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The Los Angeles South Bay B2B Magazine • Third Issue 2008 • Volume 4, Issue 1 • www.BusinessInsider.us • Complimentary Copy
BUSINESS
insider
...and you.
...and you. ...and you.
...and you.
...and you.
...and you. ...and you.
...and you.
...and you.
The New Campus El Segundo Athletic Fields: A bright, shining example of the thriving, symbiotic relationship
between our business and residential communities, working together with government for the greater good.
That greater good is a wonderful little city called El Segundo.
Cover Story:
Banking on the South Bay 2008
7 South Bay Financial Institutions
Provide a Ray of Hope in Dark Market ... 25
Financial Insider
Your Large Life Insurance Premium Need Not
Come Out of Your Own Pocket ... 9
Publisher’s Perspective
The Good News: The “Bailout” Passed”
The Bad News: The “Borrowout” Passed” ... 15
Technology Insider:
Mobility Problems in the High-Tech Workplace ... 6
SPECIAL FEATURE:
4th Annual Business Meeting Event & Banquet Guide ... 17-24
H
as mobile technology made the traditional office the beginning or end of the workday, it’s a fine place to go
obsolete? Technology has mobilized business peo- to recharge your motor, check and respond to email and
ple in ways barely imagined when most of us start- get caught up on your administrative work. And it’s not a
ed our careers. Wireless technology is cheap and available bad place at all to write, research online, or do creative
everywhere we look. An inexpensive laptop computer can work. This is where working from wireless “hotspots” is at
now hold enough data on its own to outshine small of- its best.
fice networks of the eighties. Virtual servers are cheap to But most public forums are lousy places to do phone
rent, relatively secure and accessible from any Internet work. And that’s a big problem for business owners and
connection. In fact, all of these innovations have brought salespeople trying to work on the road. Public places
into question the need to have a tradi- either have too many distractions
tional office at all. or the ubiquitous cell phone shout
In truth, there is very little I do in run- ends up disturbing others. Plus, you
ning my business that I can’t do with have to walk outside to have a pri-
a cell phone and my laptop computer vate conversation. California’s new
using virtual resources. And my life law requiring motorists to use hands-
has been that way to some degree free sets when using a cell phone
for several years. When I started Busi- while driving just adds another com-
ness Insider Magazine, I was anxious to plication to the mobile work life. It
get out of the prison cell I once called seems mobile technology has devel-
my office. I had traditional managers oped a workplace image that is not
who didn’t understand the way I liked realistic.
to work. Their vision of the workplace I roll my eyes when I see ads depict-
included an indoor skyline of tall filing ing young, hard-charging executives
cabinets overlooking a landscape of running though an impressive of-
crinkled papers hanging over the edge fice plaza while taking an important
of long neglected in-boxes. call on their cell phone. It creates a
When I left, I felt liberated from the ball and chain we sense of energy suggesting the kind of productivity that
called headquarters and of all of the paper-producing ad- leads to success. But think about this for a moment: How
ministrative procedures I considered archaic. In this day many people are really so good at multi-tasking that they
and age, a magazine publisher doesn’t need to generate can have a coherent business conversation while running
tons of paper in the office to generate tons of paper at the down the street without knocking people over or getting
printer. But the transition to a mobile work life wasn’t as hit by a bus? Do people really work like that? Well, I oc-
easy as I anticipated. casionally get long, rambling voicemails, usually left after
Since much of an upstart publisher’s life involves sales, I hours, from someone with a jittery voice huffing through
immediately became a laptop road warrior. I regularly in- their words because they are trotting along very quickly
vaded every caffeine-fortified Wi-Fi “hotspot” I could find as they are speaking on their cell phone. When that hap-
to go about my business in decidedly modern fashion. Do pens, I really think they are tying to give me an exagger-
I really need a regular office to run my business? The fact ated sense of their own importance by letting me know I
is I don’t. But everyone needs a proper place to work to am not worth a proper conversation during the business
be productive. That’s where there is a big disconnect with day. Mobile technology has given arrogant people entirely
mobile technology and workplace productivity. I learned new ways to act unprofessionally.
there are major complications in getting things done when And I love those ads depicting trendy young people with
the workplace has no place to call its own. laptop computers pointing and clicking away while re-
clined in contorted positions no person over 40 could
Pitfalls to Working on the Road hold for more than five minutes. I occasionally do see
Whenever you go into a coffeehouse these days, you reg- young people working that way with their laptops, but real
ularly see people working on their laptop computers. At
Continued on page 8
M
r. and Mrs. Successful Business Owners (we’ll call focused on how to make the most of the next steps of their
them Mr. and Mrs. Subo), now in their mid-60s, succession plan. The company is now worth $11,000,000
have recognized that it’s time to make some criti- and counting (their 80% worth almost $9,000,000), with
cal decisions that affect both business and family. They have their net worth approaching $12,000,000. Though they are
built a solid and growing manufacturing company over the still in good health, they do not fight the realization that
past 28 years and wish to keep the family business thriv- the day will come when they will no longer be here. If they
ing into the next generation. Of their three children, their were gone today, their estate tax liability would be nearly
daughter and one son in their early 30s are active in the $4,000,000. With even modest growth over their life ex-
business and have shown both competence and interest in pectancy of about 20 years, it’s not hard to imagine the tax
continuing to grow the company. The other son has devel- liability getting out of hand (5% growth would add another
oped his career in education and is unlikely to participate $5,000,000 to the tax bill in 15 years under the 2008 tax
in the family business. Mom and Dad want to treat all three schedule).
equally as they address their estate planning goals for the Space restrictions prevent the author from discussing strat-
present and future. egies to reduce and/or freeze the size of the taxable estate.
