Escolar Documentos
Profissional Documentos
Cultura Documentos
Contributing Writers
Dennis Branconier, Ed Burzminski,
Steve Goldstein, Ken Roberts,
Brian Simon, Tony Traven, Cayley Vos,
David Whitehead, Lori Williams,
R. Boyd Zack
Special Feature
2nd Annual South Bay Technology Guide 17–24
6 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
C O L U M N I N S I D E R
priate not for everyone, but for those who will likely want to
avoid taking any more out of their retirement plans than they For individuals who don’t want to
must in order to satisfy the law. It will be even more signifi- tap into their retirement plans and will
cant for families that will face estate taxes (retirement plans do
not receive a “step up” in basis like other assets do). Here’s support their retirement lifestyle with
why it makes sense in certain situations: other income producing assets, the after-tax RMD
might as well be used for something beneficial.
It is more likely that future tax rates will go up
than stay the same or go down. Life insurance policies can be designed with a
Given the nasty outlook for government entitlement pro- graduated premium over the years to parallel the
grams such as Social Security and Medicare, along with war anticipated growing RMD payout.
efforts and other costs not yet known due to the aging pop-
ulation, we may be at the lowest tax rates we will see in a
long while. Why not get some taxes out of the way now what the economic loss will be for family members or busi-
while it’s relatively cheap? Remember, they will be due and ness partners due to someone’s death. The amount of insur-
paid someday. If the block of money you pass on to your ance you choose will be based on an estimate of the loss at
loved ones (through insurance) is tax-free, will you worry some targeted future time and on your preferences for a cer-
about what the tax rates are in the future? No, because your tain level of premium payments.
family won’t be paying them. Talk about peace of mind.
What is the best way to pay premiums?
For the beneficiary, paying income tax on just the If you are a long way off from retirement, it’s unlikely you’d
investment earnings is better than paying tax on tap into your retirement accounts for premiums (though it can
every dollar taken. be arranged for your 401(k) or profit sharing plan to actually
While the stretch-out provisions are superior to the old own and pay for insurance with pre-tax dollars). This provides
lump sum tax hit from past days, it still means every dollar a good reason for you to sit down with your financial advisor
the beneficiary takes from the retirement plan is subject to to review your financial and estate plans, because your retire-
income tax when received. By contrast, the fund created by ment account is likely a substantial part of both.
life insurance proceeds is not taxable when taken out. Only The reference earlier in this article presumes that the retire-
the interest or investment returns on that fund are taxed. ment plan itself is the source of funding, which is easiest to con-
sider at age 70 1/2 or older because you’ll be forced to take
My spouse is the beneficiary of my retirement plan; money out anyway (unless you are a non-owner of the business
aren’t there special breaks for spouses? who is still actively working). For individuals who don’t want to
There are two main “breaks” for spouse beneficiaries. One is tap into their retirement plans and will support their retirement
associated with estate taxation. You can pass as much as you lifestyle with other income producing assets, the after-tax RMD
want to your spouse upon your death and the unlimited mari- might as well be used for something beneficial. Life insurance
tal deduction will defer estate taxes until the second death. policies can be designed with a graduated premium over the
The other break is associated with income taxes. Your years to parallel the anticipated growing RMD payout.
spouse can elect to “stretch” the IRA or company plan Such a concept is also appealing for individuals who want
account (which may well benefit from being rolled over into to make charitable gifts of life insurance (and the income tax
an IRA first) and take distributions over his/her life expectancy. deduction can offset the unwanted income tax liability from
Again, this only defers taxation so that the account can have a the RMD distribution).
chance to continue growing, but it doesn’t do away with
income taxes any more than the marital deduction does away What other issues need to be addressed in pursuing
with estate taxes. this strategy?
In both scenarios, a significant asset is transferred at death to Due to space limitations, this article can only remind you that
someone else who eventually has to acknowledge a tax liability you’ll need to consult your financial advisor on the appropri-
because of that asset. But there’s no reason that death must ateness of this approach for you, including decisions on:
equate to an economic loss to a spouse or family. Through the • Ownership of insurance — inside or outside your tax-
power of insurance, the true value of the asset can be preserved. able estate.
• Type of product — single life or survivorship (“second-
How do I know the proper amount to insure? to-die”).
Good question. If you take only the RMD from your plan and • Integration with other aspects of your long-term planning.
leave the rest to continue growing, the account value and Advances in underwriting have liberally opened up the
accompanying taxation are moving targets. Again, as with playing field for individuals with medical histories. As with all
other uses for life insurance, there is no way to know exactly continued on page 8
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 7
F I N A N C I A L I N S I D E R
YOUR IRA
continued from page 8
great opportunities, acquiring insurance
must be taken advantage of while it’s still
available.
8 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
A R E A L E S T A T E P R O ’ S P E R S P E C T I V E
BY KEN ROBERTS
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 9
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
BY TONY TRAVEN
W
HEN YOU WANT TO CHANGE THE CONVERSATION IN YOUR COM-
PANY FROM PROCESS IMPROVEMENT, PERFORMANCE REVIEWS, COM-
Many companies have annual strategic planning meetings trend or figure out a complex problem to help move the com-
where a couple of days are set aside to focus the key execu- pany forward.
tives on strategic discussions and ask questions like: Where do They are continuously breaking things down and putting
we want to be in five years? How are we going to get there? them back together to figure out a better way of doing busi-
How can we improve internal communications? Maybe even ness. Strategic thinking people naturally think in the future
conduct a Strengths, Weaknesses, Opportunities and Threats text and are asking “what if” questions both internally and
analysis (SWOT). externally.
