Business Insider Magazine - Mag - Vol 4, Issue 2 - First Issue 2009

MO DERN ECON OM I C LOGI C: What Goes Down Mu st Go Up
The Los Angeles South Bay B2B Magazine • First Issue 2009 • Volume 4, Issue 2 • www.BusinessInsider.us • Complimentary Copy
BUSINESS
insider
5 South Bay Business Veterans Who Don’t

Let the “R” Word Get the Best of Them
Business Survival Columns:
Tips From South Bay Business Pros PRESORTED STD
U.S. POSTAGE
PAID
PERMIT 447
Tax Time Feature: LOS ANGELES, CA
Cash Strapped California Issues IOUs

Instead of Income Tax Refunds
BIM Volume 4 - Issue 2.indd 1 1/30/2009 4:13:02 PM

BUSINESS insider MAGAZINE
Recession Budget Cuts? The South Bay Los Angeles
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In Th is Is su e...
Cover Feature:
Surviving a Tough Economy
Let the “R” Word Get the Best of Them ... 8
Legal Insider
Seven Simple Ways to Law-Proof Your Business
During Tough Economic Times ... 10
A Real Estate Pro’s Perspective:

A New Year, a New Beginning ... 12
Publisher’s Perspective:
Modern Economic Logic:
What Goes Down Must Go Up ... 16
Finance and Accounting Insider:

Managing Your Business During Tough Economic Times ... 20
Technology Insider:
Moving Your Website?
Plan Ahead to Avoid Critical Service Disruptions ... 6
TAX TIME FEATURE:

The Great Tax Shock of 2009:
California Issues IOUs Instead of Tax Refunds ... 24
South Bay Calendar of Business Events:

Save the Date! ... 22

Everyone’s Business Plan for 2009:
“Surviving a Tough Economy”
As we roll ahead in 2009, South Bay

NOW, MORE THAN EVER...
businesses are still shell-shocked from
last year’s unprecedented financial cri-
sis that is expected to make things dif-
ficult for some time. I originally slotted
It’s About Your Bank!
the “Surviving a Tough Economy” issue
into the editorial calendar about a year
ago. I figured the economic downturn
would start affecting more people and
businesses by this time, and boy did I
get that right. We decided to interview Top Business Bank in the Nation
some longtime South Bay business-
people who have been through sev- - US Banker Magazine-2007
eral recessions before. They tell their
stories of survival, and the details pro-
vide a perspective of what suffers and No. 6 Performing Bank in the Nation
what doesn’t when the economy gets - US Banker Magazine-2008
challenging. Also, clever people can
capitalize on opportunities created by
an economic downturn. But that said,
surviving this downturn will be a chal-
Super Premier Performing Bank
lenge for everyone. Having been hit 17 Consecutive Years
disproportionately compared to the
rest of the country 15 years ago, busi-
ness veterans in this area don’t panic Premier Performing Bank
at the first sign of an economic down-
turn. However, the current situation is 27 Consecutive Years
one that no intelligent person is going - The Findley Reports
to take with a shrug. If anything, busi-
nesses in this area are feeling the ef-
fects of fearful consumers who for now
are keeping their money in their own
Strong Fitch Review
pockets. We have columns in this is- - Fitch Ratings
sue with helpful tips for running your
business more effectively and ways
to avoid legal problems that tend to Four Star Rating BauerFinancial Inc.
increase whenever the economy gets
challenging. This year for our “Tax - BAUERFINANCIAL™ Star-Rating
Time” feature, I decided to write an
overview on the outrageous proposal
from Sacramento to issue IOUs instead
of our state income tax refunds. And Manhattan Beach Gardena El Segundo Coming soon
to give everyone the big picture view (310) 802-4015 (310) 217-6000 (310) 322-2222 to Torrance
of what’s causing the business cycles
to get more ferocious as the global
economy gets increasingly unstable, I
penned an in-depth perspective piece
on key economic factors that create
these crazy business cycles and what’s
ahead if we don’t fix the system from
the ground up. Yes, these are challeng-
ing times indeed and Business Insider
Magazine will be focusing on the most
important issues for the duration.
David Whitehead,
Publisher
Member FDIC • www.cbbank.com

TECHNOLOGY INSIDER
Moving Your Website?

Plan Ahead to Avoid Critical Service Disruptions
By David Whitehead
L
ast fall I engaged in a long overdue project to consoli- to apply Murphy’s Law from the start. As a pioneer office
date my web domains with one service provider. I also computer user who jousted with “tech support” long before
decided to phase out a convoluted domain I set up in the term was coined, I knew I should get suspicious when-
a hurry when we launched Business Insider Magazine that ever anyone said, “Do this and it should work automati-
has been confusing my readers and customers for nearly cally.” I also sit up straight and listen intently whenever I
five years. As tech savvy as I thought I was, I found myself hear, “You can do this yourself online very easily.” I know
caught up in the usual print publisher behavior of spending these statements are rarely true, so I prepared for the oppo-
too much time putting ink on paper and not enough time site and dealt with the calamities as they occurred.
gracing cyberspace with my pres- I had a bad feeling about this seem-
ence. Plus a number of things I was ingly easy project from the start.
doing years ago are no longer effi- There have been instances when cli-
cient or cost effective. Like every- ent emails that have worked for years
one else these days, I need more ef- suddenly started bouncing back as
fective marketing options that save their websites mysteriously vanished
money. So it was time to address for several days, leaving their vendors
my wasteful and inefficient Internet and customers to believe something
practices once and for all. was seriously wrong with their busi-
Increased competition has driven ness. Most of the time, this happened
down hosting and domain registra- because they moved their website
tion costs in recent years. I knew I and email service to another ISP and
had too many nifty web concepts didn’t properly manage their domain
spread out over too many servers. It and file transfers. Whether you are
was getting difficult for the Google- your company’s IT manager or not,
bot to figure out what I was doing, and I was overpaying by sit up and take notice when someone says they want to
current standards. move your website. This is not a process to take lightly. No-
From the start, I was reticent about getting too involved in body thinks there will be a crisis until web functions taken
this endeavor. It felt like I had procrastinated starting a nec- for granted suddenly disappear and then you realize it will
essary clean-up project that was sure to dig up a number of take days to straighten out. Whatever anyone says, moving
important things I forgot to do (and that at this point , would a website is rarely as easy as setting up new directories and
rather not think about.) moving the files. Web domain names are legally tied to the
One thing that spared me a great deal of aggravation was designated host, and there is red tape involved with having
6 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1ST ISSUE 2009

them released and moved to another
ISP. And why would any company
holding the strings to your domain
. . . the key was planning and setting up contingencies
want to make it easy for you to leave?
They can’t force you to stay of course,
for the unexpected to avoid downtime. That was the
but they can and do set up obstacle
courses for you to negotiate on your
difference between a week of anticipated troubleshooting
way out.
I didn’t know many details about this
and the avoidable disaster of losing Web presence for a
process myself. Once I got the ball
rolling on setting up the new service,
week or longer.
I called my current provider to cancel
the old one. However, customer sup-
port was a bit ambiguous about who me from leaving. However, my user a new domain to go live, which de-
held the registry on my domain. Al- names and passwords were long for- layed things even further.
though a big reason I was leaving this gotten, and one company sent me sev- I also had to deal with small details
ISP was because of lousy tech sup- eral pages of paperwork to fill out and no one bothered to tell me. For exam-
port, I have to give these people credit fax back signed with a photo I.D. so I ple, when the first domain transferred
for advising me to keep the current could get access to my own account. I to the new provider, it defaulted by
service until the new one was up and think that was its way of punishing me pointing to the DNS address of the
running. That turned out to be a wise for leaving, and it was time and effort old provider. For three days, this left
decision indeed. I certainly didn’t anticipate spending. me thinking the transfer didn’t go
Even though I am my own webmas- It’s interesting that company didn’t through.
ter, I found myself on a learning curve need to confirm my pass codes when When everything was up and tested
when it came time to move the web- it cashed my renewal checks. on the new site and I knew the files
sites because I don’t set up or transfer Then I found out there was a four-day were actually being pulled from the
domains very often. I have three regis- time delay in the release and transfer new site, I finally contacted my old
tered domains hosted by two compa- of the domains to my new provider. If service provider to discontinue ser-
nies and I wanted to consolidate them I had started off by canceling services vice with full confidence my visitors
with a newer company that offers bet- with my own provider, my website wouldn’t know the difference. One of
ter pricing, systems and support. and domain emails would have been my less important domains pointed
First, I had to rediscover where I regis- down for about a week. Given the pa- to my main website for about a day
tered each domain because they were perwork and online troubleshooting, while the last transfer went into ef-
set up quickly at different times with one of my domains actually did take fect. However, since I have a well-dis-
little thought given to the process. Do- about seven days to transfer. played link on that page going to the
main registration and transfer is con- Since this move also allowed me proper destination, I didn’t sweat it. I
fusing if you are not a regular visitor to abandon an early Internet UNIX was also too frustrated at this point to
to www.whois.net. I found one of my server, I had to change the names of care.
domains registered with a company in certain files on the new system. I also I was fiddling with this project for
Australia and another in upstate New learned it can take up to 24 hours for Continued on page 30
York. The third was with a company
used by the ISP I was moving to and
it didn’t need to be transferred. I nor- ALPHA COMPUTER
COMPU SUPPORT, INC.
mally sent checks every two years to Our busine
business is to keep you in business.
renew the two domains I needed to
transfer, but I really knew very little Consulting and Service for Businesses
about domain registration companies, • Experts in all
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their purpose or the bureaucratic pro- • Experienced
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cedures to which they were bound.
As it turned out, I had to go to their
websites and log on to my account to CCall Now ! (310) 801-9026
set up the transfer. The other choice I
rejected was to do it over the phone We understand the value of keeping an eye on the bottom line!
while enduring a sales pitch to keep
1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 7

Cover Feature
Let the “R” Word Get the Best of Them
By Brian Simon
T
he same mantra has held true throughout the various
economic downturns in this country’s history: the
jobs will come back, the stock market will go up again
and housing will appreciate. No matter how dire
the circumstances ever were, recovery and prosperity always
followed sooner than later. Besides, recessions are necessary
hiccups in an otherwise sound economic system, right? It
stands to reason that sustained growth can’t be expected to
continue indefinitely and that the occasional shakeout is part of
the program when it comes to free market capitalism.
CONTINUED ON THE NEXT PAGE
Continued on page 8
8 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1ST ISSUE 2009