About five years ago, in a joint meeting with their estate Those techniques can and should be applied as fully and
planning attorney and CPA, it was clear that the Subos’ reasonably as possible with the help of qualified tax and le-
success was resulting in the rapid growth of their assets, gal advisors. Whatever is left is subject to estate taxes under
with far more expected. At that time, their net worth was two conditions:
about $5 million, comprised almost entirely of their busi-
ness. Their advisors recommended transferring a minority 1. The government accepts only cash.
interest, as large as they were comfortable with, to an ir- 2. The government expects to receive cash within nine
revocable trust for the three children. In that way, all future months of death (for a married couple, typically this
growth of those assets would occur outside of the Subos’ means the second death).
estate and therefore avoid estate taxes upon death.
Though this made sense economically, Mom and Dad felt This presents a particularly glaring problem if the estate’s
uncertain and awkward about giving up some control of assets are largely illiquid, as is the case for many business
the company. In addition, though the children were show- owners and real estate investors.
ing good promise in their young adulthood, the parents
were concerned that giving too much to them might be a Create Needed Liquidity Double Tax-Free
curse rather than a blessing. They decided to follow their Life insurance is the only method authorized by the Inter-
advisor’s recommendation and gift a portion of their com- nal Revenue Code to create income tax free dollars upon
pany stock to a children’s trust, but kept it conservative by death. When structured properly, it can also avoid estate
transferring 20% of their interest. The appraised value of the taxes. That’s why it is such a popular tool for addressing the
company at the time was $4,000,000, but the 20% interest estate tax liability. However, when the premiums are sub-
was worth less than $800,000 due to lack of marketability stantial, several considerations come into play:
and lack of control. So the value reported on the Subos’
gift tax return was actually less than $600,000 as calcu- • The estate owner might not have the cash flow or liquid
lated by a professional appraiser (today that stock is worth reserves to cover the entire premium.
$2,200,000, which translates into an estate tax savings of • The estate owner might rather have use of the money
about $1,000,000). for business or other investment opportunities.
Now that this strategy is “old history” for them and the • Gifting of the premium dollars to an insurance trust
children are five years older and more mature, the Subos (or the children outright) might exceed the annual gift
wish they had done more at the time, but they are now Continued on page 38
W
hen the economy starts slowing down and sales put in. In other words, to maximize the networking value of
drop off, the natural next step for a business is to a chamber, be prepared to get involved in committees and
cut unnecessary expenses, which usually includes helping out with events.
advertising. While this may seem like the natural thing to
do, a contrarian approach is to spend more on marketing Size and Frequency
and advertising. There is still a need for your product or To be effective, advertising has to be repetitive and con-
service, and the company that comes to mind is where the sistent. Building an identifiable brand is an important com-
money will flow. ponent to advertising. While it’s common to think bigger is
How often have you scrolled through to the second page of better, often in advertising a smaller ad that runs regularly is
a Google search? The theory goes that companies investing more effective than a full page that only runs once.
in Search Engine Optimization, or SEO, to get their names When I lived in Marina del Rey, each week I looked
on the first page of a web search will generally see more through the Argonaut community newspaper to find the
business than those that aren’t making the investment. Handy-J Car Wash ad for the discount coupon. It was al-
The same theory holds true for advertising in a soft econo- ways there, just in a different place each issue. So I had to
my. The company that continues to invest in advertising will hunt around for it. I made it a point to go to Handy-J when-
not only survive, but will more than likely thrive when the ever my car needed a wash—after picking up an Argonaut,
economy picks up again. of course, and clipping the coupon. As it turns out, while
at Handy-J’s one Sunday getting my car washed, I met the
Identify Where Your Target Market Gets Its Information. woman who later became my wife.
If you’ve never considered advertising your business or Take Goodyear tires as another example. Why would a
you currently are advertising and want to improve results, tire company spend huge amounts of money to operate a
consider where your target market gets its information. fleet of blimps across the nation? Does it make you want to
run right out and buy tires from Goodyear? Not necessarily.
• What publications do they read? Goodyear is building brand recognition by being visible to
• What trade shows do they attend? its market-- just about anyone who owns a car, truck, bus,
• Are there networking groups for that specific RV, etc.
market? The Goodyear Blimp is a reminder that the next time one
• What trade/professional organization do they of us car owners is looking for tires, we’ll be drawn to the
belong to? Goodyear ads in the newspaper or look for Goodyear’s on-
• What networking groups do they attend? line. I’ve been a devoted Goodyear tire customer for over
• What websites are specific to the market? 20 years. Why? I can’t really explain it; it’s just that I feel a
• Who are their trusted advisors? sense of comfort with that brand… I grew up seeing it all
• Where do their trusted advisors network? the time in television commercials, at ball games and just
• What do their trusted advisors read? flying overhead, so I just tend to choose Goodyear over
others.
