Clear vision and plan help lure top execs

Dear Karen: I know the management team is important for a strong business. How can I attract top executives to my start-up?

Answer: You’ll need a clear company vision and a plan for key managers to accomplish your top objectives.

“If you can provide incoming senior executives -- especially those that appear to be overqualified -- with an opportunity to realize a tremendously successful outcome in a relatively short amount of time, you have a real shot at getting them to work for you,” said Kent Barkouras, president of MyPrint Corp. “You also need to make sure that they see their role as integral to the success of the company.”

Get reliable funding in place now. Executives won’t move away from job security into a shaky start-up. “They do not want to spend their time, energy and resources supporting funding the company. As soon as the vision of the business takes a back seat to funding, most companies begin to fail,” said Barkouras, who brought in an experienced management team when he took over and expanded his father’s business in 2002.

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Network and market yourself

Dear Karen: As a native of China, I know companies would love my help with overseas sourcing, quality control, communication and delivery. How do I find clients?

Answer: Building a client base is the most challenging and time-consuming aspect of starting a service business. Your best bet might be working for an established consulting firm for a few years. If you’re set on starting a business now, you’ll need to network in local business circles and online to get your name circulating and to identify potential clients.

Next, you’ll have to sell yourself. “There is no magic formula for finding clients, except to pick up the phone and speak to decision makers,” said Kevin McKelligon, a senior account executive at E-Business International Inc. “Since our focus is industrial products, I target manufacturers that fall into our areas of expertise, making 30 to 50 cold calls per day with the goal of one or two leads per day,” he said.

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Tax consequences of forming an LLC

Dear Karen: We’re forming a limited liability company to hold our family-owned apartment building. Will establishing a company trigger a property-tax reappraisal or affect the step-up in tax basis upon our deaths?

Answer: Probably not, at least in the near term. Generally, a property’s value is reassessed for property-tax purposes only when there’s a change in ownership. Transferring between individuals and a legal entity would not be considered a change in ownership, said Roobina Baghoomians, a certified public accountant with Los Angeles-based CBIZ Accounting, Tax & Advisory Services. Just make sure that the proportional ownership of the property in the LLC is set up the same way it is now.

A transfer to an LLC generally wouldn’t affect the “step-up in basis” upon death. Tax basis is the purchase price used to determine capital gains and losses for tax purposes. A “step-up” means that when a property owner dies, the tax basis for heirs is adjusted to reflect the property’s fair market value on the date of the owner’s death, Baghoomians said. Similarly, a person who inherits an interest in an LLC takes as his basis an amount equal to the interest’s full fair market value, including liabilities.

Keep in mind, however, that the estate tax system is scheduled to be repealed in 2010, with the rules in effect before 2001 scheduled to be reinstated in 2011. Make sure you have an up-to-date estate plan that is periodically reviewed by an expert.

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Got a question about running or starting a small enterprise? Send it to ke.klein@ latimes.com or In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012