SURVIVING A TOUGH ECONOMY
That said, many worry that the cur-

rent recession is different. When the
Though some (businesses we interviewed)
very bastions of corporate reliability—
from venerable financial institutions are in especially impacted industries,
to retail giants and automakers—go
down for the count, it shakes the very
foundation of consumer confidence.
they’ve found a way to navigate through
And now that a global economy holds
sway, could it be that all bets are off the tough times.
when it comes to the usual prediction
that “everything will be fine eventu-
ally?”
Though undoubtedly hit hard by this
downturn, the South Bay coastal com-
munities are fortunate in comparison
to most other areas. Prime location,
safe neighborhoods, beach properties,
Have we got
quality schools, and a diverse business
base continue to fuel demand. At the
same time, new construction is nearly
at a standstill and listed homes remain
virtually unsold.
SPACE for you.
Business Insider Magazine spoke to
five South Bay professionals who have
W hether you’re a company looking for a
survived several recessions and are large corporate headquarters facility or just
determined not to let the current slide need a small satellite office, Continental Park
get the best of them. Though some has the solution.
are in especially impacted indus- Continental Park is located along the
tries, they’ve found a way to navigate Rosecrans Corridor in El Segundo/Manhattan
through the tough times. Beach. It is the South Bay’s largest
office/retail/entertainment complex.
Keeping It “Real” Walk to the Daily Grill, Fleming’s Prime
Perhaps no industry has felt the Steakhouse & Wine Bar, Romano’s Macaroni
crunch of the recession more than Grill, McCormick & Schmick’s, Houston’s,
real estate. With home values drop- P. F. Chang’s China Bistro, and many other
ping and inventory sitting unsold,
fine restaurants and shopping. Work out at
many agents have seen their incomes
the Spectrum Club Sports & Fitness Center
markedly drop. Others are looking for
new work and the immediate forecast or enjoy a movie at Pacific Theatres.
is not very encouraging. Convenient access to the Metro Rail
A real estate agent in Manhattan System, the San Diego (405) and Century
Beach since 1980, Sabine Birkenfeld (105) freeways. Ten minutes to LAX.
has no plans to jump ship, though
she has had her close calls over the
years.
Though entrenched at the indepen-
dently-owned Homestead Realty C O N T I N E N TA L PA R K
for the past 27 years, Birkenfeld did “It’s not just a Location; It’s a Lifestyle!”
moonlight in the late ‘80s during an
especially tough real estate downturn. Leasing:
“I ended up getting a job in the air- Continental Development Corporation
line industry to help pay the bills,” she 2041 Rosecrans Avenue, El Segundo, CA 90245
310.640.1520 www.continentaldevelopment.com
said. “I wasn’t the only one. Several
Continued on page 14
1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 9

LEGAL INSIDER
Seven Simple Ways to Law-Proof Your Business

During Tough Economic Times
mes
By Kurt Andrew Schlichter, Esq.
W
hile the economic downturn will increase most Next, review your leases. Ensure your landlord is meeting
businesses’ exposure to legal problems, it can also obligations – and that you are meeting yours. And where
be a good time to get your legal house in order. your business is the lessor, the same applies.
Companies and individuals in trouble often look to the law Finally, take a look at your “standard” customer agree-
as a quick way to avoid debts or to collect on real or imag- ments. Chances are that it has been a while since you up-
ined claims that in good times would be put aside. But dated them. Make sure they accurately reflect how you
when things are slow, businesspeople have the chance to actually do business – clients are often just as surprised as I
focus on legal matters am to see what their homemade agreements contain.
they would otherwise There are some things that you should seriously consider
exile to the backburn- including in any agreement, like an attorney’s fees provi-
er, and many lawyers sion. Unless contained in the agreement, parties bear their
will be eager to help at own legal fees even if they win a lawsuit over the agree-
discounted rates. ment. Without a fees provision, litigation for sums under
A small investment $50,000 is often economically impractical because legal
of time, effort and per- bills will eat up most of the recovery.
haps a little money
answering seven legal 2) Do You Have The Right Business Entity?
questions now can Many people do business as a sole proprietorship, often
help your business called a “DBA.” That is not necessarily a bad thing – it is
avoid enormous costs cheap and simple – but from a legal perspective, it does
down the road – and place the risk for the business’s obligations onto the own-
maybe set you up for er. Incorporating or becoming a limited liability company
even greater success (LLC) can change that. Just as important are the tax issues
when the tough times – your business lawyer and accountant should both have
end. input in deciding what is the right business form for you.
3) Do You Have Disputed Receivables?

1) Are Your Contracts And Agreements All They Can Be? When things are good, there is often little time to focus on
As a business lawyer, it pains me to say that many of my unpaid bills. But when things are slow, you have the time.
clients’ lawsuits could have been avoided if they had come Keep in mind that your customers are having a tough time
to me sooner rather than later to talk about their home- too – in many cases there may be nothing there to collect.
made agreements. Whether it is a partnership agreement Most of your customers do want to get you paid. If the only
or a customer contract, a big part of every business lawyer’s way to get paid is a payment plan, agree to one. You can
workload is devoted to undoing the damage caused by also choose to settle a debt for less than the amount due.
poorly drafted, vague contracts. Memorialize whatever you agree to in writing. Remember
Start with any agreement among your business’s owners. the golden rule of collections: Better all of a little than none
Does it still reflect how you are actually running your busi- of a lot.
ness today? Many arrangements evolve over the years, but The first step is to choose your fights. Identify the debts
no one takes the time to update the actual written con- you will probably never collect - you know who they are
tracts. Simple moves like changes in profit distribution or – and pack them off to a debt collector. If you get a few
responsibilities can be drafted by the parties themselves. dollars down the road without risking any further effort, so
More substantial changes should go through your business much the better. For the others, first try a personal phone
attorney. call. Be polite and constructive. If that fails, take the next
10 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

step and have a debt collector or your business lawyer do Web that discuss California’s numerous and convoluted la-
the negotiating. bor laws. Learn the rules and enforce them. It is stunning
Some debts will require an actual lawsuit. Many lawyers how many savvy businesspeople fail to obey the law and
will charge $300 per hour or more. Consider a contin- are shocked to find themselves facing huge defense fees
gency arrangement where the lawyer takes a percentage on top of damage awards and penalties. For more detailed
of monies collected – the percentage can be 33 1/3 and projects like creating an employees’ handbook, you should
up. Go ahead and negotiate with your attorney – maybe contact your business lawyer.
he will take 30 percent. Legal fees are not set by law, and
your lawyer might be willing to take a loss leader case now 7) Is Your Lawyer Right For You?
to get future work when things are up and running again. This is a good time to think about it, and a good time to
Understand that collections work can be time-consuming fix the relationship if it is not meeting your needs. Start
for the lawyer, and be leery of any attorney who seems to with the basics. Can you actually get your lawyer on the
offer too good a deal. If he will not protect his own inter- phone? If you feel like you are always at the back of the
ests, then he certainly will not protect yours. line, you probably are. Do you understand her bills? Your
4) Do You Have Disputed Payables? invoices should clearly explain exactly what she is doing
The converse applies to debts you owe. If you know that during your billed time (but do not be surprised to be billed
your creditors are having a tough time, it might pay to call for phone calls – after all, your lawyer is selling you her
them up and propose a deal – cash now for a discount. time). Are things like faxes, copy and long distance charges
Remember, suing you is just as unattractive for them as su- a profit center? Fortune 500 companies do not put up with
ing a debtor is for you. It might also pay to ask your lawyer that nonsense and neither should you. Most importantly,
to consult about some of your bigger debts – settling them are you getting results commensurate with her rates? If not,
at a discount is easier if your lawyer has armed you with a this might be the time to talk candidly with your lawyer
few good arguments about why a collections lawsuit might – she might just need you more than you need her right
not succeed. You can also ask your lawyer to handle the now. And there is a fringe benefit to these tough times. If
negotiations, perhaps at an agreed flat fee. you are not happy with your business lawyer, this is a great
time to shop your business around.N
5) Are You Properly Insured?
Kurt Andrew Schlichter is a business litigator and a partner
The best time to find out is before you get sued. Remem-
at Schlichter & Shonack, LLP, in Manhattan Beach, a six-at-
ber that insurance does two things for you – it pays the
torney law firm primarily focusing on the representation of
claims against you and, equally important, provides you
businesses and businesspeople ranging from Fortune 500
with a free legal defense for covered claims. Review your
companies to individual entrepreneurs. He writes frequently
policies with your broker. You are looking at three things
on legal issues. Kurt can be reached at 310-643-0111.
– the type of insurance, coverage and exclusions, and pol-
This article does not constitute legal advice and does not
icy limits. Start with your Comprehensive General Liabil-
establish an attorney-client relationship. Consult an attorney
ity (CGL) policy. This is the one that covers accidents and
regarding your individual situation.
injuries. Does it cover the type of problems you are likely
to have? For example, make sure it covers all of your em-
ployees’ accidents while on duty, including while driving
their own vehicles (yes – the law places you firmly on the
hook for negligence and even some intentional acts com- A small investment of time, effort and
mitted by your workers within the course and scope of their
employment… and “the course and scope of employment”
is construed very broadly). Also, make sure all your loca- perhaps a little money answering seven
tions are identified in your policies, and review your “errors
and omissions” policy, which can protect officers of your legal questions now can help your business
business. Make sure the limits are high enough to protect
you. Finally, make sure you have workers’ compensation
insurance. avoid enormous costs down the road – and
6) Are You Complying With the Labor Laws? maybe set you up for even greater success
The labor law field is booming and courthouses are
swamped with lawyers suing businesses on behalf of em-
ployees complaining of missed meal breaks and unpaid when the tough times end.
overtime. There are plenty of resources out there on the
1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1 1