This type of market research helps fine-tune the type and
frequency of advertising investment and ensures that your
ad gets the maximum opportunity to be noticed by your Where to Advertise
target audience. If your business is a consumer product or service, the
Let’s talk about the trusted advisors. If your business is a most likely places to advertise are in ready-to-buy venues
professional service, oftentimes work is generated through reaching the masses. These can be via newspapers, cable
referrals from a CPA, an insurance broker, a networking television, the Internet, billboards, bus benches, etc. Here
group or some other trusted professional advisor. A referral again, it’s important to understand where your market gets
from one of these people can open doors that are otherwise its information—or in the case of consumers, what is the
difficult to open. demographic, where do they shop, what do they read, are
Many chambers of commerce are good places to network. they mostly taking the bus, what and where is their com-
The trick with chambers is that you get out of it what you mute, etc.
Newspapers are “ready-to-buy” media, meaning they are the graphic artist that created the ad for them.
a great place to promote special coupons, products or dis- Full-service marketing or public relations companies will
counts. The big dailies like the Los Angeles Times reach a generally include graphic design services. Although work-
wide audience, while community newspapers generally are ing with agencies can be very rewarding, it can also be-
weekly or monthly and more targeted to particular cities. come costly. Research and referrals pay off well here.
Local magazines can also be good places to advertise to When all else fails, do a Google search for graphic artists
reach the general population of a city. To find a magazine or graphic designers in your city. Take a good look at their
that is specific to a particular trade or business, start with portfolios and make sure they have experience designing
a Google search for the industry followed by the word both print and online ads.
“magazine.” You’ll probably be amazed with the number
of results. Web Advertising and Special Offers
Believe it or not, chamber of commerce business direc- Online advertising can be a valuable tool. Having a web-
tories and maps are actually an excellent place to connect site is becoming a must these days so people can get a bet-
to a certain kind of audience. Generally, the members of a ter understanding of what you do can create value for the
chamber of commerce are business owners or, if the com- buyer. Optimizing the website so it gets more easily found
pany is larger, a mid- or higher-level manager. The board of during a search, or SEO (Search Engine Optimization), is
directors is generally composed of the movers and shakers a good place to invest some money with an expert. SEO
of the business community and the chamber is generally optimizes keywords to help your website not only show up
perceived as an organization that gives its “stamp of ap- when someone searches for your product or service, but
proval” to its business members.
also ideally help it show up on the first page of the search.
Reaching out to the chamber market is a good way to
This can be quite involved and it is a good investment.
reach other business owners and managers. A good busi-
Special promotions are great ways to get people to try the
ness directory will have at least a one-year shelf life, in-
product or service. A free consultation, 20% off your first
clude valuable information about the community, the busi-
order, or a free extra of some sort lowers the barrier. The
ness infrastructure, the quality of life in the community and
local Thai restaurants and pizza parlors often use this tech-
a comprehensive listing of products and services available
nique with their mini-menus that show up hanging on the
in the community. That list is usually limited to members of
the chamber and, in the general scheme of things, a cham- doorknob.
ber membership is not very expensive. Pictures in an ad, on the website and in any promo help
In fact, the publisher of the chamber directory or map will draw in customers. A nice photograph of a schwarma plate
usually design the ad for you at no extra charge, as long as on a flyer is a lot more enticing and informative than just
you provide them with the text, a photo and/or a logo. writing “schwarma plate” on a menu. Those who don’t
That leads to the next issue—actually creating the ad. know what it is will just pass it up. Those who do may go
With all the available software these days, it’s pretty easy get it. But a photo can make it look really tasty even if you
for anyone to fancy themselves a graphic artist and create don’t know what it is.
a display ad. Well, you wouldn’t hire a dentist to repair a An economy in decline can be an opportunity to grow.
muffler. Then why hire yourself to do something an expert A smartly planned advertising strategy is an integral part
can do much faster, with much more experience and un- of survival and can help position a company for gaining
derstanding of design? Hiring an expert will give your ad a market share when the economy again starts to pick up
clean, professional appearance. speed.
Ed Burzminski is a Business and Management Consultant
Designing the Ad helping business owners realize maximum performance and
How do you find a graphic artist? Contact the local cham- value from their business. He was President and co-founder
ber of commerce for a referral. When you find an ad that of Performance Publishing Group, Inc. in El Segundo, CA. You
looks good, contact the company and ask to be referred to can email Ed at: edburzminski@roadrunner.com.
