Highlights of the June 2006 Issue of FSB: FORTUNE Small Business

The full stories are available at FSB.com.

COVER PACKAGE
Building Wealth Once you've made it, how do you keep it growing? For entrepreneurs, the answer involves some unconventional thinking about personal finance.
How To Fund Other Startups (And Get Rich), by Jeanne Lee, page 38
If you cash out of a flourishing small business, what's next? Another startup is likely to be all-consuming, yet retirement would probably bore you. For an increasing number of entrepreneurs, the middle ground is angel investing. No school teaches angel investing, so newbies often earn their wings in typical entrepreneurial style-by the seat of their pants. FSB asked four veterans for advice they'd give to someone just getting started. One thing they all agree on: Devote only a small portion of your portfolio, say 3% to 10% to such risky investments. Here's what else they said:

. Don't go it alone - "We realized that a single investor or a small group of four or five can get too emotional about deals."

. Follow your passion - "When you combine investing with your passion, you get a great send of satisfaction."

. Locate the exit - An angel investor's worst nightmare is a founder/CEO who is chugging along, running the business, making a nice living, with no interest in selling or going public.

. Befriend the vultures - "Make sure the term sheet is user-friendly to the VCs who will come later."

Little Stocks That Rock, by John J. Curran, page 45
No rally lasts forever, but small caps have beaten the broader market since 2000. Since March 2000 the Russell 2000 index has posted an average annual return of 7.3%, vs. -0.6% for the Standard & Poor's 500. Meet a few that may keep up the streak: Coinstar (CSTR), which makes coin machines and kiddie rides just signed a deal to put coin machines in Wal-Mart stores. Landec (LNDC), which deals with unique plastic polymers just inked a deal with Chiquita to package bananas for convenience stores, reportedly, Starbucks. Amerigon (ARGN) provides climate-controlled car seats for a wide range of automakers, including Ford, Hyundai, and Toyota. PW Eagle (PWEI) makes PVC piping and just announced that it would allow activist investors to join its board.
PLUS: 50 Small-Cap Stocks to Watch, page 47
FSB asked ten top-performing small-cap managers to name five high-growth stocks each. Small companies tend to be volatile, but they make sense as part of a balanced portfolio.
Keep Out The Taxman, by Jeanne Lee, page 51
Call it the last stage of wealth building: keeping retirement money out of the hands of tax collectors. Many small-business owners shy away from retirement plans for fear of prohibitive costs and burdensome administrative tasks. But lately, providers have made entrepreneur-focused plans more user-friendly. FSB offers a guide to some of the most popular plans.

STARTUP
Now Is The Time to Tear Down the SBA, by Richard McGill Murphy, page 25
Now that Small Business Administration chief Hector Barreto has resigned, it's time to ask whether the agency should even exist. By nominating a successor for the post, President Bush has overlooked the perfect candidate: nobody. Barreto's SBA had come under attack for its slow and bungling response to Hurricane Katrina last fall. Its loan programs reach less than 1% of U.S. small businesses. The SBA's employees suffer from the lowest morale in the federal government, according to one recent survey. If the SBA wants to live up to its own mission statement-"helping small business succeed"-it will close its doors. Dr. Annie Liebowitz, co-founder and chief medical officer says, "We're either the single place to go with questions or the single place to go if you don't know where to go." Clients that run small businesses say they find Health Advocate's specialists more helpful than most in-house HR generalists-which is an important selling point for companies whose HR staff, if they have one-are stretched to the limit.

HEALTH CARE
The Doctor Will See You Now, by David Whitford, page 72
PartnerMD is one of those new concierge medical clinics that cater to patients who are sick of HMOs and can afford better. For a $1700 annual fee beyond the cost of care you get appointments that begin as scheduled, ample face time with a doctor, and a holistic approach to medicine that emphasizes screening and prevention over disease management-and even house calls "when medically necessary," if you can believe that.
ALSO: Disease Spotter A small firm figures out a new way to detect Parkinson's. Open That Jar! Two MBAs offer arthritis sufferers a better bottle opener.

INNOVATION
This Man and His Army of Robots Want to Slash Your Shipping Costs, by Maggie Overfelt, page 110
Mick Mountz has developed what he believes will become the future of warehouse automation. Mountz is the founder of Kiva Systems, a three-year-old startup that promises to double or triple the productivity of its clients' distribution centers with its fleet of automated robots. The basic concept is that dozens of robots slide under the four-foot shelving units, lift them, and carry them to pickers, human employees stationed around the warehouse's perimeter. The robots are controlled by software that keeps track of their location and the location of every item and every shelf.

LOCAL COLOR
Commune Capitalism, by Christopher S. Stewart, page 84
Twin Oaks is experiencing a mid-life crisis. The Virginia commune supported its throwback hippie lifestyle for more than 38 years by selling hammocks and tofu. But in 2004, Twin Oaks lost one of its biggest hammock customers, Pier 1 Imports. Last year revenues slipped to $1.1 million from a 2000 peak of more than $2 million. "We set this up so no one would kill it," says Kate Kinkade, a founding member of Twin Oaks. Members come and go, Kinkade suggests, but Twin Oaks goes on forever.

FSB is available in digital format. To access this version go to: http://digital.fsb.com .

 

For further information please contact:
Erin Clinton
212-522-4071
erin_clinton@timeinc.com