A R E A L E S TAT E P R O ’S P E R S P E C T I V E
A New Year, a New Beginning

By Ken Roberts $417,000 the opportunity to potentially secure some of the
lowest mortgage rates of our lifetime. The Fed’s commit-
I
couldn’t help but be moved ment as a buyer of mortgages was intended to entice home
by the outpouring of hope buyers back into the marketplace to help shore up prices.
generated by the results of the If the real estate market is stabilized, it is the first step to
presidential election, both here boosting consumer confidence, stimulating retail spending
and abroad. Mere words cannot and thus sparking an economic recovery.
adequately describe how monu- As of January 1, 2009, the new high balance conforming
mental a shift in the power of mortgage limit for loans over $417,000 has been lowered
possibility that exists now more to $625,500 in Los Angeles and Orange Counties from the
than ever before. It has been $729,750 limit of last year. We were hoping they would
said that a journey of a thousand do away with the $417,000 breakpoint so that rates, lend-
miles begins with a single step. We have taken a giant stride ing guidelines and loan types would be the same up to
in the direction of one world, one people. There’s no doubt $625,500. But that was optimistic. In fact, pricing above
a very long journey lies ahead. At times, real change arises $417,000 is not only higher, but depending on the lender
from the aftermath of catastrophe. The possibility for great and day of the week, it could be anywhere from .25 to 1.0
change lies before us. However, there is still much to do. percent steeper in rate—or as much as two points (each
With the economy in shambles, the banking and auto in- point is one percent of the loan amount) in fees! Pricing is
dustries in tatters, the national real estate market in a freef- very volatile and guidelines differ slightly from lender to
all with foreclosures rising like flood waters from Katrina, lender. With loan amounts above $417,000, the amount of
and a credit crunch squeezing business and consumers cash-out in a refinance is limited and there is an additional
alike, one might ask if there a silver lining anywhere. The one-point fee charged by the lender.
answer is yes. For regular conforming loan amounts of $417,000 or
First, the state of the South Bay real estate market is hold- less, we now have risk-based pricing depending on cred-
ing up far better than some areas in California. Both the it scores. Again, pricing may vary slightly from lender to
San Diego and Orange County markets are experiencing a lender, but just know that a middle credit score below 740
larger decline in prices than our local marketplace. But this will cost you in additional fees, with pricing increases as
is as disjointed a real estate market as I have ever seen in high as three extra points for scores below 660. Now more
that price declines vary dramatically even within the same than ever, credit scores are incredibly important. A recent
city. Some areas or tracts may have prices stabilizing, while 30-day late payment on a department store card of just
in another area within the same zip code, prices are still $10 can drop your score 80-90 points! Regular conform-
falling. Short sales (where the bank agrees to take less than ing cash-out refinances with middle scores below 740 also
what is owed against the property) and foreclosures that have pricing bumps.
come back on the market as bank-owned properties (REOs) In the old days, FHA financing was difficult, expensive,
are making appraisals challenging. In fact, new appraisal slow and very finicky about the condition of the property.
guidelines for a declining market require appraisers to use Escrow periods were seldom less than 60 days. There was
at least two comparable sales (comps) from the last 90 days only one interest rate to choose from, and the seller would
instead of the usual 180 days. They require a pending sale have to agree to pay several discount points for the buyer
and a current listing—or two current listings—at an equal to get that rate. If a property had any deferred maintenance,
or higher value than the comps. If the comps support the it would have to be repaired prior to the close of escrow.
appraised value but the pending sale and current listing And then real estate values rose much faster than FHA loan
are lower, the appraised value gets adjusted down accord- limits, rendering the loan program nearly useless to even
ingly. entry level buyers in most of the South Bay. Today, much
Second, the Federal Reserve, as part of the stimulus plan, of that has changed. While owner occupancy is still a re-
announced it will be buying about $500 billion of new quirement, FHA loan limits have increased to $417,000 for
mortgage-backed securities from Fannie Mae, Freddie Mac regular FHA and $625,500 for jumbo FHA. While there are
and “Ginnie Mae” between now and the end of June, plus several different FHA loan products today, the most popu-
an additional $100 billion of existing mortgage-backed se- lar is the 30-year fixed rate. You have the ability to buy the
curities. This announcement caused mortgage rates to drop rate up or down by paying more or less points instead of
and started a mini refinance boom that over the next six being limited to just one rate. Guidelines for regular and
months could give borrowers with loan amounts under jumbo FHA aren’t as dramatically different as they are with

conventional financing. The biggest that’s added to the loan amount, your over $625,500. There are a handful
difference is that with regular FHA, holding period for the property should of banks, insurance companies and
with compensating factors, you can be long enough to cost-justify the re- credit unions lending out their own
get a borrower approved with high finance. Once you have an FHA loan, deposits for jumbo loans and keep-
debt ratios. Jumbo FHA will be more should rates decline, you may be eli- ing those loans in their portfolio and
conservative. With the ability to pur- gible for an FHA streamline refinance. servicing them--meaning they collect
chase a home with three and one half It doesn’t require a new appraisal, so the payments. By not bundling them
percent down, (all of which can be a it’s possible to refinance even in the up and selling them in the second-
gift), add several non-occupying co- face of declining values. ary marketplace to investors, they
signers, (co-mortgagors) while blend- If you are a veteran, VA loans are still can choose the rate, fees, loan type
ing all borrowers income and debts around. They also have increased loan and guidelines under which they will
in order to qualify and allowing less limits to a maximum of $417,000 with lend. For the consumer, that comes
than perfect credit, FHA is making a no money down and no mortgage in- with benefits and costs. The most ob-
major comeback as the loan product surance. Many former vets may be vious benefit is competitive rates. We
of choice for many borrowers. FHA surprised to learn that today they can are seeing three-, five- and seven-year
guidelines require the roof to have at still use those benefits to buy a home, fixed rate ARMs, both fully amortized
least two years of economic life re- even if they had owned a home previ- and with an interest-only payment op-
maining, and any health and safety ously using their VA entitlement. You tion, from the low to high five percent
violations have to be corrected prior can be currently in active military range. These are for loan amounts,
to the close of escrow. That and FHA duty or honorably discharged. You with some lenders, up to several mil-
doesn’t like peeling paint. Any interior don’t need to be a first-time buyer. You lion dollars. Thirty-year fixed jumbos
or exterior peeling paint has to be re- just have to owner-occupy the prop- are very difficult to find at a good (be-
painted. The biggest limitation is the erty as your primary residence. If you low seven percent) rate right now. The
maximum FHA base loan amount of buy a property using your VA entitle- downside, or costs, associated with
$625,500. As with conventional con- ment, you can’t buy another property lenders still making jumbo loans at at-
forming loans, there are price bumps with a VA loan as long as you have tractive rates are stringent guidelines,
for loans over $417,000 and for de- an existing VA loan, whether you are high credit score requirements, and
clining credit scores. Mortgage insur- still currently living there or not. After very low loan-to-value ratios. In short,
ance (MI) of a little over a half per- it is paid off, however, through sale or only the best of the best borrowers
cent is required on FHA loans as well refinance, you are free to use your VA and properties make the cut. Some
as an upfront MI premium of at least entitlement again and again. As with lending guidelines are a little crazy
1.75 percent if the loan amount can FHA, there are many rate and point op- at times, such as not lending on a
be financed by adding it to the loan tions available, making it unnecessary condominium project that’s less than
amount, even if you are at the loan for the seller to have to pay any points 10 units, or 70 percent loan-to-value
maximum. Some investors who pur- on your behalf-- and the 30-year fixed for single family residences but 55
chase FHA loans will allow you to re- is the most requested loan type. Also percent loan-to-value for condomini-
move the MI Premium from your loan of note is that there are some limits ums. How about not counting rental
after a minimum of five years and if on some closing costs charged to the income from an investment property
the loan is paid down to 78 percent veteran, and some small charges are if the tenants are on anything shorter
of the original loan balance. In many required to be paid for by the seller than a one-year lease? Then there’s
instances, an FHA loan can be used to for the veteran. always payment shock. That means
refinance when there isn’t enough eq- There are some lenders still mak- if you are paying low rent in order to
uity to meet conventional guidelines. ing jumbo loans at attractive rates. save up for a home purchase and your
Because of the upfront MI premium Jumbo loans are those with amounts
If you think you can time the bottom of either the real estate market or
mortgage rates, how well did you time getting out of the stock market? It’s
much better to get a good rate and a good value even if rates and prices were
to dip a tad further than to miss it by waiting.