T
he financial events of the
last few weeks are almost as much as $100 billion into each institution to make sure
unprecedented. To draw they remained solvent. Guaranteeing mortgages purchased
an analogy we Californians can by Freddie and Fannie was the Fed’s attempt to stabilize the
relate to, the financial landscape mortgage markets and ensure the housing markets have fi-
is on fire and blazing out of con- nancing readily available. This may make Mortgage-Backed
trol. Even with the firefighting Securities (MBS) more attractive to investors. If MBS carry
Fed’s tireless efforts to contain a higher yield than Treasuries with the same U.S. govern-
the blaze, it is picking up speed ment-backed guarantee, they could attract additional in-
and cutting a path of destruction through the biggest names vestment funds and thereby lowering mortgage rates, fur-
on Wall Street. And I applaud the leadership, creativity and ther fuel home buying, and hopefully begin to shore up the
courage of fire captains Ben Bernanke (Fed Chairman) and sinking housing market. We now know that deregulation of
Henry Paulson (Secretary of Treasury), whose decisions and Fannie and Freddie allowed them to leverage their invested
economic policies impact not only our nation, but the en- funds up to 50 times! There were several attempts over the
tire civilized world. They are proposing a bold measure to last few years to pass legislation requiring more oversight
try to quell the financial inferno threatening us. But before and accountability for both institutions. In 2003 and again
we get into the details of the firefight, let’s examine the in 2005, bills were introduced, but didn’t have enough
events leading up to perhaps the most complex financial support to get passed. The warning signs were there. Sur-
firestorm in history. prisingly, some of the loudest voices now being heard in
Much has been said by many about the creation of invest- Congress decrying the lax policies that led Fannie and Fred-
ment vehicles by Wall Street to meet an underserved mar- die into their current financial mess are the same voices
ket of Baby Boomer funds in search of safe, high-yielding that wouldn’t vote for the proposed oversight because they
investments providing greater returns for retirement. With didn’t see the need at the time!
no open market for the Collateralized Debt Obligations Next, one of the oldest investment banks, 158 year-old
(CDOs) and Structured Investment Vehicles (SIVs), rating Lehman Brothers filed for bankruptcy while 94 year-old
agencies set the value of these investments. It wasn’t un- Merrill Lynch was acquired by Bank of America in a fire
til hedge funds began to fail because of mounting losses sale of half its market valuation just a year earlier. And the
from non-performing sub-prime mortgages contained with- Federal Deposit Insurance Corp. (FDIC) seized control of
in these portfolios that the ratings of these debts got dra- Washington Mutual, Inc., and JP Morgan Chase & Co. will
matically downgraded. Along with the ability to leverage buy its assets for $1.9 billion. Wamu’s takeover makes it the
in some cases hundreds of times over the actual dollars in- largest bank failure in U.S. history. Then as the fire rages,
vested was the unbridled proliferation of these investments the two remaining major independent investment banks,
based on plain old-fashioned corporate greed and a flawed Goldman Sachs and Morgan Stanley, threw in their tow-
computer model that didn’t see the most glaring hole in its els by becoming bank holding companies. This will give
risk assessment: a substantial downturn in the real estate
market. That was the lightning strike in the dry brush amidst
gusting Santa Ana winds and low humidity that ignited the Now let’s turn to the bailout plan devised
pending catastrophe we face today.
Rumors of accounting irregularities and subsequent finan- by the Treasury and the Fed. As it was
cial instability have plagued the two Government Spon-
sored Enterprises (GSEs) Fannie Mae (Federal National pointed out to me, we need to stop
Mortgage Association) and Freddie Mac (Federal Home
Loan Mortgage Corporation) over the past year. On Sep- calling it a bailout, but rather a plan to
tember 7, 2008, James B. Lockhart III, the director of the
Federal Housing Finance Agency (FHFA), announced his stabilize the economy.
decision to take over Fannie Mae and Freddie Mac with the
full support of Paulson and Bernanke. Combined GSE losses
T
he week before this issue went of oversight the original bill lacked. I quences far more if we continue to
to press, I went back to the thought it was sneaky to insert an ex- operate under a dangerously distorted
drawing board several times re- tension of the Alternative Minimum and manipulated economic model.
working this column. Our Real Estate Tax into this legislation that excludes The root causes of this crisis go far
columnist Ken Roberts was cheerlead- about 20 million Americans from this beyond any momentary issue facing
ing for the $700 billion rescue plan. unpopular tax affecting middle class the financial industry. It’s the aggre-
He laid out a foreboding scenario fac- families. Who in Congress wants gate debt load caused by more than a
ing the economy if a plan wasn’t ex- to vote against that? But this and a generation of debt-driven economics
ecuted immediately. lawmaker’s wish list stuffed into the that is now destroying our economy
Being the monetary policy nerd I am, 451-page novel that was ambiguous in short order. It has reached an apex
I was keenly aware he was right about political legalese at its finest was the that can only be fixed by allowing a
the precipice we were teetering over. clincher that turned things around. genuinely free market with appropri-
I was also keenly aware this could On Friday, October 3, the House of ate rules of the road as opposed to po-
set us up for a much bigger fall later Representatives approved the Senate litically charged bureaucratic regula-
because the country is flat broke and sponsored version of the bill in a 263- tions to correct it.