Sometimes the meetings even include team building work- Future thinking is not something that is easily controlled,
shops and fun exercises to help bring people together. These and often contributes to feelings of frustration because strate-
are all good practices and can benefit a company. However, gic thinking people clearly see what needs to be done and yet
this is not where strategic planning starts. may have little power to affect change.
In reality, most strategic planning meetings are very well- Many scholars will debate and even condemn this overly
planned, scripted presentations designed to communicate simplistic viewpoint and reference hundreds of books and
where the company is headed, build consensus and make classes designed to teach strategic thinking skills and how fol-
everyone feel part of the team. The real strategic planning is lowing specific processes can set a clear strategic direction for
done before the meeting. the company. They will state emphatically that you can teach
The fact is strategic/analytical people are always thinking strategic thinking… and I would agree with them in part. Edu-
strategically. It is not something to be turned on an off like a cation, intelligence and work experience all contribute to
switch, but it is the way the person processes information and how effective an individual will be in the context of strategic
determines what needs to be done. Strategic people are the planning.
fact finders — not the fault finders in a company. They are The in-depth discussions and classes that take place at
constantly looking for facts to verify the existence of a new campuses throughout the country are extremely helpful in
10 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S M A R T G R O W T H S T R A T E G I E S
The biggest challenge most companies have is that the planning committee or executive team
is already in place handling all areas of strategic planning.
If the team is strategic and forward-thinking, great!
If not, then that’s the way it is…
However if you are a person who cannot accept this as fact, needs to challenge the status quo,
likes to take risks and needs to push things forward for the sake of the company,
that is also understandable.
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 11
F I N A N C I A L I N S I D E R / R E A L E S T A T E P R O
12 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
F I N A N C I A L I N S I D E R
Safe,
But
Never
Sorry:
Farmers & Merchants
Takes Conservative Approach
to the Bank
BY BRIAN SIMON
chants Bank, it’s time to stop the presses. On March 11, 2008, Henry
headquartered institution, succeeding his father who had merely held the
post since the Carter administration. Given that Henry is only 42, it’s
likely we won’t be reading about another CEO coming aboard until close
continued on page 14
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 13
F I N A N C I A L I N S I D E R
14 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
C O L U M N I N S I D E R
equity has a price. When the economy Through careful management of its tors are in a big hurt.”
turns, you’re going to take losses.” money, F & M has also grown by delv- Though cautious in assessing the
It’s hard to argue with the Walkers’ ing into expansion when appropriate. future direction of the economy, Henry
way of thinking. F & M is rated the Of its now 22 offices, most are de novo Walker can only control what’s right in
safest bank in California and has man- (start-up from scratch) branches, though front of him. “With respect to banking
aged to thrive as an independent, family the bank is also open to purchasing we are doing it right,” he said. “As for
managed operation from its inception. facilities inside or outside its current the economy, we’ll see what happens
With over $3 billion in assets, it also marketplace areas if the deal makes with consumer spending.”
has the flexibility to assist people who sense. The majority of its new branches In any case, the Walker brothers and
are being turned away from lenders to broke even within the first two years of the rest of the executive team (four peo-
help refinance existing mortgages or operation as compared to the normal ple with a combined 158 years of bank-
consolidate other forms of debt. The four or five industry-wide average. ing experience) are poised to ride out
bank’s legal lending limit exceeds $100 F & M now has roughly 80,000 cus- any storm. “From our point of view, we
million due to its unusually strong capi- tomers combined on the consumer and are very excited to continue in bank-
tal position. business sides, though more than three ing,” said Dan Walker. “We enjoy our
“Our focus on long-term banking is quarters of the bank’s portfolio is real jobs day in and day out. We are on call
to create a portfolio that doesn’t allow estate related. Despite documented to our staff 24-7 and are here to con-
the economy to put us in danger,” said downturns in that market, Henry Walker tinue the longevity of F & M. The liveli-
Dan Walker. “We have to manage those noted that the bank’s bases of operation hood of this bank and shareholder
dollars as well as our own capital to not — Los Angeles and Orange counties — responsibility is not something we take
risk our livelihood and to continue are among the better economies nation- with any ease in our minds. We live this
lending and supporting the communi- wide. “Consumer spending hasn’t bank…”
ties we’re in. We are maintaining the dropped significantly in the regions we
customer relationship through the loans serve,” he said. “Business is still moving Brian Simon is a freelance writer who
we have. The customers affected great- along and doing well, though some sec- lives in El Segundo.
est today are in real estate — either in
financing, or in sales — because of lim-
ited cash flow. But we can be patient
because our LTV still allows for a good
loan to give our customer time to turn
things around.”
Conservatism and safety do not equate
to being stuck in the Dark Ages, however;
even though a stroll through the bank’s
historic downtown Long Beach branch
might make one think the year is still
1923. The Walkers say F & M is commit-
ted to maintaining a high level of technol-
ogy in order to serve the growing
customer base on the information side.
