Facts about small firms are elusive

Question: I’m interested in finding out about a local privately owned small business for a potential partnership. How can I get forecasts, sales information and overall progress data about this company?

Answer: Unfortunately, it’s difficult to get solid financial information about small, privately held firms. Unless you get the owner’s cooperation, meaningful data will be hard to come by.

“I’ve never known a small business to share its sales forecasts or other financial data with any outside entity other than a bank, its accounting firm, attorney or some other professional vendor who has a relationship with them,” said Glendale business broker and consultant Gene Pepper.

Still, it wouldn’t hurt to run the name of the company in question through the database of the Better Business Bureau, online at www.bbb.org. Other good sources are business research firm Dun & Bradstreet Inc., at smallbusiness.dnb.com, and its subsidiary Hoover’s Inc., www.hoovers.com.

If the company you are investigating is quite small, it’s unlikely to register at those sites. In that case, it may be more useful to try to network with friends, colleagues and other local business owners, or seek information through your established contacts at a local bank or chamber of commerce.

“Ask if they can help but with the caveat that your interest is confidential, so caution must be used,” Pepper said.

Although you are unlikely to get hard data through these channels, you may get a good idea of the company’s reputation, its general financial health and the image it projects to the community.

Search the firm’s website; look for any news releases, reports or white papers it has released publicly; and run its name through general and specialized search engines and through the archives of local newspapers. Legal database LexisNexis, www.lexisnexis.com, has an information search function designed for small-business owners that you may find useful (click on “search LexisNexis AlaCarte” from the home page).

If you are a potential buyer or partner, once you have made an offer or opened negotiations with the firm, you will be entitled to conduct due diligence on it.

“This, of course, opens all the secret and confidential doors and vaults” at the company, Pepper said.

Workers’ comp an issue for 14-year-old son?

Q: I operate a home-based sole proprietorship and have no employees. I am thinking about hiring my 14-year-old son to work at the business once in a while. Am I required to provide workers’ compensation insurance for my dependent son?

A: Technically, state law requires any business with employees to carry workers’ comp, and it makes no exceptions for business owners who hire their minor children. Failure to secure workers’ comp insurance is a misdemeanor punishable by fine or imprisonment, under the California Labor Code.

The California Department of Industrial Relations, Division of Workers’ Compensation, requires any employer who pays W-2 wages to any employee to carry workers’ compensation insurance coverage “from Day 1,” said Dave Ortolf, owner of Adams Avenue Insurance in Huntington Beach.

But as a practical matter, if you have no other employees and your son will be working out of your home office, it’s highly unlikely that the issue of workers’ comp will ever come up, or that the state would pursue a case against you if it did.

If your son were to be injured while working for you, as his parent you would be responsible for his treatment anyway.

“Recourse against a parent would only be necessary if the parent did not take care of him -- an unlikely scenario,” said Donald Lucove, a certified public accountant with Lucove, Say & Co. in Calabasas.

You should talk to an insurance broker further about your situation, but it’s likely that “reality would trump statute,” he said.

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