deep in debt publicly to the tune of 171 vote. The President signed it into No matter how financial leaders
$10.2 trillion. That’s why despite the law the same afternoon and it’s now a paint a rescue plan that could recoup
fact my own business would suffer done deal. this expenditure to the government
greatly if the economy didn’t get some I fully recognize we face catastroph- and ultimately to the taxpayers, there
financial relief, I couldn’t bring myself ic consequences if they had chosen to is no functional way to do this with-
to support it. let the economy correct on its own. out shifting the debt elsewhere that
I flipped when I first saw the “$700 And let’s face it: the term “correction” will ultimately return this astronomi-
billion” headline in the Los Ange- is a euphemism when referring to an cal financial burden to the American
les Times in September. Then I was event of this magnitude. For that rea- people. No one in the mainstream is
pleased when the House of Represen- son, I empathize with the call to put talking about the debt-charged for-
tatives rejected the first version. And this fire out immediately. The short- eign investment money that’s going
then I realized the Senate version of term consequences Ken laid out (see to fund this scheme. In fact, the plan
the plan was not only more politically column on page 12) if a rescue plan is really designed to keep that going
palatable, it went right to the heart wasn’t enacted are absolutely correct. as opposed to rescuing anything. No
of consumer fears and added a layer However, I fear the eventual conse- rescue or bailout is possible because
our nation is simply too broke to do
it. We will need to continue massive
borrowing from abroad to function
The root causes of this crisis go far beyond and the next crisis will only be that
much worse.
any momentary issue facing the financial For most people it hasn’t sunk in yet,
but this may be remembered as one
industry. It’s the aggregate debt load of the most far-reaching decisions
caused by more than a generation of debt- our government has ever made. And
expect the controversy to grow. As
driven economics that is now destroying Wall Street royalty the likes of former
General Electric CEO Jack Welch are
our economy in short order. screaming for the taxpayers to res-
cue their cozy country club world,
Continued on page 16
Continued from page 15 letting the system collapse would the domestic wealth and sovereignty
the public didn’t buy it at the onset. I have given international financiers a of the United States of America. This
was and still am totally against throw- free hand to pick up the pieces and is an idea we tossed out the window
ing another $700 billion on the debt reshape the global economy in their so long ago most people don’t under-
heap. Unfortunately, we are left with ideal image. Most people don’t real- stand the monster we created that is
no good options. The rescue plan pro- ize this, but we just missed an oppor- destroying our economy.
vides $700 billion in liquidity that tunity to find out the true state of the
was expected to keep investor share U.S. financial system. Many leaders in Original Version of Bill
prices propped up awhile longer and government and finance have known Would Have Given Treasury
give consumers a short reprieve from this reality for some time. We have a Secretary Extraordinary Power
their inevitable financial miseries. But corporate controlled media addicted The $700 billion bailout package as
that hasn’t happened as of this writ- to Wall Street money that kept this originally written would have given
ing as the Dow Jones industrials sank process as fuzzy for years. the Treasury Secretary a mandate that
875 points over the two-days prior to Confronted by a financial reckoning amounts to financial martial law. The
October 8. But not implementing a this extraordinary, we need transpar- original text of the bailout bill con-
massive liquidity infusion plan means ency and honesty—not the destructive tained 32 words that probably made
the economy would have been free financial policy disguised as a bailout it unpassable in an election year. This
to correct itself in short order. If the we ended up with at the end. What inflammatory language alone makes
new Senate proposal failed, we would we need is a full acknowledgement me suspicious of their real intentions.
have been poised to let the financial by central banks, the government and I personally thought it was tantamount
tsunami hit us full force. But continu- financial leaders of the out-of-con- to a modern day “Enabling Act” for
ing to expand the debt load will make trol debt that caused this problem in the financial system. They read as fol-
the collapse that much worse when it the first place. That means a return to lows:
finally happens. On the other hand, economic fundamentals that protects “Decisions by the [Treasury] Secretary
pursuant to the authority of this Act
are non-reviewable and committed to
agency discretion, and may not be re-
GRADUATE COURSES viewed by any court of law or any ad-
ministrative agency.”
Giving Paulson money is one thing.
Giving him some emergency powers
www.webster.edu/laafb to be executed for a limited period
with oversight is another. But to cor-
onate him as a “money czar” blows
Webster University—Los Angeles Air Force Base my mind. Ronald Reagan is looking
Phone: 310-607-8005 down from a cloud saying, “Oh my
483 N. Aviation Blvd., Bldg. 272, RM C2302, El Segundo, CA 90245-1256 God! What have I created?” Musso-
lini and Stalin are looking up at this
REAL-KNOWLEDGE FOR REAL-WORLD SUCCESS® from the depths with glowing approv-
al. Our nation has sunk lower than I
ever imagined, and perhaps people
are finally waking up enough to un-
derstand how dangerous this situation
has become.
By default, when we hand that level
of wealth over the to a government
agency to use at its discretion with
virtually no oversight, we are giving it
enough influence to rule our financial
destiny by decree. And we should all
be savvy by now to realize that those
who control money and finance ulti-
mately control everything else. Per-
Continued on page 28
BUSINESS
insider
A
downturn in the economy isn’t the time to put event planning on the backburner. This is
the time to sharpen your company’s razor and get your best people in the state of mind to
ride through the challenges ahead. That means it’s time for strategizing, team building and
What better way than to hold a well-planned event? Don’t make plans haphazardly. Set objectives.
Seek event venues that impress and serve fare that makes the best impressions. If budgetary
considerations require you to use your own facilities, put some extra budget into higher-end catering
and décor. For business meetings, scrutinize meeting room venues for ambiance suitable for
productivity.
