vendors Improve Cash Flow?

Perhaps the most ignored way to improve cash flow is to prepay vendor invoices when possible. Sound confusing? Well, it really does make sense. By negotiating a 1% net 10 or net 15 payment incentive, a company can set the stage for future savings, and capitalize on this discount by making prepayments when possible. For some businesses, cash flow is a seasonal or temporary issue. For those periods where cash flow isn’t a concern, making a prompt payment with a vendor willing to provide a discount, makes a huge impact in the long run. In this case, consider it a deposit. Saving money improves cash flow because it provides the business with more money in its pocket. Whether that money is saved now or later, it’s still a savings.
Small changes here and there can make a significant impact on a company’s cash flow. It takes a willingness to sell to those less than credit worthy customers, and the kind of vendors that see the business relationship as more of a partnership. By working both ends of the spectrum, a company can significantly improve their cash flow. It takes time, but eventually all of these approaches will pay off. Cash flow issues are not always a concern, and it is incumbent upon businesses to take advantage of vendor discounts when possible.

Good customer service keeps customers coming back for more; bad service will undoubtedly do damage to a company’s reputation. Few clients will applaud someone who went out of their way to assist, but when poor service is extended, its rare that a business owner doesn’t hear about it. As it is common for entrepreneurs and supervisors to be puzzled when this sort of employee issue comes up, use these suggestions to get a mediocre employee back on track again.

Defining What Poor Service Is

Good customer service is hard work, and oftentimes difficult to define. Therefore start dealing with an employee issue regarding bad service by explaining what customer service is to the organization. If there is already a human resources policy in place – excellent. If not, try saying, “Customer service to Company EFG is about helping solve problems.” By sharing this kind of succinct information, a business owner is saying to the staff member that poor service matters to everyone, not just the customer. Additionally, it conveys that customer service is more than just a smile and a nod; it can encompass fixing something, providing information, or just listening when someone needs to vent.

How To Talk About Bad Customer Service

When a staff member is apathetic or uninterested in providing anything but bad service, use the situation as an opportunity to explain how a change in mindset will benefit them personally. The reasoning may not be personal, as business owners want to keep their competitive advantage with attentive and friendly staff members that soar above the competitors. But when it comes to talking to staff members about a poor service complaint, the easiest way to get the message across is to get personal. Explain to the person in question that there will be nothing more important in their career than good communication, and the only way to ensure long term success in the business world is to cultivate their customer service skills.

What To Say To An Employee About Bad Service

Start the conversation by sharing with the staff member the reason for the interaction. Explain that customer service was good at one point in time, and give an example. Then, share that things seem to have waned since then, using specific examples such as appearing uninterested or refusing to assist with troubleshooting customer problems. Then ask the staff member for their interpretation of the poor service situation. Wait, and listen carefully.
Then, ask the staff member a question such as, “Its understood that bad service can happen sometimes. So how can this poor service be turned around into something more positive again?” Use the staff member to solve the employee issue, and take notes if need be regarding their suggestions. Inquire more about anything that isn’t clear, and ask for specifics where applicable.

Next, explain the difference between good and bad customer service for the company, using the discussion that just occurred to drive the points home on a personal level. Explain that communication is the cornerstone to any staff member’s success with the organization, and that to stand out will require lots of learning with regards to problem solving and trying to get into the customers’ head.

End the conversation by confirming the steps the staff member suggested to remedy the employee problem, and invite them to discuss any issues or concerns that crop up along the way. This way the staff member can feel empowered to deal with poor service issues, while the business manager or entrepreneur can feel like concrete expectations can be met.

Deciding which type of business structure you’d like to employ in your entrepreneurial venture is a very important decision. Some of the business structures are more suitable towards raising capital, while others offer flexibility and fewer demands on an entrepreneur’s time. So which option is the best for your business? Let’s explore your options.

Business Structure Option #1: Sole Proprietorship

A sole proprietorship is a business that runs under either the entrepreneurs’ name or a fictitious one, and who pays taxes on their business profit using their own personal tax return. The most common of business structure, sole proprietorships account for more than three quarters of all businesses in the US, according to U.S. Census data from 1990-2004 (see: PDF). Yet these business owners are also only making a fraction of the net income that corporations are making, and therefore aren’t the best choice for every entrepreneur.

Business Structure Option #2: Partnership

There are two different kinds of partnership business structures: the general partnership and the limited partnership. An advantage that a partnership provides (other than the fact that there are two people sticking out their necks to begin a business) are that any taxes paid on the business aren’t paid at the partnership level, but rather by each partner, and only as a percentage of their business ownership.

Business Structure Option #3: Corporation

Corporations aren’t as commonly-used of a business structure as the others in this list, yet they create more profit than any other business entity out there (again, according to U.S. Census Data; see above). Any business that needs to raise capital will most likely choose a corporate or LLC business structure, because they both allow for a wide variety of financing options.