Other important fringe benefits come
with the package as well. “Borrowing
from us is relatively inexpensive; there
are no points and low rates,” Henry
Walker said. “We also provide a strong
level of customer service, which can-
didly we do better than anyone else in
our competitive field.”
Dan Walker echoed the sentiment.
“We prefer to have a relationship with
our customer through deposits and then
service the loan. We want that customer
coming back to F & M. That’s why we
have so many multi-generational cus-
tomers.”
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 15
ICNOVL EUSMTNM EI N
N S
T I D
I NE SR I D E R
16 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S O U T H B A Y T E C H N O L O G Y G U I D E
The Benefits of
IT Investment
in
a Down Economy
BY R. BOYD ZACK
D
While the price of the technology may not seem to go down,
URING AN ECONOMIC DOWNTURN,
the amount of usefulness of the technology will go up at a
CUTBACKS ARE OFTEN UNAVOIDABLE. higher rate than the actual cost, thereby reducing the effective
cost of the technology. In other words, a $500 computer might
However, IT is among the business cate- cost $500 or even $550 in the future, but what that future com-
gories in which cutbacks can actually cost a com- puter can do will exceed what the current $500 computer can
do by far more than the price increase. This fact will help offset
pany more in the long run. As a business owner, it is other rises in the cost of doing business.
extremely likely that you are seeing price pressures History has shown that companies that make strategic invest-
ments during down times often emerge as leaders at the time of
all around your office. Insurance costs seem to be on the upswing. In recent years, declining revenue in the entertain-
ment industry has been very rough on some of the giants in the
a space race to the moon. Energy costs to power our
field, allowing for the rise of underdogs such as Apple with its
offices and factories are becoming very noticeable iTunes technologies. While icons such as Warner Music Group
were slashing costs in every area of their business, Apple was
line items on our financials and blowing our budgets investing heavily in its unproven technologies in an area it had
beyond belief. Not to be left out, even the post office not previously even had a presence.
Some areas of technology investment in tough economic
is getting into the practice of raising rates. times can be easy to show a reasonable ROI in labor costs
alone. Take system integration: the process of connecting sys-
tems together in such a manner that they can share data and
become a common source of information. By integrating sys-
Another area where technology investment tems together, reductions in labor costs through a decrease in
redundant data entry or elimination of work or errors can be
can provide a high return
realized. At the same time, increases in production or in features
is through server virtualization. can be achieved without increasing costs associated with pro-
The computing power of today’s computer servers viding the products through increases in efficiencies.
is so great that through the use of Another area where technology investment can provide a
high return is through server virtualization. The computing
special operating system software power of today’s computer servers is so great that through the
we can deploy several logical (or virtual) servers use of special operating system software, we can deploy several
on a single physical server. logical (or virtual) servers on a single physical server. Virtualized
servers not only provide a higher level of reliability and availabil-
Virtualized servers not only provide ity, but they also consume less energy. This means they generate
a higher level of reliability and availability, less heat, which can further reduce energy costs associated with
but they also consume less energy. server room cooling. Again, when calculating the ROI from such
an investment, we cannot assume that energy costs will remain
18 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E T E C H N O L O G Y G U I D E 2
constant or even increase as they have passing the increases to our customers or uating the issue in those areas.
historically. Instead, we must assume they cutting back in other areas. What we need to do is find ways to get
will increase at an ever climbing rate. One problem with taking either of more from what we have without the
Additionally, we should expect and even these two approaches is that they are sim- wholesale cutting and slashing that dimin-
plan on making greater use of our computer ply unsustainable. When we pass our ishes our value to our customers. Often,
and technology resources to enable us to do increased costs to our customers, it forces accomplishing this can be challenging at
more with less. With current versions of them to either do the same with their cus- best and downright painful or potentially
Outlook, users are finding they can retrieve tomers, cut costs in other areas or reduce fatal at worst. One example of a counterin-
voice message through e-mail and hold their spending with us. Similarly when tuitive approach to raising costs is to invest
meetings without leaving their desks. we cut costs in reaction to increases in
continued on Tech Guide page 4
Through the use of remote desktop applica- costs in other areas, we tend to be perpet-
tions, workers are finding increased produc-
tivity operating from home, while still
having the full computer resources found in
Small- to Medium-Sized Business?
the office. And with current cell phone (and
PDA) technology, we can access our e-mail
We’re Your Outsourced IT Department!
anytime and anywhere.
ɻ Network more efficiently for your business flow
Lately it seems we can’t pick up a ɻ Benefit from custom programming & support
paper, watch the news or visit any on-line ɻ Vacation fill-ins for your regular IT staff
news source without hearing about the ɻ Fast response & quick solutions
economic forecast. Are we headed ɻ Experience with a wide range of industries
toward a recession? Are we in a reces-
sion? How bad will it get and how long
will it last?
DME (310) 991-1464
The answers to these questions Computer Consulting Services 18402 Hawthorne Blvd., Suite C, Torrance, CA 90504
become crystal clear only after change
has taken place. And we know we are
through the worst of it when we see a
sustained improvement. One challenge
we must face and try to understand is that
what we do and how we respond while
we are in it has a dramatic effect on the
downturn itself. Sometimes a seemingly
logical response to a bad situation does
nothing more than make that bad situa-
tion even worse.