Don’t be afraid to travel from one end of the South Bay to the other for retreats. It’s best to keep
people away from in-office distractions so they can focus on the event curriculum. See event
planning as a recession-essential investment for the future and take the time to make sure everyone
involved takes it seriously. Think of your holiday party as a time to build the camaraderie that builds
long-term cohesion in your organization. Your annual banquet can be a multifaceted marketing
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 2 0 08 - 2 0 0 9 3ERVDE NI ST S G
U EU I2D0E 02
8
“2007 Business of the Year”
El Segundo Chamber of Commerce.
A Great
South Bay
Hotel
And what about sales opportunities? Why not hold informational
seminars to establish new relationships and build up your contact Gets Even
database? And why not make your serious business meetings an
Better!
event by catering in gourmet cuisine appropriate for a working
• Newly renovated
lunch? The possibilities are endless and the results are more ballroom and meeting
essential now than ever. rooms.
• Grand re-opening of our
Your employees and clients often judge your company by the
new upscale restaurant.
way it conducts its events. Make sure the venue, curriculum, • Swank state-of-the-art
décor and cuisine make the impression you want and need. Rest bar and lounge.
• Al fresco dining on our
assured, it will be remembered for a long time.
new patio.
Your South Bay region has a wide selection of quality event
Call Now To
service providers. This 4th Annual South Bay Business Meeting, Book Your Next
Event and Banquet Guide showcases some of the best and is Meeting or Event:
3 R2D 0 I08
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8V E N T G U I D E 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 9
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The 2008-2009
South Bay Business Meeting, Event & Banquet Guide
is a special Supplement of:
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7 South Bay
Financial Institutions
to a Dark Market
By Brian Simon
A
midst the current frenzy of financial gloom and Wachovia, Morgan Stanley, Lehman Brothers, Fannie Mae
doom, it seems difficult to find a silver lining. Yet and Freddie Mac, to name the most prominent of the fallen
if there is a bright spot, the South Bay can stake a stars. That’s not the end of it. Other notable banks and lend-
claim on a chunk of it. An area equally prized for its ap- ers could be next in line for a bailout or takeover. In fact,
pealing location and economic diversity, the South Bay nine regional banks had already failed this year alone as of
hasn’t experienced quite as harsh a jolt as other regions. press time.
And after talking to several executives from various small Meanwhile, investors worry that their savings are no lon-
to medium sized financial institutions that service the area, ger safe. Some even fret that the very bastion of govern-
we were surprised to learn that things are rather hunky ment-backed reliability, the FDIC, could be in trouble if it
dory, particularly in the realm of business banking which isn’t recapitalized soon.
hasn’t been impacted anywhere near that of the residential As of press time, Wall Street had just taken its biggest hit
market. In fact, many of the firms and agencies interviewed since 9/11 and Congress had just passed a $700 billion
have even profited from the ongoing economic woes. This bailout plan for the mortgage industry. Whether this plan
news comes as a welcome departure from the seemingly can stabilize the market remains to be seen. In the mean-
daily dosage of dire reports—a soap opera so volatile that time, several South Bay-based financial institution execu-
various bits of information within this article will likely be tives weighed in on the matter and let us in on how they’ve
outdated by the time you read this. managed to circumvent the crisis.
This much is basic: Starting with the sub-prime collapse
about 14 months ago and continuing with a severe real es- Malaga Bank CEO Randy Bowers sees the country’s finan-
tate downturn and crippling credit crunch, the U.S. econo- cial meltdown as a multi-step process that started with the
my has spiraled into a freefall the likes of which we haven’t sub-prime collapse. Next, larger institutions with sizable
seen in perhaps decades. That isn’t the worst of it. When investment portfolios found themselves exposed to mort-
the very institutions that could always be counted upon are gage-backed securities, which created enormous write-
suddenly vulnerable, the confidence that has long been the downs. Then, construction and land development loans
backbone of national investing has been seriously shaken. began to default left and right, adversely affecting smaller
The list of casualties reads like a financial who’s who: Bear banks that specialize in such lending. Increased credit card
Stearns, Indy Mac, Merrill Lynch, AIG, Washington Mutual, defaults followed that and, if nothing improves, business
Continued from page 16 would eventually pay back in one form or another. Keep in
haps the public at large is starting to see the scam and I mind the $700 billion figure they pitched for this “bailout”
have no doubt the lawmakers who turned against the origi- was no doubt a conservative estimate. Before this is over, it
nal bill at the last minute preferred the wrath of their corpo- will head into the trillions. In fact, the day the bailout pack-
rate financial supporters to an angry electorate that would age failed in the House, I became aware of a September 23
have shown them the door this November. Many said they Forbes.com article that took a while to make its way around
were offended by a partisan speech by House Speaker Nan- the Internet. It revealed the $700 billion figure was chosen
cy Pelosi, who was pushing this bill on behalf of the Bush purely for political reasons. It had nothing to do with the
Administration. However, I don’t believe for a minute they actual amount needed for a bailout, which in reality no one
would base a decision this serious on something that petty. really knows. The real value of domestic mortgage debt is
It was merely a convenient excuse to wash their hands of still a mystery.