Business Structure Option #4: Limited Liability Company

An LLC is very similar to a corporation, in that it requires much of the same paperwork — and more. What’s different is that an LLC can choose to either run its business in a variety of different ways for taxation purposes: if there is only one person running the LLC for instance, the taxes for a sole proprietorship apply. However, the rules regarding a sole proprietor’s liability change completely with an LLC, making it a viable option for those wanting more flexibility when it comes to income creation, profits, and liability options.

Business Structure Option #5: Nonprofit Corporation

There are as many different types of nonprofits as there are business structures, but for the most part when discussing nonprofits with regards to entrepreneurship, we mean nonprofit corporations: those companies that aren’t for-profit, but are run like for-profit companies in order to keep their membership informed and apprised of where their donations, gifts and grants are going to.

Obtaining success as a business entrepreneur isn’t easy. There is a lot that can bring your business venture down easily and quickly these days. In this article I will share the 5 secrets to prevent that from happening and in turn bring you success. Many businesses start out without a plan; a plan is very important, but what’s more important than a plan? Read below at the secrets that will help you have a great plan and much more.

Have a clear mind, goals, and values.

If you’re ready to start of as an entrepreneur it is likely that you have a lot of things going on in your head. A lot of plans, details that you want to remember, ideas, and even suggestions that you’ve received from the people you’ve told. It is important though to start out with a clear mind. The way to obtaining this is by sitting down and getting on paper what you want out of your business. Make sure to get everything down and maybe even carry that piece of paper with you to continue adding to it. The business you want to start definitely has one goal at least it wants to accomplish and that is to earn money. Like I said, all business have AT LEAST that one goal, but there are many other goals that you may have and it’s good to have all of those written down as well as your values that you want to implicate with your business.

Be good at what you do. Have some credentials.

If you’ve made up your mind that you want to start out as an entrepreneur then you should definitely know that you’re good at what you want to do and have something to back that up. Your backup can be schooling, certifications, references, or even just testimonials. You do not want to start out a business without something that will give your potential customers the confidence to trust in you and buy your product or service.

Be creative. You must have the ability to think of innovative ways to succeed.

Creativity is very important and is definitely key to a successful business. You must be able to adapt to new technologies and ways of thinking to bring your business ahead of your competition or even just to grow it. You must also have the ability to come up with new ways yourself to market, produce, and sell your products better on a regular basis. Being able to try new things should also be something that you don’t run away from. Obtaining this trait (creativity) isn’t easy, but it’s definitely doable; just take time out of your week or month to think of new creative things that you can implement or try out.

Be courageous. Go for it, do whatever you want don’t be afraid, just do it and never stop.

Having the courage to start a business takes a lot. It’s not easy to give all of you to something because the fear of failing is always there. That should not stop you though; you should always be willing to be courageous and not be afraid of failure. If you know that you’re doing something right but it’s not working then keep going. Don’t stop no matter what if you know that you have a good idea. Sometimes it just takes time but you will get results from your courageous acts.

I hope that these 5 secrets will be something that you cherish and keep in mind when starting a business. Good luck to all of those who are going to become entrepreneurs and even to those who are already. Remember that there are no rules to success, but these secrets would definitely be in the rule book if there was.

risk

Business planning involves gather information from observation, reading, and testing a firm’s core functions to identify risks to operations and business transactions. Risk analysis can reveal a firm’s project completion problems, security problems, and market-use problems.

Assessing a Firm’s Core Business Functions

Security and control risks are identified through observation and testing. Risk areas include internal operations, customer service, legal, and financials. In today’s high tech business environments, special attention is placed on assessing automated and technology systems.

“You do risk analysis for only one reason: Would you manage the product differently if any of your risks happen?” says Johanna Rothman, a technology product development consultant at Rothman Consulting Group, Inc..

Business intelligence used by risk analysts come from workers, managers, customers, and vendors. It is also derived from a firm’s operational, environmental, and market functions. A qualitative use of business intelligence may reveal actual firm threats and vulnerabilities that require business disaster recovery planning.

Quantitative business analysis can translate business intelligence into a numerical determination of the probability of a future firm risk occurrence. This may be as precise as predicting a 13.5% likelihood of a particular outcome under existing operating factors. Quantitative business analysis is frequently used in the financial business markets.

Business Risk Management: Recovery Planning After Risk Analysis

A good business analyst’s report will include business continuity planning. This is the section of the business assessment report where recommendations are made. It may suggest that the firm develop and implement certain written policies and procedures or secure a particular type of business insurance coverage in light of revealed operational risk. The business continuity plan will also include a cost-benefit analysis comparison of quantitative risk factors against the costs of the business either: 1) doing nothing, 2) retraining or retooling the firm, or 3) insuring against the risk.

Business policies and procedures can correct operational vulnerabilities and ensure that a firm is in operational compliance with the law. Creating a sound employment policy and procedure, that is regularly updated to comply with applicable regulations, can save a firm on needless litigation or reliance on payouts from employment practices liability insurance.