For example: A logical response to a
downward trend in sales may be to cut
costs across the board. The problem with
this type of response is that it can very
easily make the trend worse. If sales have
declined due to additional features of a
competitor’s product, an increase in prod-
uct development funding could have a
much more positive effect on the overall
health of the organization. If the decline
is the result of perceived value, an
increase in marketing or even an increase
in price might better align the company
with its targets.
Unfortunately, business is not always
as simple as analyzing the situation and
brilliantly coming up with the solution
that is counterintuitive. When faced with
higher costs, we tend to look at either
3 T E C H N O L O G Y 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 A G A Z I N E 19
S O U T H B A Y T E C H N O L O G Y G U I D E
BENEFITS OF IT INVESTMENT ment of a system (or systems) can save of gas is not going to do much else other
continued from Tech Guide page 3 you a significant amount in labor costs than continue to increase at higher rates,
in people. While we often look at training through increases in efficiencies. resulting in an even quicker payback.
in times of plenty, we must not set it aside When evaluating returns on such We can bank on the fact that com-
in lean times. Take management training, investments, we cannot take prior con- modities produced from natural resources
for example. The goal of management is to stants as constants. The world is changing will continue to go up while technology
accomplish objectives through others. With and will continue to change at an ever- products will effectively continue to fall in
effective management training, we can increasing rate. Prices for many things are actual cost. Putting it into context, the
often learn to accomplish more through going up and will continue to go up, actual cost of a loaf of bread will continue
others, thereby either reducing our costs or while some are going down and will to rise due to the costs associated with
increasing our offering. With effective time effectively continue to go down. If you producing a loaf of bread and the amount
management training, we can learn to were considering purchasing a Toyota of natural resources that go into the bread,
spend more time in our high payoff activi- Prius about 18 months ago, you may while the effective cost of a piece of tech-
ties and less in our lower return tasks. have looked at the mileage, number of nology will continue to go down.
Another means of getting more from miles you tend to drive and the price of While seeking the magic bullet that will
what we have in the area of IT is to the car and then compared that cost to enable our businesses to survive these
expand or refine our systems to do a bet- the truck you were driving at the time that rough economic times, we need to look at
ter job at saving us time and money. Take was paid off and getting 15 miles per gal- payoff over longer periods of time than we
a poll of the business system users within lon. With the average price of gas at may be used to considering. Technology is
your organization and ask them what $2.14/gallon it could have come to a 15- going to continue to progress at a very
could make their job easier and what year payback, assuming the price of gas rapid pace, even keeping up with the rais-
areas of the systems are difficult to use. was going to increase at the slow rate it ing price of gas. Our challenge is to make
Often you will find that with relatively had been over the prior several years. effective use of the technology available to
minor adjustments to the systems, major Taking the current $4.00-plus/gallon us and to not waste it away as we have
productivity gains can be achieved. You price, you could be looking at an eight- done with gas. You have more computer
may also find that a complete replace- year payback. More realistically, the price power on your desktop than was on board
the first space shuttle, and more in your
cell phone than our astronauts brought to
the moon. Are you using it to the potential
under your fingertips?
20 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E T E C H N O L O G Y G U I D E 4
Technology Providers
Alpha Computer Support, Inc.
Alpha Computer Support is a small office-home
office/small business consulting company. We are cus-
tomer oriented and as a small business ourself, we
understand the value of keeping an eye on the bottom
line. We have experience in all of the Microsoft Win-
dows operating systems. Our server and desktop sup-
port includes: migration, new systems and servers,
training, back-ups, fault tolerance. disaster recovery,
anti-virus, hardware, workstations, laptops and
upgrades. Network services include: VPN, LAN/WAN,
firewalls, routers, wireless networking, network cabling
and troubleshooting and DSL/cable modems.
310-374-0666
611 Green Lane, Redondo Beach, CA 90278
www.alphacomputersupport.com
Holden-Andrew Corporation
Since 1991, Holden-Andrew Corporation has deliv-
ered systems integration and support services to its
clients. With principal staff coming from security,
finance, and aerospace related sectors, the firm has
always maintained systems security as its foundation.
With Holden-Andrew Corporation, you’re not only
bringing on a company with industry partnerships, but
a leader in the Information Technology field. Through
its suite of Evolution Connect Services, Holden-
Andrew is leading the way for companies looking to
utilize managed and cost effective technology solu-
tions. Using products like VoIP Systems that deliver
powerful reporting tools, hosted application servers,
electronic and print marketing, interactive website
design and data storage services, Holden-Andrew gives
companies the opportunity to consolidate their busi-
ness operations costs. Going beyond the desktop,
Holden-Andrew Corporation is your total IT and busi-
ness solutions provider. Ask for account executive
Melissa Stewart or e-mail her at MStewart@HoldenAn-
drew.com for more information. 310-792-4999
3528 Torrance Blvd, Suite 320, Torrance, CA 90503
www.holdenandrew.com
5 T E C H N O L O G Y 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 A G A Z I N E 21
S O U T H B A Y T E C H N O L O G Y G U I D E
N
O, NOT THE CREEPY CRAWLERS THAT INVADE YOUR
Because search engine algorithms are kept secret and are mated tool: www.netpaths.net/tool/spider .