Continued from page 9 working with a green company, so to me it was a validation

people in the office picked up side jobs. Real estate at least that I was on the right track.”
allows for flexible hours. A lot of agents also got totally out Despite her good standing and additional specializations
of the business.” that can create more diverse business avenues, Birkenfeld
Birkenfeld’s sideline turned into opportunity, as her air- is a bit worried about the current recession. “It is worse
line contacts brought her new business. She continued her this time around,” she admitted. “Before there was always
dual career until 1991 when the airline company moved
a light at the end of the tunnel where you knew everything
its main offices to Florida. Birkenfeld didn’t want to move
was cyclical and it’s the routine of the real estate market
across the country.
ups and downs. Now it doesn’t seem just isolated to our
Thankfully, real estate began to pick up again in the early
area and country. It’s worldwide. As for the local market,
nineties, though she continued to pursue supplemental in-
when you have a number of listings and advertise them,
come by working in property management and event plan-
but they aren’t selling and there is no money coming in,
ning.
that gets scary.”
Birkenfeld went into real estate full-time in the late ‘90s
Still, she remains cautiously optimistic, even though list-
just before an unprecedented period of double digit annual
home value appreciation that continued through 2006. Like ings no longer “sell like hotcakes.” As she noted, there are
so many others, she reaped the benefits. “When the market still the affluent people who can afford to buy in the area
was hot, practically anyone who had a listing, regardless and will continue to do so. The downturn is also creating
of their knowledge or capabilities, would sell that property new opportunity for some. “On a very positive note, I now
and get multiple offers,” she confided. It also helped that find myself working with first-time buyers who never even
she had built community-wide name recognition through had a chance to purchase anything before, since prices
her many years in the business. “Persistence and also a were so inflated,” Birkenfeld said. “I don’t mean Manhat-
good reputation will get you through the tough times as tan Beach, but the South Bay in general. There are quite a
well as establishing trust with clients,” she added. number of short sales and foreclosure properties available,
After learning the hard way about the cyclical nature of but at least it gives more people a chance with the now
the business, Birkenfeld took additional steps to soften the lower interest rates and better loan programs to buy one of
impacts of the inevitable next downturn while the real es- these homes.”
tate market was still at its apex. “I started to take additional Short sales are up 66 percent in the Los Angeles area over
educational courses and received my CIPS (Certified In- this time last year as more people can afford to buy homes
ternational Property Specialist) designation,” she said. “To in the $200,000 to $400,000 range, Birkenfeld pointed out.
survive bad times, for me it was important to build interna- “Before, nothing much in single family homes was avail-
tional clientele. California is such a culturally diverse area, able under $500,000, so there are some positives to this
a true melting pot of different nationalities.” mess,” she said. Still, she has seen some agents drop out of
In recent years, Birkenfeld also earned Graduate Real Es- the business because they can’t pay their bills. “Those who
tate Institute status and certification as a Seniors Real Es- have already been through the tough times once or twice
tate Specialist. In 2008, Homestead became the first South before will probably keep going. I’m not planning to drop
Bay real estate business to achieve a “green certification” out of the real estate business and go into other things. Even
for taking prescribed steps to become environmentally re- when the market is slow, as long as I have clients calling me
sponsible. That too has helped. “The world is changing and wanting to know what is available out there to buy, I know
people are becoming more aware,” Birkenfeld said. “When things will turn around again. It’s a really good time to buy
I learned that it was possible that you can get “green certi- since you’re buying lower, and getting more for your mon-
fied” in a business, it just rang true to me that this wasn’t ey. By now I think everyone knows this. Down the road, the
just going to be a passing fad. Plus, I came across a survey market will come back.”
which was forwarded to me by a natural hazard study firm In the meantime, Birkenfeld noted that the South Bay
concluding that a high percentage of people would prefer housing market isn’t impacted as badly as some other ar-
“Before there was always a light at the end of the tunnel where you knew
everything was cyclical and it’s the routine of the real estate market ups and
downs. Now it doesn’t seem just isolated to our area and country. It’s worldwide.”
Sabine Birkenfeld, Homestead Realty

“I believe the cycle has come back—that the small uniqueness of a community is appealing to
people. At some point, people look for something more personal and start to go back to the
community they live in and go back to the businesses they are comfortable with—as long as
the product is good and the service is great. That’s where we come in.”
Brenda Newman, The Jewelry Source
eas. “The South Bay appeal will always draw buyers and ads and did direct mailing to communicate with our exist-
push the housing market upward again,” she said. “Good ing customer base, which still makes up 80 percent of our
schools, beach area property and safe neighborhoods will business. We never took loans out for inventory of any sort
keep the area going. People will always be attracted to the and paid for things as we went along. And we stayed posi-
lifestyle our communities offer and that is the very reason tive through any adversity. We may have been a little naive,
why buyers feel their investments will be safer here.” but it has worked for us.”
Newman’s first major investment was a $5,000 gemologi-
A Diamond in the Rough cal laboratory bought for cash. Four years ago, she auto-
Now celebrating its 25th year in business, The Jewelry mated the business via computer, which allows her to more
Source is tucked away in the sometimes foot traffic-chal- effectively reach her customer base by providing new ser-
lenged El Segundo downtown district. One would think vices such as “wish lists.”
that a retailer that specializes in luxury goods might be Then in 2006, she added a state-of-the-art on-site repair
doomed in a slow economy. Yet owner Brenda Newman shop and laser welder—the first jeweler in the South Bay to
continues to thrive thanks to a conservative philosophy and do so. “This generates a service that isn’t just selling in the
a well-timed expansion into the repair side of the coin. “We showcases,” said Newman. “In a recession, people might
have weathered the storm since opening in 1984,” she said. decide to repair jewelry they’ve set aside instead of buying
“And though jewelry is a luxury item, it is something that something new. Having on-site repair has helped expand
women will always need and buy. It is a gift of love and the business and provides a service we couldn’t have done
represents something very deep and emotional.” otherwise.”
Newman didn’t start out as a retailer, however. She and While Newman admitted that the current recession has
(now retired) partner Roanne Mahoney sold a line of beads “devastated lives” and that the worst may not be over yet,
to major department she is confident about a full recovery. She also firmly be-
stores and small bou- lieves that small town, mom and pop-inspired enclaves like
tique shops up and Downtown El Segundo—which have suffered due to the
down the California advent of chain stores and Internet shopping—may find a
coast, working out of revived audience. “I believe the cycle has come back—that
an 84-square foot hall- the small uniqueness of a community is appealing to peo-
way around the block ple,” she said. “At some point, people look for something
from the store’s even- more personal and start to go back to the community they
tual Main Street loca- live in and go back to the businesses they are comfortable
tion. Soon enough they with—as long as the product is good and the service is
began offering their great. That’s where we come in.”
own necklace designs In the meantime, Newman is also doing more direct ad-
to local patrons and vertising than ever, even though many business owners are
the business caught on cutting back in that area—and despite the fact she consid-
Brenda Newman from there. The two had ers herself conservative. “I’m a risk taker by being in busi-
barely gotten their feet wet when the recession of 1987 hit. ness period, but the crunch is here now,” she said. “We’re
Nonetheless that year, the business grew 400 percent, al- talking up a storm with people to let them know what we
beit with minimal revenues to show for it. It managed to have. It’s just one customer at a time. If they have a good
maintain 100 percent annual growth through 1992 before experience, they will tell their friends and neighbors. It’s a
finally slowing down. Things improved again in 1998 and very tough time, but we’re all going to make it.”
have basically stayed that way ever since.
“We were practical,” she said about the store’s ability to Pouring It On
grow despite recessionary times. “Early on, we had only While certain monthly expenses are more or less fixed,
three employees (two owners and one craftsman), low there are other areas where consumers look to cut costs.
overhead, low cost of doing business, and one customer
at a time. We advertised consistently, but created our own Continued on page 26

PUBLISHER’S PERSPECTIVE
Modern Economic Logic:

What Goes Down Must Come Up
By David Whitehead
W
hen it comes to economic downturns, some peo- And this alludes to what’s different about this economic
ple believe what goes down must come up again. downturn. There have been several in my lifetime. I’m not
A scientist applying this logic to physics would old enough to have experienced The Great Depression. But
say they got it backwards. Any economist with a grasp on I do remember Carter administration malaise followed by
reality would have to agree. We can count on gravity to pull convulsions in the eighties during the Reagan Revolution.
things down. But up requires a deliberate effort from some- Then the early nineties got so bad, many of us would prefer
where. This is as true with economics as it is with physics. to forget the first five years of that decade. And just when
Getting some more up in the economy is what these un- things were looking good again, we were hit by dot com
precedented government interventions are all about. The doldrums in 2000 followed by an astoundingly short reces-
problem is government and financial leaders are upping in sion after 9/11. Short only because former Federal Reserve
a reckless and dangerous manner. Chairman Alan Greenspan solved it by bottoming out lend-
The deliberate effort in this case is accomplished by ex- ing rates, thereby creating a magnificent money bubble.
panding debt disguised as targeted bailouts to stop the Looking back, I can’t help but notice the downturns tended
economic freefall experts knew was inevitable for a very to get worse and the booms that followed were usually
long time. As it turns out, something incredibly complex more majestic than any before. This was especially so with
is governed by a very simple bottom line: An economic the stock market, gold and real estate—all known indica-
system isn’t sustainable when downward pressures caused tors that money bubbles compounded by lopsided interna-
by mounting debt grow exponentially in relationship to tional trade were disguising the fact our currency was and
upward momentum created by genuine economic growth. continues to get dramatically weaker in real terms.
But central bankers with the complicity of our government What’s more, during this time central bankers have grown
would have you believe otherwise. increasingly interventionist in their efforts to control the
Economic experts call this phenomenon “the business economy, while Wall Street has become increasingly cre-
cycle.” This is not a normal process within a sustainable ative in what it calls an “asset” worth selling to investors
economic system. It’s more like a cycle of seizures in a ter- around the world. This is largely because no one wants to
minally ill patient. Experts espousing the status quo point to experience another Great Depression.
historical data that suggests no matter how bad a short-term And no Federal Reserve chairman, treasury secretary or
economic trend gets, the long-term “cycle” continues to political leader wants to see a large scale economic catas-
go up. And because we have been through many of these trophe happen on their watch. So as the problems become
“cycles” over the decades, most people take it as a given more insurmountable, the economic policy becomes more
that the long-term trend will always be that way. In fact, we radical and increasingly desperate as the situation gets out
have staked our destiny on this misguided notion and are of control. So now we have a downturn so dangerous, it has
just beginning to pay the price for our ignorance. forced everyone to focus on the long-term effects of their
The myth of the endless business cycle requires some actions. It has also forced domestic financial experts and
sleight-of-hand deception on the part of financial wizards political leaders to remove their blinders and learn about
for the illusion to appear real. And those of us fearful of the global causes and effects that spurred, and continues to
losing what we have spent decades building are eager to drive, this financial crisis. The end result is people calling
believe these illusions because they make us feel safer. Yet themselves “conservative” proposing interventions in the
illusions are what they are and reality has no conscience. economy as extreme as any Lenin or Trotsky might have
The dark side of this deception must be confronted at some proposed. I find that surreal to say the least.
point.