the entire mess. The new Senate version includes oversight “It’s not based on any particular data point,” Forbes.com
and limits the duration of the authority of the legislation. As quoted a Treasury spokeswoman as saying on September
it turned out, the electorate was properly frightened and the 23. “We just wanted to choose a really large number.” Isn’t
new version of the bill sailed through easily. that just marvelous? This bill was thrown together so quick-
The desperation this process reveals is both extraordi- ly I doubt if anyone really knows if it has any merit.
nary and unprecedented. Our nation’s longstanding cycle Some would argue the course was set in the early 20th
of debt-driven economics is revealing its dark side as the Century when we shifted to issuing currency at interest
credit crunch spreads its toxins around the world. In the through a for-profit central banking system. Believe it or
United States, the reported public debt has grown from 2.7 not, you must look at the 100-year tend to understand the
trillion in 1989 to $10.2 trillion and rising fast as of this strains placed on the economy by the central banking sys-
writing. It began to grow exponentially following Septem- tem. When money itself accrues interest before a chartered
ber 11, 2001. bank can lend it to a borrower, it adds an additional strain
Most people don’t realize the multi-billion dollar bailout to the economy. There is a large and growing movement
is really a “borrowout” that only compounds the problem in America that believes the strain from this added layer of
when the next financial tsunami hits us. This isn’t a political compounding interest tied to units of currency issued is the
affirmation. It’s mathematical reality. Money issued to the reason our nation lost control of its debt in the first place.
government by central banks accrues compounding inter-
est that must be paid back. With the help of the Treasury A Central Banker Makes a Candid Admission
Department and the Federal Reserve, the Bush administra- Richard W. Fisher, president and CEO of the Federal Re-
tion shifts us into high gear as the gas gage nears empty. serve Bank of Dallas, gave an uncharacteristically candid
Try doing that with your own business and see how long appraisal of the national debt May 8 in a speech he made
you last. before an audience in San Francisco at the Commonwealth
First $300 billion to back the Bear Stearns buyout and Club of California. “I have been scanning the horizon for
now the government has been forced to take responsibil- danger signals even as we continue working to recover from
ity for approximately $5.3 trillion of mortgage debt held the recent turmoil,” the transcript read, “In the distance, I
by Fannie Mae and Freddie Mac. That’s nearly half of all see a frightful storm brewing in the form of untethered [sic]
U.S. mortgages! As of this writing, there are 117 banks on government debt.”
the FDIC watch list of troubled financial institutions. The Following his litany of foreboding rhetoric, Fisher dropped
recent IndyMac Bank rescue depleted approximately $20 a bombshell describing how un-funded obligations for So-
billion of the organization’s $50+ billion budget, meaning cial Security and Medicare were, as he put it, estimated at
the FDIC will need help from other agencies on a massive “$99.2 trillion over the infinite horizon.” Some have taken
scale before this is over. this to suggest the national debt is really more than $100
Now the unthinkable is happening. Before the sub-prime trillion, but there is really more nuance to it than that. What
blowout initiated this mess, there were five major invest- he meant was, we haven’t funded future obligations we
ment banks on Wall Street. Now there are two still function- know about for Social Security and Medicare as the baby
ing. The great behemoth Lehman Brothers declared bank- boomers are entering retirement at a rapid pace. The high
ruptcy in September, and the same week Bank of America birthrate and longer life expectancies we are experienc-
announced it was purchasing Merrill Lynch. Then at the be- ing today have forced estimated costs of these programs
ginning of October, Citigroup and Wells Fargo were vying to grow enormously, and the “pay as you go” system can’t
to purchase Wachovia Bank. cover these un-funded costs.
And the end of this is nowhere in sight as President George What he implied was we could be in the hole for nearly
W. Bush embarks on what will likely be a multi-trillion dol- $100 trillion in a few years if we don’t do something to
lar bailout the rest of us (or perhaps our grandchildren) properly fund these programs that don’t just shift the debt
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3RD ISSUE 2008 ((( ! 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 3 1
Banking on the South Bay 2008
have them now because our under-
writing is very strong and we are com-
ing in during a tough market where
credit availability is scarce and we’re
getting opportunities to get the upper
tier of borrowers.”
Continued on page 34
“Our greatest increase in assets has always been to reduce their financial burden, so we’ve been doing some
work-outs, allowing them to skip some payments so they
when there is trouble in the economy. It’s a flight can get back on their feet.”