frequently changed, preparing a site for high ranking and The web crawler has not dropped in to try an entrée or
keeping it there is a demanding task; one that is never fin- two. It’s there as a sort of Digital Health Department with a
ished. There is no right and final answer, but there are much critical eye and a long checklist: — Are there incoming links
discussed guidelines that follow search engine best practices from other websites? — What is the quantity and quality of
and can virtually guarantee you a slot on page one. Search content? — Is the content grammatically correct with no mis-
Engine Optimization, or SEO, is the generic term for the pro- spellings? — Is the site unique or redundant? — How many
cess of tuning a website so that it achieves the best possible internal links are there and how many are broken? — How
search results — as close as possible to a page one listing. many unique visitors, page views, revisits and conversions
Your website must be designed for effective communica- can be measured? — Is the source code technically precise?
tion with a human being, and part of that design must be sat- It may seem like an intimidating checklist, but a fundamen-
isfying the search engines that bring it to the visitor. A site tally sound website will have a good chance at ranking well
must have strong elements that visitors can connect and in the search engines.
engage with, as well as copious copy, well labeled images We may not be afraid of spiders, but if we want good
and keyword-rich title tags for search engines. This is not a search results, we must prepare for them.
slam dunk task. The spiders are coming. But don’t call an exterminator.
Search engine spiders like an interesting buffet of copy, Update the text on your website and prepare for more busi-
keywords, text and links. You want to have 200–500 words of ness.
copy per page, well labeled images, plentiful navigation links
and a keyword-rich title tag. Common problems are sites that Cayley Vos is the owner of www.Netpaths.net, a forward think-
ing Web design company that focuses on providing high value
are heavy in graphics, interactive media/flash/video and services to the online market. You can improve the value of
audio. An easy test to see if your website fails the text test is to your business with a well-designed and promoted website.
use the view source button on your browser or use this auto- Cayley can be reached at 310-372-3086.
22 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E T E C H N O L O G Y G U I D E 6
TECHNOLOGY PROVIDERS range computer environments. RBZ&A brings more printers and fax machines in the Greater Los Angeles
continued from Tech Guide page 5 than 26 years in computer services to the table with area for almost 20 years. We also sell toner, ink and
an excellent management team promoting a conta- other office supplies via our Redondo Beach retail store
scalable and secure instant messaging and communi- gious “can do” mindset. It also has an uncanny ability and e-commerce site, which features over 6,500 office
cations software solution adopted by some of the top to understand complex business problems and to products. WeFixPrinters.com provides on-site service to
financial, legal, gaming and entertainment businesses. accommodate the needs of even the most sophisti- small and large companies, and services most major
The IMiN instant messaging server lets you capitalize cated customer. RBZ&A’s extensive experience with makes and models. We are the South Bay’s only autho-
on the powerful new advantages of real-time enter- both mainframe and client server technology coupled rized service facility for Canon inkjets, photo printers
prise-accelerating revenue growth, productivity, oper- with an in-depth understanding of business processes and scanners. WeFixPrinters.com offers full service
ational efficiency and profitability. Make faster, better makes it uniquely qualified to migrate older systems printer repair and supplies. Our goal is to make servic-
decisions. Empower managers and associates to do onto new platforms. 310-303-3320 ing your equipment hassle-free so that we can reduce
more in real time. Available through our network of 23844 Hawthorne Blvd. #101, Torrance CA 90505 downtime, while extending the lifetime of your equip-
channel partners and alliances, IMiN secure instant www.rbza.com ment. Call today to set up your corporate account!
messaging software is the securest, simplest and most 310-937-4588
scalable instant messaging solution available in the WeFixPrinters.com 2895 190th St., Redondo Beach, CA 90278
market. 310-303-3320 WeFixPrinters.com has been repairing laser/ink jet www.WeFixPrinters.com
23844 Hawthorne Blvd. #101, Torrance CA 90505
www.ebs-imin.com
Netpaths
You can get a website anywhere, but Netpaths can get
you to the top of the search engines. Find out more
about how your website can be at the top of Google.
We offer you a forward thinking Web design company
focused on providing high-value services to the online
market. You can improve the value of your business
with a well designed and promoted website. We
design search engine-friendly websites that can attain
top placement in the big four search engines. We offer
custom e-commerce solutions and organizational
website development. We also offer economy devel-
opment models for smaller start-ups and non-profits.
You can view our new automated website builder.
Create your own website with a Web-based automa-
tion tool for free. We have been in the online business
since 1998 and have successfully moved hundreds of
businesses online with an individually customized
Web presence. We have been doing search engine
optimization before Google existed and have a 100%
success rate for all online marketing campaigns. Net-
paths’ Web design is consistently ranked among the
top Web development and SEO firms with a long his-
tory of strong customer support. Get a fresh perspec-
tive on your online initiatives and see how your
website can work for you. We make you look good.