The Global Chickens are Coming Home to Roost 540,000 people suddenly finding themselves out of work
Since the mid-nineties, we have been indoctrinated to be- and unemployment spiking to 7.2 percent, the highest in
lieve globalization will improve our lives. Just before the 16 years. In contrast, unemployment was only 4.9 percent
outsourcing revolution started in the early seventies, Alvin a year prior. In 2008 approximately 2.6 million people lost
Toffler described this phenomenon in his classic futuristic their jobs, the most since 1945.
book Future Shock as the transition to “super-industrialized These statistics are mind boggling. Predicting this as re-
man.” But few at the time questioned how a de-industri- cently as a year ago would have been considered reaction-
alized society could call itself “super-industrialized.” And ary in mainstream circles. That’s why it is a good time to
even fewer questioned how nations could protect their own expand your information sources because for years, cred-
wealth and avoid the enslavement of debt if they didn’t con- ible experts have been preaching from the sidelines about
trol their vital domestic resources and produce their own these kinds of foreboding events.
essential goods. This is the conundrum now before us. Perhaps this will be the final bubble of a 40-year debt cy-
Toffler’s book was released in 1970, not long before trade cle that will bring this decade’s long cycle of cycles to an
deficits were made legal in the United States. Since then, a end. If there is a “recovery” in 2009 based on these extraor-
dollar with no bullion backing whatsoever has been vola- dinary bailouts, which as of this writing seem to be having
tile, consumer inflation has been somewhat steady with a somewhat positive effect on the stock market, many of us
occasional dramatic spikes, and real estate has soared in will breathe a sigh of relief. But another false recovery sim-
comparison to salaries and consumer prices. Foreign in- ply puts off the inevitable. And if and when the last possible
vestment of various forms has driven the economy, and the bubble bursts with devastating effect, then what?
ongoing trend has been for public and private sector debt
to mount. We are leveraging our position as the world’s W. Orders Up a New Economic Order for the World
reserve currency to keep things going. But that requires Outgoing President George W. Bush recently held an eco-
global cooperation, which is waning fast. nomic summit of world financial leaders to begin what will
In mid-December 2008, on the heels of the Bank of Eng- undoubtedly be a long process to replace the Bretton Woods
land lowering its key lending rate to two percent—some- global economic order established at the close of World
thing it hasn’t done since the institution was established War II. This is the great financial order best represented by
in 1694—the Federal Reserve lowered its own key lending its institutions, including the International Monetary Fund
rate to a range of 0.0 to 0.25 percent. Stock markets then and the World Bank. Its policies rebuilt Europe after the
dipped on the belief the central bank was running out of war. The Bretton Woods institutions have been at the fore-
tricks to stimulate the economy. The market then rallied as front of developing the globalized society melting down
2008 transitioned into 2009. However, the Dow lost an as- before us and have been governing international monetary
tounding 34 percent of its value for the year, the third worst policy for over 60 years. The Bretton Woods agreement was
decline in its 112-year history and a fraction of a percent originally based on a U.S. dollar backed by bullion to serve
worse than 1930! Finally in the second week of January, the as the world’s reserve currency. But the dollar was taken
Bank of England broke its record again by lowering the rate off the bullion standard in the early seventies, becoming a
another half percent to 1.5 percent. fiat currency with nothing tangible backing it. Not only did
Domestic job losses went into freefall in December, with Continued on page 18
The myth of the endless

business cycle requires
The Myth of
some sleight-of-hand
the Endless
deception on the part of
Business Cycle
financial wizards for the
illusion to appear real.

PUBLISHER’S PERSPECTIVE
Continued from page 17 Latin American nations if it suited its purpose. In fact, this is
this make it problematic to develop a prosperous domestic where the term “Banana Republic” originated.
economy without incurring destructive loads of debt, it also This modern global process actually allows financial
freed the developing nations to lowball their currency valu- powerhouses to collectively act as parallel governments
ations to maximize their export potential. This process is at in many situations, and marginalizes the influence of all
the root cause of the false economy we have grown to rely sovereign nation states in this world. In other words, this is
on and is key to the illusion of wealth we were collectively the process that some would argue actually rules our world
conned into believing was real. through raw unadulterated economic power no political
On the heels of the gold standard’s eulogy, the long pro- leader has the clout to challenge.
cess of de-industrializing and manufacturer outsourcing On a global scale, the nations we once called “third world”
started and then grew steadily over the decades. With do- leveraged their devalued currencies and cheap labor to de-
mestic industrial output declining at an alarming rate as the velop large scale industries to produce goods for what we
world’s nation states were obliged to hold and spend dol- still call “developed nations.” All of these nations, including
lars, this highly manipulated economic environment drives the United States, the United Kingdom, France and Germa-
the business cycles and instability we have seen over the ny, have de-industrialized to some degree. But none have
decades.
done so to the extent of the United States. And no others
Although the term “globalization” was coined in the mid-
could because by not being the issuer of the world’s reserve
nineties, the modern version has roots as far back as the
currency, their money supplies would implode if they tried.
18th Century British East India Company. The British Empire
In fact, that’s exactly what happened to several Latin Ameri-
called these organizations government chartered compa-
nies. They were more than just private sector businesses. can countries during the 1970s when they dove headfirst
These economic behemoths were literally authorized to into radical “free trade” before the rest of the world became
govern the lands they cultivated on behalf of The Crown. addicted to it. Conversely, if the United States could not
In fact, Cecil Rhodes used this concept to raise standing rely on its status as the world’s reserve currency to keep
armies to subdue southern Africa in the late 19th Century foreign wealth at our disposal to back the dollar, we could
so the West could control the gold and diamond industries. not have dug in this deep in unsustainable debt. It is now
The modern contracting system the Bush administration crystal clear to say that we should not have—at least if it
implemented to rebuild Iraq has sinister similarities to its is our intent to defend our sovereignty as diligently as our
imperial predecessors. national security. At this point, I am not at all certain most
The United States first got into the imperial game about the of my compatriots give much thought to the issue.
same time Rhodes was conquering Africa, originally with Americans were easily aroused to fight global terrorism
the United Fruit Company in Latin America. This is the or- because 9/11 made it clear to them why it is a threat. But
ganization that marketed the famous Chiquita Bananas. The de-industrialization and the possible internationalization of
United Fruit Company is often referred to as the first global our currency, whether masked by the pegging of the North
conglomerate and had a reputation for acting as a govern- American currencies to each other or the issuance of an
ment unto itself to the point of initiating coups in emerging “Amero” style single currency for the continent, doesn’t
sink in for most people as a substantial threat to the na-
tion. Let’s face it—Spielberg will never fill theaters making
. . . if the United States could not rely on its a movie about that. But my question is this: How can a
nation state call itself sovereign when it doesn’t control the
status as the world’s reserve currency to keep
manufacturing of its essential goods, and at this point some
foreign wealth at our disposal to back the of its essential services, or even its own money supply? The
fact is, it can’t. And if sovereignty isn’t important to a nation
dollar, we could not have dug in this deep that calls itself the defender of freedom in the world, I don’t
know what is.
in unsustainable debt. It is now crystal clear There are no straightforward answers to the problems I
have just laid out. But the global economy will never re-
to say that we should not have—at least if cover in a sustainable way unless people at all levels of
government, industry, finance and most importantly, the
it is our intent to defend our sovereignty as media, begin asking the right questions. I hope I have pro-
voked some from you.N
diligently as our national security. David Whitehead is the publisher of Business Insider Maga-
zine. He can be reached at Publisher@BusinessInsider.us

A R E A L E S TAT E P R O ’S P E R S P E C T I V E
Continued from page 13 priced in relation to the market, it will sell fast, in multiple
mortgage payments are going to be more than 100 percent offers, over full price and to the highest bidder with the
more than your current rent, no matter how high your credit largest down payment and the shortest escrow period--usu-
scores, no matter how big your down payment is, no mat- ally with almost no contingencies. I have seen offers sub-
ter how much you have in cash reserves after the purchase, mitted on both short sales and bank REOs where after two
and no matter how big your income is, you will be declined months of waiting, there hasn’t been a hint of an answer.
because you don’t have a history of paying a big payment Not an easy road… Sometimes you are better off trying to
like a mortgage! They can draw lines anywhere they want buy a home that has been on the market for a long time
and cherry pick all they want. At least there is good money and has a large price reduction from extremely motivated
out there available for higher loan amounts. sellers. Timing is everything. If you are buying up in price
The residential mortgage marketplace will continue to be range in this market, it works well. You may be selling low,
volatile, but within a range. I am recommending those in- but you are buying low… and when prices rebound, your
terested in refinancing get all their documentation together, purchase will go up more in value than your sale property.
If you are thinking about downsizing, sit down with your
get approved and wait for a favorable day when mortgage
mortgage planning professional and see if makes sense to
bonds put on a big rally, causing rates to dip. Have a target
purchase now without selling. If your current residence
rate determined with your mortgage professional so they
was your primary residence the previous two years, you
are prepared to pull the trigger and lock at the opportune
can rent it now and buy another primary residence. As long
time. Don’t sit around waiting for some perceived bottom
as you sell your previous residence within three years of
only to try and scramble when it comes. If you are not pre-
converting it to a rental, it would still qualify for the capital
pared, ready and waiting, rates will dip and spike back up gains tax exclusion for the sale of a primary residence of
and you will miss it. $250,000 tax-free for a single person or $500,000 tax-free
If you are trying to buy in the South Bay market, know for married couples. That way you could potentially sell
that we don’t have as many short sales and bank REOs as into a higher market later for more money. While there are
in some other areas. If you find one you like and it is well Continued on page 23
Could Your Company Benefit From

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FINANCE & ACCOUNTING INSIDER
Managing Your Business