Additionally, business continuity planning may include obtaining additional insurance. Some types of insurances are mandatory for firms based on the applicable international, national, or state law; or whether the firm is operating in a highly regulated industry. The types of business insurances are extensive, but business recovery planning may include securing one of the following insurance policies:

  • Aviation
  • Bid and Performance Bond
  • Business Owner Policy – BOP
  • Commercial Auto
  • Commercial General Liability
  • Commercial Property
  • Commercial Umbrella
  • Course of Construction/Builders Risk
  • Directors and Officers Insurance (D&O)
  • Earthquake Residential
  • Employment Practices Liability Insurance (EPLI)
  • Errors and Omissions Insurance (E&O)
  • Health Insurance
  • Health Insurance Group
  • Home Owners Insurance
  • Inland Marine Equipment
  • License Bond
  • Life Insurance Personal
  • Life Insurance Group
  • Pollution Liability
  • Truckers
  • Workers’ Comp

Business risk analysis can be devised internally or contracted out to a business consultant. Greater market exposure, both domestically and internationally, translates into a need to manage business security risks. This makes business risk assessments essential to any size firm.

law

In the case of Citizens United v. Federal Election Commission (FEC), the Supreme Court ruled in favor of a conservative non-profit corporation, which produced the film, “Hilary: The Movie.” The FEC had blocked the airing of this political attack ad, citing a previous 1990 Supreme Court ruling, Austin v. Michigan Chamber of Commerce.

In addition to this previous ruling, the ad was found to be in violation of the Bipartisan Campaign Reform Act (BCRA), also known as the McCain-Feingold Act, which bans corporations and unions from funding political ads that favor a particular candidate.

McCain-Feingold Violates Free Speech

Critics of campaign finance reform, such as Robert Samuelson of The Washington Post, claim such legislation violates the first amendment by refusing to offer constitutional protections of free speech for corporations.

Richard Epstein of Forbes writes that there are laws that protect from fraud and abuse by corporations, and often pressure from shareholders, public opinion, and opposing funding from other corporations work to maintain integrity in the system.

The CEO of Whole Foods Market Inc. enraged his liberal customer base with his stance on Obama’s health care. His op-ed piece criticizing health care reform prompted a campaign of boycotting his company, as reported by Emily Friedman of ABC News.

Activist Judges Overturn a Century of Established Law

In the decision Austin v. Michigan Chamber of Commerce, the Court sought to uphold portions of BCRA by regulating “soft money” (money given by corporations to a political purpose with the intent of supporting a specific candidate) and “issue ads”.

Previous to this decision, the Tillman Act of 1907 was the first law passed to forbid corporate funding for elections.

David Corn of Mother Jones argues that this decision goes against everything the Court and legislatures have been working toward for nearly a century, and severely alters the balance of power in government. His opinion is shared by some of the Justices on the Court itself.

Justice Stevens wrote in his dissenting opinion that this decision was “misguided” in its attempt to rewrite law regarding campaign finance reform and attribute the identity of personhood to corporations. He makes the case that corporations do not hold the same rights as a natural human citizen, and furthermore, are open to influence by nonresidents or foreign nationals.

Foreign Influence over American Politics

During President Obama’s State of the Union address, Justice Alito was seen to mouth the words “not true” in response to the President’s assertion that this ruling opens up the possibility that foreign governments can now influence American elections.

Attorney Ted Olson refused to rule out the possibility of foreign influence on campaign finance when Justices Stevens and Ginsburg inquired about the considerations of defining multi-national corporations as citizens of the U.S. with constitutional rights.

During the 1990s, the Clinton administration came under fire for having allowed Chinese money to influence important political discussions.

Shift in Power to Favor Republicans and Big Business?

In Obama’s press to pass health care reform, many of the most vocal opponents were reported by news agencies such as MSNBC to have been funded in part by health insurance companies. Many progressives see this as a trend in current politics where special interest groups influence important policy decisions that might affect their profit margins.

Already, the coal and oil industry is spending millions on ads to persuade people to call their congressional representatives to urge them to vote against any environmental reform considered by the legislature. Many fear an equally intense battle over the finance industry reform bills now being considered.

Progressive lawmakers such as Senator Charles Schumer (D) claim that the voice of the American people will be drowned out by corporate America, who has shown that they are willing to spend liberally to fight against legislation that affects them directly.

Traditionally, Democrats have always held the opinion that strong government counteracts abuses by large corporations. Republicans have argued that government should stay clear of corporate growth because a free market economy will eventually eliminate all abuses.

Congress Responds to Concerns

President Obama appealed to Congress during his State of the Union address to offer legislation that would put the balance of power back into the hands of the people and hopefully prevent foreign and special interest an undo amount of influence in U.S. elections.

Senator Barney Frank (D) has asserted that the congressional finance committee, which is responsible for corporate law, can and will do something to limit the power of big business in politics.

Senator Mike Capuano (D) has presented legislation that would hope to counteract this decision by requiring shareholders of a company to vote on the use of treasury funds to participate in political campaigns.

This decision represents a firm interpretation of the law by the Supreme Court, and cannot be overturned except by Constitutional amendment or subsequent decision by a future Supreme Court. Regardless of this, lawmakers and political activists are working hard to find ways of counteracting what they have called a devastating change in the political climate.