310-372-3086
23940 Madison St., Torrance, CA 90505
www.netpaths.net
7 T E C H N O L O G Y 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 A G A Z I N E 23
S M A R T G R O W T H S T R A T E G I E S
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 25
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
The Pros
and Cons of
Popular Growth
Strategies
BY DAVID WHITEHEAD
A S AN ENTREPRENEURIAL PUB-
LISHER WHO HAS worked for
both large and small publishing
organizations, “growth strategies” for busi-
nesses is a topic I have strong feelings
companies. And all too often they are
rationalized by making false assumptions
about the feasibility of building on the
company’s initial success.
ance for risk as they would if they were to
engage in a speculative investment ven-
ture. It’s really no different when you think
about it because any investors you bring
on board are certainly speculating on
about. I went through a misguided five- Know the Risks your success. Ask yourself if you would
year strategic plan at a regional newspa- in Growing a Business invest in somebody else’s company who’s
per that crashed and burned in three. I I leaned from personal experience that proposing what you are; and base your
also served on the front lines with another certain elements must be in place before decision on answers to tough questions
company that destroyed itself while exe- any decision should be made to deliber- you would surely ask if you didn’t own
cuting an aggressive growth strategy. ately grow a company beyond its natural the company yourself. The answers to
Executing a deliberate growth strategy parameters for expansion. these kinds of questions will determine if
is something most companies do at some First, the principals need to be fully you are headed in the right direction.
point. Sometimes growth makes sense aware that any growth strategy is a ven-
when the demand is there and new mar- ture into the unknown. This holds true Grow for the Right Reasons
kets are wide open. However, highly regardless of the level of research con- Second, never decide to grow an existing
questionable growth strategies often origi- ducted up front. That means aggressive venture simply because you want it or you
nate from pressure by creditors or growth is always a calculated risk. The think you are somehow entitled to it as a
investors, especially with publicly held principals must evaluate their own toler- reward for your early success. The market
must genuinely demand your heightened
presence or you are doomed from the
onset. Never fall in the trap of ignoring
market data or not bothering to gather it
when your company’s internal rhetoric
makes it sound like the best idea ever con-
ceived. All departments, especially the
finance and marketing teams, must do their
due diligence to determine viability and
weigh risks before any decision is made to
go forward. And for the good of all, they
must be prepared to disappoint people if
they determine it is not the time — or tem-
per their plans if they are reaching too far.
continued on page 29
26 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S M A R T G R O W T H S T R A T E G I E S
SMART GROWTH STRATEGIES dled and reconfigured in order to appeal to a changing market-
continued from page 25 place. Technology companies have a firm understanding of this
operations of the company and focus on immediate tasks instead of concept. New electronic gadgets are introduced to the market and
long-term goals. Some company owners may recognize the impor- are quickly followed by advanced models. These products are in
tance of strategic planning but simply lack clear understanding of turn succeeded by stripped-down, less expensive models that
the process. While vast libraries exist on the subject of strategic plan- appeal to a large consumer base. Fast food chain McDonalds built
ning, many authors focus on the concerns of large corporations and an entire marketing campaign around the Happy Meal , a shining
TM
key in on issues that are non-applicable to smaller organizations. example of a product bundling strategy at work.
Strategic planning shouldn’t be complicated. In its simplest By answering the three questions above, your organization can
form, a strategic plan is a clear vision of a company’s long-term begin to think in a more strategic manner. Independent of size, all
position based upon the value-add it provides to customers and companies must participate in strategic planning activities. In the
shareholders. Strategic plans require knowledge of fundamental new economy, knowledge has trumped raw materials as the essen-
industry shifts and how customers and competitors are expected to tial business resource. Strategy development and execution is crucial
respond to those changes. Flexibility is an inherent characteristic of for long-term business success. Don’t get blindsided by your compe-
strategic plans, which should be easily adaptable to the current tition. Playing catch-up has never put a business in a good position.
market. Evaluating strategic options is based on identifying choices Markets are not destroyed overnight even though executives
that are most capable of providing value for all stakeholders and may feel that a loss is swift and unexpected. Markets deteriorate
align with the organization’s vision and core competencies. slowly over time and leave a trail of clues along the way. More
So, where to begin? First, become aware of the major changes often than not, these clues go unnoticed. Usually the cause of a
impacting your industry and begin to align those changes with your company’s failure was an inability to identify looming changes in
organization’s core competencies. Your answers to the following the business environment and adjust corporate strategy accordingly.
three questions can help develop your starting point. One of the contributing factors to the lack of business acumen is an
executive’s false belief in continuity. Companies are firmly con-
1. What business are we in? vinced of their own perpetuity and envelope themselves in a mis-
The answer to this question isn’t always the most obvious. It is not guided sense of security and invincibility. This is especially true of
necessarily tied to the product or service your company offers. For generation businesses or legacy organizations. Where once a busi-
example, insurance companies have long recognized that they are ness model could be counted on to provide a successful foundation
in the business of selling security and assurance. Small retail outlets for at least a decade, today’s companies may need to revamp them-
such as 7-Eleven stores understand that they are in the business of selves in as little as a year or two. Creative destruction is constantly
selling convenience. Whole Foods realized that it was in the busi- reshaping our business landscape. As a result, companies cannot
ness of social responsibility and identified a large consumer base expect to operate from a position of assured continuity.