During Difficult Times
By Angela L.H. Sayers, CPA, MBA
T
he stock market is extremely volatile and our invest- when they need you. Always remember: internal controls,
ment portfolios have plummeted. So how can we keep internal controls, internal controls…
our businesses running profitably and riding through Most small business owners believe they see everything
the recession without too much turmoil? Small business and that they only hire honest employees. Internal controls
owners have to manage their companies much more ef- are only another hindrance on getting the work done. In
fectively than large corporations on Wall Street regardless reality, no company is too small to merit some form of inter-
of the economic climate. After all, small businesses are go- nal controls. Here are a few internal controls that are simple
ing to pull our country out of the recession. Here are some and accomplish what the small business owner needs:
points to help your business navigate through these difficult
economic times. 1) For every expenditure paid, there needs to be a re-
First, keep operating costs to a minimum. Success does ceipt or an invoice regardless of the method of pay-
not hinge on a posh office and a giant payroll. Rent only the ment. If employees want reimbursement, they need
space you actually need and keep it functional. Also, re- to have a receipt. The page of their credit card state-
tain only the bare minimum number of employees required ment reflecting the charge is fine if there is docu-
for the average workload. In addition, mented approval (e.g. your signa-
find one or two individuals who can ture). While you must keep the copy
help you in a pinch if you have a short of that page of the employee’s credit
busy period but do not need to be on card statement in your accounting
the payroll full-time. In my CPA of- records, black out the employee’s
fice, I have one full-time employee credit card account number (i.e.
year-round, but also one or two others with a Sharpie).
I can pay to come in during tax season 2) Employees should sign for receipt
to provide extra help. As for the other of all paychecks and that signature
services, buy only exactly what you should be kept on file with your
need and no more. You do not need to copy of their pay stub. If employ-
have the latest gadget or computer to ees misplace or damage their pay-
do your job efficiently. checks, issue new ones only after
Also, watch your receivables. If you verifying that the previous check
do not call or email your clients when has not cleared your bank. If they
they are late in paying you, they may do not bring the original destroyed
get the idea that they do not have to pay. Do not keep paycheck back with them, issue a stop payment on
working for clients who do not pay. The only exceptions the replacement check and deduct the bank stop
are those with short-term financial difficulties who at least payment fee from their bank.
make the effort to pay when they can. 3) As the owner of the business, you should be the
Employees can be our most valuable asset and/or our only person who can sign on the account or has ac-
worst nightmare. Make sure that your employees remain cess to the banking website to make payments. You
a valuable asset by always being there in case they need should have sole authority over approving expenses
help or encouragement. This economy can be as rough for before they are expended. Never allow your book-
them as it is for you and, in extreme cases, may cause them keeper to sign checks, go online and pay bills or ap-
to rationalize dishonest behavior by thinking you do not prove expenses. The bookkeeper is recording trans-
pay them enough or that you are not standing behind them actions that have already occurred and should not

have the ability to consummate a transaction. Their be required to bring in all of the receipts for charg-
only access to your banking information should be es that you have hopefully approved, and match
getting duplicate statements and questions to your those receipts to the statement that you receive.
bank about transactions that have already occurred. If they used it for personal reasons, they should
They should never have the ability to call the bank
give you the receipt for that and make a payment
and consummate their transaction.
from their own funds to pay the credit card for
4) As the owner of the business, you should look at
the bank statement with the canceled checks before those expenses. However, that practice should be
anyone else is allowed to open it. Make sure that frowned upon and the exact required procedure
everything on the statement is what you authorized, should be documented in detail in your employee
and that there are no extra transactions or washed handbook.
checks. Also, make sure that all deposits actually 8) Proper employee screening with the help of an ex-
are recorded on the statement. If not, you should perienced human resource professional is an im-
find out why. perative step. Then have procedures and internal
5) If you have a business that uses a cash register, only
controls in place to keep them honest and hard
one person should be allowed on the register at any
one time. When that employee’s time on the register working.
is over, the register needs to be properly closed out. 9) You have to follow the same procedures and inter-
When closing out the register, the register should be nal control rules as your employees to show them
able to tell you what sales are broken out between the procedures are important. If you do not follow
the various credit cards and cash. You will then them, you have set a tone that these procedures/in-
know how much cash should be in the register. The ternal controls are not very important.
cash and checks in the register should be counted. If
the register is short (has less than the amount of cash
These business tips are important regardless of the state
or checks it is supposed to), you need to find out
of the economy. Keep in mind that small businesses such
why. If the register is more than a few dollars short,
than the employee that was responsible needs to ex- as yours—not large companies—are the ones creating
plain why. If the register is malfunctioning, causing new jobs to help the economy every day. If you properly
it to appear short, the employee must let you know apply the above principles along with offering your clients
as soon as possible and you need to have that fixed that great service they are accustomed to, your business
immediately. can be one of those small profitable companies that cre-
6) If you loan your credit card to your employee to pay ate jobs. N
for some expenses, that employee should come back Angela L.H. Sayers, CPA, MBA, hs provided professional tax
with all receipts from the various charges (or at least
and accounting advice for over 14 years. Her full-service ac-
a list of what was charged) and your credit card. All
of these charges should have been approved by you countance corporation offers a wide range of services that
and should match your credit card statement. provide value and tax savings, whil being small enough to be
7) If you absolutely have to give your employee(s) a flexiblew and responsive to clients’ needs.
credit card (i.e. their job may require significant You may contact Angela at 310-541-1611 or by email at
travel for you), at the end of the month they should angelasayerscpa@cox.net.
Small business owners have to manage their companies much more

effectively than large corporations on Wall Street regardless of the
economic climate. After all, small businesses are going to pull our
country out of the recession.

CALENDAR OF BUSINESS EVENTS
Save The Date!

El Segundo Chamber of Commerce achievements. Awards include:
For more information about the events listed, call
Best Retail/Service Business: An Uncommon Journey,
310-322-1220 or visit www.ElSegundoChamber. Palos Verdes Estates
org. Best Professional Business: Burkley & Brandlin LLP,
Torrance
El Segundo Chamber Installation Dinner Best Restaurant/Art/Entertainment: Frascati Ristorante,
Thursday, February 5, 2009, 6 -8:30 p.m. Rolling Hills Estates
Hacienda Hotel Best New Business: Rancho Palos Verdes Flowers,
525 N. Sepulveda Blvd. El Segundo, CA Rancho Palos Verdes
Call the chamber for more information. Best Non-Profit Organization: Peninsula Friends of the
Library, Rolling Hills Estates
Manhattan Beach Chamber of Commerce The Matt Brunning Business in Excellence Award will
For more information about the events listed, be presented to Ralph and Risty Wood, owners of Ad-
call 310-545-5313 or visit miral Risty Restaurant.
www.ManhattanBeachChamber.net
Tickets are $75 each and are expected to sell out early!
“Premier” tables of 10 are $1,000 including preferred
Manhattan Beach Women in Business
“A Night at GROW” seating, complimentary full-page program ad and
Thursday, February 5, 2009, 6:30 – 8:00 pm. unlimited wine. Auction items and travel packages
GROW The Produce Shop, 1830 N. Sepulveda Blvd., offered. Whether you attend or not, congratulatory
Manhattan Beach, CA messages/ads to the honorees can be purchased in the
Featuring speaker Barry Fisher, includes food and bever- program.
ages.
$15 for Chamber members, $20 non-members. Redondo Beach Chamber of Commerce and
Register online at www.ManhattanBeachChamber.net. Visitors Bureau
For more information about the events listed,
Speed Networking
call 310-376-6911 or visit
Thursday, February 12, 2009. 5:30 p.m.-7:30 p.m.
Manhattan Country Club, 1330 Parkview Avenue, Manhat- www.RedondoChamber.org
tan Beach, CA
Includes appetizers, sodas and cash bar Redondo Beach State of the City Address
Members $20, non-members $30 Tuesday, February 17, 2009, 7:30 a.m.
Register online at www.ManhattanBeachChamber.net. Crowne Plaza Hotel
300 N. Harbor Dr., Redondo Beach
$30 pre-register, $35 at door.
Palos Verdes Peninsula Chamber of Commerce
For more information about the events listed, call Redondo Beach Economic Summit
310-377-8111 or visit “Surviving Challenging Times”
www.PalosVerdesChamber.com. Thursday, March 19, 2009, 7:45 a.m.-1:00 p.m.
Redondo Beach Library (upstairs)
Signature Event: 303 N. Pacific Coast Hwy., Redondo Beach
Salute to Business/Installation Dinner Come out to the Redondo Beach Economic Summit to
Thursday, February 12, 2009, 6:30-9:30 p.m. learn more about our local economy, the challenges
Trump National Golf Course we face and how we can overcome those challenges.
One Ocean Trails Drive, Rancho Palos VErdes In addition to enjoying a keynote presentation by
The PVP Chamber of Commerce and Palos Verdes Sunset Steven Little, INC Magazine Business Growth Expert,
Rotary Club will honor outstanding businesses for their attendees will hear great panel discussion on topics

that include (1) how to get access a.m. – 1 p.m. Continued from page 19
to capital, (2) Los Angeles County First Federal Bank Meeting Room no guarantees about real estate values
economic challenges and (3) how 2233 Artesia Blvd., Redondo Beach being higher in three years, we have a
businesses can, and should, tap into much better chance of having higher
the Web 2.0 world. prices in three years here in Southern
Torrance Area Chamber of California than in many other parts of
Below is the agenda, which is subject Commerce the country.
to change: Because banks are teetering on the
For more information about the
brink, pricing is all over the place and
7:45 - 8:15: Registration & Continen- events listed, call 310-540-5858 lenders will swiftly move in and out
tal Breakfast or visit of the market. Banks may offer com-
8:15 - 8:45: Mayor’s Welcome & City petitive rates one month, but will then
Presentation
www.TorranceChamber.com. raise them if they get more business
8:45 - 9:45: Panel of Business Re- than they can handle. For that rea-
source Experts South Bay Regional Economic son, it makes sense to work with a
9:45 - 10:00: Break Outlook Address mortgage planner who has as many
10:00 - 11:30: Keynote Presentation Wednesday, February 25, 2009, lending sources as possible. Dealing
by Steven Little, INC Magazine Busi- 11:30 a.m.-1:30 p.m. directly with one bank can really limit
ness Growth Expert Torrance Marriott your choices. We have a six-month
11:30 - Noon: Luncheon Break window, at least, for great mortgage
3635 Fashion Way, Torrance
Noon - 1:00: Keynote Presentation rates. No one knows how low rates
Jack Kyser, Chief Economist for will go. No one knows how low real
continues
1:00: Adjournment the Los Angeles County Economic estate prices will go. I do know there
$30.00 with advance registration Development Corporation, will is a big inflationary cycle coming at
$40.00 at the door. Registration in- present the Torrance Area Chamber the end of this economic disaster.
cludes: Continental breakfast, lunch of Commerce Economic Outlook With the Federal Funds Rate near zero
and a complimentary copy of Steven address to enlighten the South Bay and the Fed throwing around hun-
Little’s book, “The 7 Irrefutable Rules business community on future finan- dreds of billions of dollars to try and
of Small Business Growth,” courtesy of fix the mess we are in, that spells I-N-
cial patterns. Kyser is responsible for
Northrop Grumman. F-L-A-T-I-O-N in a big way later. The
interpreting, forecasting and analyz- Fed will have to raise short-term rates
Networking Events ing major industry economic trends. in the future like crazy to try and hold
The Los Angeles Business Journal calls off a runaway freight train of inflation-
Network Café Kyser “the guru of the Los Angeles ary pressure that will show up. That
Enjoy a great lunch and learn about economy.” means a period of higher mortgage
Chamber members and their busi- Kyser is the founder of the Kyser rates before things settle down again
nesses while promoting your own. in a range. We need to position our-
Center for Economic Research for
Each person will get to present a selves to take advantage of low rates
the LAEDC, a not for profit organi- now. When the time is right, mortgage
30-second commercial in front of the
whole group. Advanced reservations zation focusing on the economic rates will move higher in a blink com-
are required and will save you $5. base of Los Angeles job retention pared to real estate values. If you are
Members with reservations are $20 and creation. His analytical research going to refinance, do it soon. If you
and guests and members without a work and insightful knowledge of the are going to purchase, do it as soon
reservation are $25. regional economy help the LAEDC as you find the right property. Wait-
ing for the absolute bottom is not a
gain recognition as the source of
Thursday, February 12, 2009, 11:30 good strategy. It begs the question,
economic information and projection “If you think you can time the bot-
a.m.-1 p.m.
in Southern California. tom of either the real estate market
Delzano’s By the Sea
179 N. Harbor Dr., Redondo Beach Admission: $35 per person or $350 or mortgage rates, how well did you
for a table for 10 people with reserva- time getting out of the stock market?”
Thursday, March 12, 2009, 11:30 tion.N Continued on page 30