TCCU’s standard policy is to give a loan to virtually any-
to quality.” one who can pay it back. As such, it has picked up business
from customers needing home equity lines of credit—as
many institutions have frozen or limited that type of lend-
Steve Stoppel, CEO ing. As an example, Stoppel offered the following: “A mem-
Torrance Community Credit Union ber starting to remodel his house found out his bank (one
of the big ones) cut his credit limit down to his balance, so
Continued from page 35 he had no access to funds. We were able to give him his
the election will be an interesting wild card. There are infla- loan here.”
tionary pressures. The government has to balance inflation Stoppel believes it’s more of a knee-jerk reaction when
with keeping rates low. This is a difficult task.” some banks cut or freeze credit lines, especially when the
During the upheaval, CBB has not only picked up some customer in question boasts an excellent credit score, great
new clientele but also a few key employees from other income, and plenty of equity.
banks who are frustrated about lending limitations at those Once limited to City of Torrance employees and their fam-
institutions. “We’re an attractive employer right now,” said ilies, TCCU has recently expanded its scope and can ser-
Myers. “Our assets and loans have increased. Our profit- vice anyone in Torrance as well as Hawthorne, Lawndale,
ability is up eight percent from 2007 and our loan growth Redondo Beach and the Palos Verdes Peninsula. Full-scale
is up over 10 percent. We are a good success story in this business banking,
kind of economy. We’re one of the few banks in the black now only available
at a time when at least 75 percent are in the red.” in small doses for
sole proprietors, is
also on the long-term
While the argument can be made that the business sector
radar.
is driving South Bay banking, there are other financial in-
Why would some-
stitutions doing just fine without it. In the case of Torrance
one switch to a cred-
Community Credit Union, business banking has been vir-
it union? “We don’t
tually non-existent.
have a credit crunch,”
CEO Steve Stoppel reports that the credit union itself is still
Stoppel replied.
making money, in part thanks to the fact it didn’t engage in
“We have plenty of
“exotic lending” in the mortgage realm. But he has noticed
money to lend out.
some impacts. “On consumer loans, some of our mem- As long as you have
bers are having issues making payments, which in some the resources to pay
cases have gone up 50 to 75 percent,” he said. “They’re us back. We’ve got
also struggling to make car and credit card payments.” As a $35 million in in-
result, Stoppel estimates that delinquencies are up 20 per- vestments just sitting
cent, though TCCU has the capital and flexibility to navigate there.” Steve Stoppel
through such obstacles. “We’re trying to help our members
! "
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Continued from page 29 national consensus and avert the disaster we seem com-
cover this daunting obligation as a nation in short order. mitted to experiencing. There is too much at stake here to
That’s the dark secret no politician wants to see put into play games anymore. If any one of those folks said anything
sound bites. So most of them, whether they be conserva- that made me believe they understand this problem and
tive or liberal, stump for policies that continue to roll the can propose any reasonable policy that can address it in a
debt over with unrestrained borrowing at the central bank- meaningful way, I would vote for them.
David Whitehead is the publisher of Business Insider Magazine.
ing level. The recent federal stimulus package and these
bank bailouts are classic examples. Not to mention the You can read the full transcript of Richard W. Fisher’s speech posted on the
enormous sum being spent on the War on Terror. Consum- Federal Reserve Bank of Dallas website at website at:
ers are just now feeling this strain form the latest round of http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
unprecedented expansion of debt.
By the way, $2 trillion of our reported $9.6 trillion na- Continued from page 14
tional debt is owned by foreign governments. These are the all choking guests must be saved? Then, if we decide they
same governments whose domestic industries are getting are worth saving, what should be done? Is it possible they
fabulously wealthy selling us cheap imports driving the could stop choking without any assistance? How about a
trade deficit up to over $700 billion. We saw that figure slap on the back, the Heimlich maneuver or a 911 call to
drop from over $750 billion to near $711 billion recently let the paramedics handle it? If you try and help and the
because the weakening dollar is driving demand for U.S. guest doesn’t make it, do you have exposure to financial
exports. However, unless economic fundamentals change, liability? Should the choking guest be required to sign a
expect the long-term trend to continue. This includes mon- liability waiver and a statement of financial responsibility
ey supply disappearing at a faster rate as more is needed to before doing anything?.. You get the picture. Sometimes the
cover the debt, more money being issued without appro- less than optimal action taken immediately is better than
priate backing exacerbating the debt, citizens screaming, the best action taken too late. Time is of the essence. We
“Don’t tax us for God’s sake, the inflation is killing us!” now have an economic stabilization proposal that needs to
while our political leaders, most of whom don’t understand be swiftly implemented. The financial markets are ablaze.
this situation very well, are taking desperate actions to en- For most Americans, Wall Street is a distant reality far re-
sure their own reelections and continue the game as long as moved from Main Street. I don’t know about you, but I
possible (as more debt continues to mount, of course). You think I smell smoke! Is it warm in here or is it just me?
see, when foreign governments step in to save our economy Ken Roberts is a mortgage planner with nearly 30 years experience in the
by continuing to invest in it, they aren’t merely lending to South Bay real estate market. Ken can be reached at (310) 534-6200.
an insolvent borrower. They are making payments towards
the nation they ultimately plan to own when the borrower Continued from page 8
ultimately defaults. Tell me why there is practically no one nology works just about anywhere, you can’t work any-
in government who considers this an issue of national se- where. Sure, there is a lot of stuff you don’t need anymore
curity? for an office to be an office, but whatever you do, you
In this election year, I have no interest in arguing about need a decent place to do it. So I suggest you text this
John McCain’s age, Barack Obama’s aloofness, Joe Biden’s message to all of your mobile workmates struggling to be
hair plugs or Sarah Palin’s lipstick. Let’s get real, folks and productive on the road.
put the puzzle together so we can get some semblance of David Whitehead is the Publisher of Business Insider Magazine