that would respond to this message. As a result, the market chain
has been rewarded with higher margins than commonly seen in a Financial Considerations
traditional grocery store. Companies that understand what business Strategy without financial analysis is incomplete and subject to
they are in are more adept at identifying niches, following trends failure. Continual growth under any economic condition requires
and responding to market demand. This flexibility makes them a strong financial plan. CEOs often find themselves in right-brain,
more successful at formulating sustainable businesses models. left-brain quandaries — how do you commingle visionary opti-
mism with cost-conscious pessimism? Executives often adopt
2. What changes are occurring in our industry? strategies that do not consider the financial implications. Ineffec-
New technologies can change the competitive landscape tive strategic plans are devoid of comprehensive ROI analysis.
overnight. Moreover, competitors may emerge from the most unex- Smaller firms are particularly at risk since they may lack a qualified
pected places. Today, candy bar companies compete with digital CFO. Controllers with only basic accounting procedures are miss-
music providers for teenagers’ discretionary income. ing the advanced analytical skills required for close financial
Make it a point to maintain a constant dialogue with your examination of a strategic plan.
customers, suppliers and industry experts. Schedule quarterly Industries are not created or destroyed equally. Some companies
meetings with your sales staff to learn what they are hearing in are better positioned for economic uncertainty. Executives who
the marketplace. strive to become increasingly strategic in their financial decision-
making and engage in vigilant oversight of the company’s financial
3. How can we continue to make money? condition have an edge over their competitors. Financial vigilance
Recognizing the core competencies of your organization is criti- includes evaluating the company’s fundamental economic position
cal to building strategic flexibility. The best way to preserve your by analyzing the industry, customer profitability, financial perfor-
competitive edge is to continually innovate. Upgrade your tech- mance, cost structure, availability of capital, debt leverage and
nologies, hone your internal processes or develop more efficient retained earnings.
distribution channels. The balance sheet will reveal your debt leverage and the
Core competencies can be repackaged, stripped down, re-bun- continued on page 28
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 27
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
28 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S M A R T G R O W T H S T R A T E G I E S
PROS AND CONS OF POPULAR GROWTH STRATEGIES rate veil if you want to borrow serious money and expect this sit-
continued from page 26 uation to get worse as the credit crunch continues.
Make Sure You Are Capitalized This approach requires the accumulation of overhead that will
Beyond Your Projections not be paying for itself for some time — if at all. Even if your early
Smart growth is a process of calculated risk that must be capital- sales numbers sound exciting compared with your previous
ized well beyond your expectations with money you can afford efforts, your spending on the growth process will likely be much
to lose — or better yet, money that belongs to someone else greater than your early returns. You won’t really be boosting your
who’s in a better position to lose it than you are. Know that any profits for some time and only if the new economics of your modi-
data you gather that returns positive indicators for growth can be fied business model allow that to happen. This strategy really can
immediately vanquished by unexpected variables, including a put the principals in a position where they are going to get buried
change in trends in your industry, a downturn in the economy, if it doesn’t work out. This is especially true when they commit
competition you didn’t anticipate and changes in the structure of essential personal capital or worse, and go heavily into debt with
your company that alter your profit/loss statements in an undesir- the payback entirely dependent on the growth strategy’s success.
able way. That said you must choose the growth course that fits Whatever your projections, you won’t really know how long it
your tolerance for the level of risk you can at least calculate and will take or how much it will cost until you are well committed. If
also realizes your desired objectives. you misread the market before you start, you are dead. If you’ve
dug in deep, you have put yourself in a position where there is no
Growing by Your Own Bootstraps good exit strategy. I’ve known people who dug in so deep they
First let’s examine the most common growth strategy, which is risked personal financial ruin whether they ceased operations or
also one of the most tedious, resource-consuming and often the not. As a result, they didn’t quit when they should have and only
riskiest. That is growing by your own bootstraps using a direct made things much worse for themselves and everyone else in the
sales effort with your own money or borrowed money that end. Suffice to say, the “grow or die” position is best avoided. If
requires the principals to personally guarantee debt even if their you are not a gambler by nature and conservative in your finan-
status is LLC or incorporated. If you are a small operator trying to cial outlook, this is definitely not the strategy you want to use. It
get to the next level, expect credit terms that pierce the corpo- continued on page 36
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 29
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
30 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S M A R T G R O W T H S T R A T E G I E S
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 31
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
32 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
A R E A L E S T A T E P R O ’ S P E R S P E C T I V E
STIMULUS PACKAGE expectations in line with the new tightening some rate quotes, choose the lowest rate,
continued from page 12 trends in lending, you won’t be blindsided and then you’re done. Isn’t it about time
credit score. If your credit score is one by the sometimes arduous roadblocks you put as much planning into financing
point lower than a benchmark set by a erected in your path along the way. Make your home as you do planning a vacation?
lender, you pay more — a lot more. sure you plan ahead. Consult with a mort- If you do, it can pay off big. Either way, it
Before last August’s credit crunch, the gage professional months in advance of promises to be very stimulating!
pendulum had swung too far in the loose your intended purchase or refinance. Find
direction, with what some have called out about your options. Identify the strong Ken Roberts is a mortgage planner with
“mirror underwriting:” Fog a mirror and points and weaknesses in your qualifica- nearly 30 years experience in the South
you’re approved. Now the pendulum has tions. Have a game plan. Gone are the days Bay real estate market. Ken can be
swung waaaaay too far in the opposite of being able to make a few calls, collect reached at (310) 792-7090.
direction. For all lenders, times have
changed. The message is when getting real
estate financing today, be prepared to jump
through numerous hoops. Expect guide-
lines to defy logic. You will have to write
letters of explanations for trivial things. You
will need to provide full documentation
and in some cases, even over-document
every source of income you have. Cash
reserves are very important, with many
banks requiring 6–12 months mortgage
payments in reserve. If you have circum-
stances, tell the story of what happened
and why. Banks are returning to the days of
subjective underwriting, and a human
being will make a judgment call about
your qualifications. If one bank says no,
another may say yes. Appraisals are being
scrutinized and appraised values are being
reduced or cut in appraisal reviews. The
rates for Jumbo loans should creep closer
to Conforming over the next year or so.