TAX TIME INSIDER
The Great Tax Shock of 2009:
Californians May Get IOUs

Instead of Tax Refunds
An Overview and Perspective
By David Whitehead
A
s the stalemate surrounding its budget crisis deepens, ferent form than we typically complain about. The differ-
the State of California is poised to run out of money ence is, this is waste forged out of desperation that no one
to pay its bills in February, requiring taxpayers to be really wants.
issued IOUs instead of their highly anticipated income tax State Controller John Chiang told the Merced Sun-Star on
refunds. Try paying your own bills that way and see if you January 9 that many agencies, which include hospitals and
get a favorable response. clinics, may be getting IOUs instead of cash.
I was caught off guard when I learned our governor with Chiang has been telling media organizations the State
the consent of the State Legislature can do this legally. It has already started to notify agencies of possible IOU pay-
hardly seems fair and I think it should ments. The IOUs could start in Feb-
elicit outrage from all of us. However, ruary. This will include 1,700 elected
California’s political establishment is officials plus their staffs, in addition
keenly aware of this and I do realize it to California residents who are due
is holding its nose with the rest of us in tax refunds.
a desperate attempt to address the cur- Apparently, only some programs can
rent $15 billion budget shortfall. legally be addressed with IOUs. Ob-
Only once since the Great Depres- ligations to us, the citizen taxpayers,
sion has the State resorted to sending are among them. The list also includes
IOUs instead of refunds to taxpayers. a wide range of student aid programs
And as of this writing, it is not certain if necessary to prepare the next genera-
this likely proposal will extend beyond tion to run our government’s financial
the first round of refunds to be issued affairs more intelligently than the cur-
in February. rent crop of goofballs serving in our
ABC News reported on January 5 that famously dysfunctional State Legis-
if the budget crisis prevents the State lature. However, under California’s
from making refund payments to tax- constitution, schools themselves and
payers for an extended period of time, bondholders get first dibs on cash in
interest would clearly be owed, which the State coffers. I think a state initia-
could be as high as five percent. Given tive to include taxpayers on that list
the bleak investment prospects with would be the “Proposition 13” of our
the current economy, that’s not necessarily a bad return, generation and would gain widespread support from angry
but it’s really the principle of the matter that makes this out- taxpayers. But the sad truth is the public sector has run its
rageous, not to mention the fact that a wide range of State finances so miserably for so long, we would bankrupt our
financial obligations will have to be addressed the same vital public institutions if we actually tried that.
way. If we just look at how the State’s $15 billion budget short-
And let’s face it—interest paid by the State is really tax- fall affects tax refunds alone, last year 10 million taxpayers
payer money in the end. It’s not so bad if it is simply coming received back $8 billion. That figure alone for a single year
back to us at a later time, but interest paid to people and is more than 50 percent of the current total budget shortfall.
agencies running operations on behalf of the State would So I wouldn’t expect getting your refund paid back for some
amount to more debt and more government waste in a dif- time. To make matters worse, the State’s budget deficit is

expected to swell to $42 billion over But thanks to years of fiscal misman- stance. That affects everything and
the next 18 months. agement, there is nowhere left to go everyone who buys anything. No one
The last time the State did this wasn’t without imposing obnoxious, if not wants to see parks shut down or roads
so long ago. In 1992, in the wake of debilitating taxes on people and com- and bridges in a desperate state of re-
a serious recession, natural disasters panies already feeling the stress from pair continue to deteriorate.
and the L.A. Riots, California had to the economic downturn, or letting vi- Labor unions are already fighting the
send out IOUs instead of refunds to tal services fall by the wayside. Governor’s furlough plan, and expect
taxpayers. But this time, the financial No one wants to see dramatic in- citizen groups of every kind to lobby
crisis is global with far more major fi- creases in the state sales tax for in- Continued on page 30
nancial institutions in serious trouble
and public and private sector debt
getting beyond the range of control.
In addition to delays on paying tax
refunds and other obligations, Gov-
ernor Arnold Schwarzenegger has or-
dered State offices to close on the first
and third Fridays of every month.
“The State is going to run out of cash
in weeks if we don’t have a budget so-
lution,” Aaron McLear, the Governor’s
spokesman recently told the Wall
Street Journal. “The Governor has a
responsibility to save money wherev-
er he can.” According to McLear, Cali-
fornia will save more than $1.3 billion
because of the furloughs.
Schwarzenegger espouses dras-
tic steps to reduce the budget gap.
These include shortening the school
year by five days and raising the sales
tax, in addition to taxes on oil extrac-
tion and alcohol. The Governor is in
the uncomfortable position of asking
Republicans to accept $14 billion in
tax increases and painful budget cuts
throughout the State system.
It’s truly a great irony for the char-
ismatic bodybuilder, turned actor,
turned Conservative politician who
came into office on the heels of a con-
troversial recall election spurred by
the “drunken sailor” spending spree
conducted by his predecessor, former
Governor Gray Davis.
To the astonishment of fiscal con-
servatives everywhere, the budget
crisis has become so intractable that
the hugely controversial spike in the
State’s car tax, the single issue most
responsible for inciting the recall
election in the first place, is back on
the table for consideration. Surely this
is not how the “Governator” would
like his legacy to be remembered.

Continued from page 15 24/7.” during the month of January. And Peto-
One thing that immediately comes Working within customer economic letti reported that sometime this year,
to mind is eating out, particularly at limitations was one solution that has 60 percent of The Bottle Inn’s wine list
the more upscale establishments. This worked wonders. About six years ago, will become “reasonably priced,” as
hasn’t been a major challenge so far The Bottle Inn began offering Sunday compared to 40 percent previously.
for Hermosa Beach’s venerable The and Monday sunset dinners—a three- While getting creative to entice more
Bottle Inn, an upscale Italian restau- course meal for $12.95. “It wasn’t due diners, management must also look at
rant with a four-star wine list and a to a recession, but to pack the place on the bottom line. “We do what all busi-
35th anniversary this year. Sunday and Monday,” said Petoletti of nesses do—we look where we can cut
Long-time general manager Silvio Pe- the decision to offer the deal. “Money costs and do what it takes to ensure
toletti said prior recessions didn’t affect talks and more people are coming in we have good cash flow,” said Peto-
the restaurant much even though The to eat on the special nights. But the letti, emphasizing that one area not
Bottle Inn’s location on a side street regulars are coming in both on their being shaved back is advertising and
just outside of Hermosa’s busy down- normal nights and supplementing on promotion. “You can’t sacrifice what’s
town area makes it more challenging the special nights. When we went to going to bring in business.”
to find new patrons. “We would have $12.95, we worried our check average On the other hand, employee and
more of a captive audience if we were would drop. Before that it was $25, restaurant hours have been reduced
on Pacific Coast Highway,” Petoletti but it has actually increased. People some, as has inventory. “We’re buy-
said. “Any restaurant that is more of a are now buying a bottle instead of a ing more often, but less… in order to
destination needs to do something to glass of wine. They’re buying a bottle minimize waste. In the wine cellar,
bring more people in and also to keep that they wouldn’t normally buy.” we were on a three-year program to
regulars coming back. We’re more of The restaurant also recently added a increase the wine we have, but it’s
a destination and we’re Italian. In our Wednesday night (“Midweek Crisis”) not fashionable for mom and pops to
business, figuring out how to get more trattoria-style three-course meal for carry what hotels do. So we’ve been
people in is something we work on $19.95, and dropped corkage fees decreasing the wine list, though we’re
keeping all the big favorites.”
Despite a particularly slow Novem-
ber, The Bottle Inn rebounded nicely
in December with more banquets and
parties than usual. Petoletti wasn’t
sure if the reason was due to a morale
issue where more companies provid-
ed events to cheer up their employees
during a tough time, or if it was just
simply “our turn this year.”
Regardless of turn, The Bottle Inn
trudges on in part thanks to its con-
sistency. “It’s a restaurant people can
rely on,” said Petoletti, who noted
that more than half of his clientele are
regulars. “We have a bigger follow-
ing simply due to attrition and partly
because we’ve been here for so many
! " #$" years.”
Though just being around long

enough helps, you still have to do

things the right way. Petoletti has

some advice for fledgling restaura-
teurs, especially those hoping to make
ends meet in a tight economy. “After
seeing what has happened to several

other restaurants I’ve been involved

with, you need a really nice atmo-

sphere and a personable and caring

GRADUATE COURSES
staff with good management,” he said.
“After that, it comes down to a great
chef, good menu and great food. It’s a
simple recipe that has worked for us,
www.webster.edu/laafb
along with being creative when we
had to.” Webster University—Los Angeles Air Force Base
Phone: 310-607-8005
Pooling Resources 483 N. Aviation Blvd., Bldg. 272, RM C2302, El Segundo, CA 90245-1256
When he started his business in the
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310-328-3754
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“I was getting calls from real estate Certified Public Accountant
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By that point, the business expand-
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When the Economy Gets Tough
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ural waterfalls, ponds, and high-end
Your Legal Problems Get Tougher
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Continued from page 27 tics. He views himself as a “problem-solver” rather than

“It was like a rocket ship to the stars,” Garcia said. as a salesperson. “Very few people do this,” he said of his
That ship has landed for now. The struggles began in 2007 business niche. “Not many people build waterfalls or put
and the recent confirmation of the country’s recession ce- in a specialized irrigation system that will save money and
mented them. Garcia noticed a huge difference. “When also help the environment. We’ve always promoted the en-
news came out about the economic crisis, the phone vironmental aspect and built into our name. People have
stopped ringing,” he said. “I’m used to getting 30 calls a no problem spending money even in this economy if it can
day from potential new clients. Now, it’s down to one or save them in the long run. Some people had ponds 10, 20
two.” years ago with big, energy-guzzling pumps. I can save peo-
Yet Garcia remains undaunted despite the fact that instal- ple $200 a month ($10,000 in four years) with an energy
lation work has virtually efficient system. Tell me people won’t want to do that. And
stopped. Being established it helps the environment. The system costs $1,600 versus a
and having the security of solar panel system that may take 12-15 years to make back
existing clientele for a few your money. It’s gotta be how you can help your client and
decades helped. “Com- the environment. If you can help achieve what they want,
panies that have been you can get what you want…”
around a long time seem
to weather the storm since Accounting Their Blessings
they have a huge amount If any business professionals have a beat on what’s hap-
of referrals, whether land- pening with the economy, it may be certified public ac-
scape or real estate—and I countants. More than anyone, they hear about and see
have 30 years of backlog,” first-hand evidence of the financial nuts and bolts of how
he said. “It’s true of every the recession has truly impacted businesses. Fortunately for
Mike Garcia business. If you’re newer, some CPAs, the recession might just represent a boon for
it’s not a bad idea to see if them personally.
established companies are hiring and even be willing to As an example, Torrance-
work at a lower rate just to figure out how they do it.” based accounting firm
While waiting out the latest slowdown, Garcia is adamant Brigante, Cameron, Wat-
about keeping a high profile. “Now is not the time to skimp ters & Strong, LLP is do-
on your advertising, especially when your competitors are ing more consulting than
pulling out of theirs—if anything, now is the time to in- ever these days, thanks to
crease your advertising,” he said. “I am absolutely com- client concerns about the
mitted to weathering the storm. I don’t look at failure as economy. John J. Camer-
an option. In the early 90s, I was a lot more involved in on, a long-time managing
the service and maintenance aspect. As the 90s proceeded, partner for the firm, said
there was more of a call for new construction landscaping, he has to do his share of
so I rode that wave and the business was heavier on the “hand-holding” to help
installation end. It was tempting to let the maintenance go businesspeople navigate
because it’s not a lot of money, but I hung onto it as a safety through a treacherous pe-
net for the hard times. I’m glad I did.” riod. “They’ll call about
Garcia is thankful that he can still service his existing cus- their stock portfolio—not
tomers, though reality has set in that his business may have that we’re security advi- John J. Cameron
come full circle. “The installation part is over now,” he ad- sors, but they ask if they
mitted, adding that other builders have problems of their should cash out today,” he said. “With this recession, there
own. “Contractors are hoping to sell the projects they’ve is more fear and caution than before. It’s certainly played
been working on and live off the proceeds. After that, up in the media to every extent it can be and it’s touching
they’re just going to live off the savings for awhile.” everybody—not just one industry. Before it was savings and
Though servicing homes won’t make Garcia rich, they do loans or aerospace.”
pay the rent. “The maintenance aspect is what keeps us While benefiting somewhat from the recession as more
going,” he said, noting that people still need existing pools clients turn to it for advice with increasing frequency,
maintained even if they aren’t building new ones right BCWS has always kept a tight ship when it comes to its
now. own budgeting process. Other than quality of labor, which
Garcia continues to contact his clients when he has ser- Cameron said the partners will never sacrifice, the firm has
vices to benefit them, but does so minus any hard sell tac- cut back considerably in equipment resources and quantity

of personnel. “We’re using technol- get creative when one wants to cut its role as a confidant as the recession
ogy where it should be used and have costs without losing personnel. “A continues. “We’ve always had a phi-
less people because of that,” he said. large service company client is doing losophy that along with compliance
“We can do more with the people rolling layoffs of one group at a time work, we have to offer consulting and
we have than we did 10 years ago. in order to keep employees but reduce communicate with our clients on an
We went paperless in 2001, so that payroll,” said Cameron. ongoing basis. Just talking to them
streamlines our process, and we can Cameron believes it could take six and reassuring them is something they
do everything electronically. We’ve months to a year before the economy find comforting.”
also trained business clients to submit begins to get back on track. In the Brian Simon is a freelance writer who
electronically through Excel. We car- meantime, the firm plans to continue lives in El Segundo.
ry a computer to see our clients—not
paper.”
About a year ago, the firm also im- SUBPRIME FALLOUT - CREDIT CRUNCH - MORTGAGE MELTDOWN!
plemented a program on a computer
site to eliminate most of its servers in The Rules Have Changed!
favor of virtual servers that are easier Debt Structuring, Credit Management
to maintain and save energy. It’s part
of today’s trend to go green while also
And Tax Planning
being a money saver. The same phi- Crucial in Real Estate Financing
losophy is extended to clients. “We
look at what they’re doing and how T housands of homeowners are learning the hard
way how short-sighted mortgage opportunities can
devastate their financial situation. In the current volatile
they’re doing it so we can help them
mortgage market, a mortgage is no longer just a mort-
save money as well,” Cameron said. gage. It is a financial instrument that needs to be woven
“Businesses need to be cautious and into the fabric of your short and long term financial plans.
look at labor and costs—getting the As a Certified Mortgage Planning Specialist and Certified Ken Roberts CMPS, CLA
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don’t want to create a bigger problem with safety and liquidity in mind. 30 Years in Real Estate
than when you started. At the same In today’s real estate market environment, you can no longer afford to do business with anyone
time, you have to protect your people who’s not a tried and true seasoned professional. Do not trust one of your life’s largest financial
as much as you can. Good people are transactions to someone that’s new, part-time or doing mortgages on the side. Likewise, make
sure you deal with a Realtor that is at the top of their game and experienced how to thrive in our
hard to come by, whether it’s good current environment. For you, it may well be the difference between success and failure. The game
times or bad times.” has changed. Play to win!!
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TECHNOLOGY INSIDER
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Continued from page 7
three domains, plus a lot of limitations productivity dividend is the fact my
about eight days and probably spent
on expansion without spending more. new provider gives excellent tech sup-
the equivalent of three days work get-
The new plan is $6.99 a month and I port over the phone. My old provider
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have done it in a day or less. Was it online. I had been paying about $70 on hold for extended periods. I think
worth the effort? Well, I was spending per domain for a two-year registra- for the long haul, it was the right thing
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at Publisher@BusinessInsider.us.
Continued from page 25 pay attention to our dysfunctional

hard for their own interests while government in Sacramento. This has
damning the big picture view. led bad political policy to go by un-
The governing institutions of the checked for far too long. The only way
world’s eighth largest economy are in
for us to fix this mess is to get a grasp
dire straits, but our state is not termi-
nally ill by a long shot. In many ways, of the intractable issues, identify the
we’re doing better than other parts painful compromises we are going to
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prime mortgage meltdown. ning as we have grown to accept it,
California will ride through this and
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MO DERN ECON OM I C LOGI C: What Goes Down Mu st Go Up

5 South Bay Business Veterans Who Don’t

Cash Strapped California Issues IOUs

BIM Volume 4 - Issue 2.indd 1 1/30/2009 4:13:02 PM

Get FREE Consultation Publisher & Editor

Protect your interests: BUSINESS insider MAGAZINE makes every

and responsive one-on-one client service © 2009 BIM Publications

BIM Volume 4 - Issue 2.indd 2 1/30/2009 4:13:17 PM

CEOs and entrepreneurs looking for new home.

Must be willing to move to ideal location next

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www.themostbusinessfriendlycity.com THE CITY THAT INVESTS IN YOU.

BIM Volume 4 - Issue 2.indd 3 1/30/2009 4:13:30 PM

A Real Estate Pro’s Perspective:

Finance and Accounting Insider:

TAX TIME FEATURE:

South Bay Calendar of Business Events:

BIM Volume 4 - Issue 2.indd 4 1/30/2009 4:13:33 PM

As we roll ahead in 2009, South Bay

BIM Volume 4 - Issue 2.indd 5 1/30/2009 4:13:34 PM

Moving Your Website?

6 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 6 1/30/2009 4:13:40 PM

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 7

BIM Volume 4 - Issue 2.indd 7 1/30/2009 4:13:40 PM

8 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 8 1/30/2009 4:13:41 PM

That said, many worry that the cur-

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 9

BIM Volume 4 - Issue 2.indd 9 1/30/2009 4:13:41 PM

Seven Simple Ways to Law-Proof Your Business

3) Do You Have Disputed Receivables?

10 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 10 1/30/2009 4:13:42 PM

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1 1

BIM Volume 4 - Issue 2.indd 11 1/30/2009 4:13:42 PM

A New Year, a New Beginning

12 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 12 1/30/2009 4:13:42 PM

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1 3

BIM Volume 4 - Issue 2.indd 13 1/30/2009 4:13:42 PM

Continued from page 9 working with a green company, so to me it was a validation

14 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 14 1/30/2009 4:13:42 PM

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1 5

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Modern Economic Logic:

16 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 16 1/30/2009 4:13:43 PM

The myth of the endless

1ST ISSUE 2009 S O U T H B AY B U S I N E S S I N S I D E R M AG A Z I N E 1 7

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18 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

BIM Volume 4 - Issue 2.indd 18 1/30/2009 4:13:43 PM

Could Your Company Benefit From

You may also submit your request on line at www.BusinessInsider.us

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Managing Your Business

20 S O U T H B A Y B U S I N E S S I N S I D E R M A G A Z I N E 1ST ISSUE 2009

things the right way. Petoletti has

other restaurants I’ve been involved