Normal will never be as things were just a
year ago. This is all an overreaction that
will ease some over time. Right now, banks
and lenders want to lend money only to
people who clearly don’t need it!
So as long as you go into a mortgage
transaction today with eyes wide open and
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 33
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
34 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
S M A R T G R O W T H S T R A T E G I E S
A Dynamic Business Plan: This is a plan pitfalls while maximizing ROI. Early agement are knowing your options,
that incorporates “what if” scenarios and signs of trouble can serve as opportunity maintaining many options and utilizing
projections. The business plan should for change. Seek professional assistance only those options that match your
provide a framework for operating with from consultants and bankers as early company’s goals and objectives.
agility within different economic envi- as possible. Remember, banks really do
ronments. The business plan should also want your company’s business. Banks
Michelle King, CPA-MBA, is a business
be the start for identifying plans for want to lend money, and investors are consultant and coach specializing in
growth and thus, future cash needs. always seeking a sound operation to energizing cash flow. For more informa-
invest in; but if you wait until things are tion about her services, log onto
Cash Drivers: Recognizing the true cash desperate, your options become limited. www.info@es-concepts.com or contact
drivers is essential. Oftentimes, The keys to strength in financial man- her directly at 310-782-7920.
resources are not expended on the
products and/or activities that have the
greatest positive impact on cash, and
thus ROI. Are you investing time and
energy into products or services that are
truly generating the highest profits?
Incorrect cost allocation techniques and
hidden cost may serve to undermine
efforts to improve ROI. Be careful not to
overlook and underestimate products or
services that could hold hidden profits.
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 35
C O L U M N I N S I D E R
S M A R T G R O W T H S T R A T E G I E S
36 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
money at the onset. This strategy allows
you to use investor capital for a new
venture without risking your existing
business while still retaining a viable
exit strategy.
A local South Bay entrepreneur once
told me a good way to test-market a
new idea is to set up a “shell company,”
which for him was really a new division
of his own company that was nothing
more than a website and a sales kit
used to test the market to see if there
was any interest before committing to
invest further. This is a low-budget way
to do some in-the-trenches R&D with
immediate feedback and reduce your
risk considerably when you launch a
new venture.
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 37
Architectural Icon Calendar of Events
Frank Gehry to Move
World Headquarters Save the Date!
to El Segundo El Segundo Chamber of Commerce largest networking event, the annual
For more information about the events Regional Mixer! Mingle with members of
Internationally renowned architect Frank listed, call 310-322-1220 or visit many chambers from the South Bay as well
Gehry has selected El Segundo as the home ElSegundoChamber.org as your local friends. Sample fabulous fare
for his new offices and design studios. The from a variety of local restaurants in this
public announcement was made to a large Evening Mixer: family-friendly atmosphere! Don’t miss this
group of civic and business leaders by Mayor Thursday, July 17, 2008 annual opportunity! The Regional Mixer is
Kelly McDowell during the annual State of 5:30–7:30 P.M. THE Mixer to be at in August!
the City address. Chevron Mixer in the Park
The move to El Segundo from west Los Network Café
Chevron Employee Park
Angeles resulted from Gehry Partners out-
(corner of El Segundo Blvd. & Illinois St.) Time: 11:30 A.M.–1 P.M.
growing their current facility. Gehry’s new
world headquarters will occupy 60,000 Enjoy a great lunch and learn about your
square feet of space in two adjoining build- Palos Verdes Peninsula fellow Chamber members and their
ings that can accommodate all the firm’s Chamber of Commerce businesses while promoting your own.
roughly 250 personnel. For more information about the events Each will get to present a 30-second
“To have someone of Frank Gehry’s listed, please call 310-377-8111 or go to commercial in front of the whole group.
stature headquartered here is a great coup www.palosverdeschamber.com. Advanced reservations are required and
for our city and fortifies El Segundo’s growing will save you $5. Members with
reputation as a prime destination and center Evening Mixers: reservations are $20 and guests and
for design, the arts and creative media,” Evening Mixers take place the members without a reservation are $25.
stated El Segundo Mayor Kelly McDowell. Please call 24 hours in advance to cancel.
third Thursday of every month from
“Frank Gehry is truly a giant in the field
5:30–7:30 P.M. No shows will be invoiced. Bring a door
of architecture and his works are world-
renowned for their synthesis of architecture Admission is $5.00 for chambers, prize to further market your business.
and art. We are proud to welcome him to $10.00 for guests and includes one drink
our community.” ticket. Call 310-377-8111 for schedule. Thursday, July 10, 2008
Gehry’s arrival continues a trend that has Catalina Restaurant
seen several prominent design, arts and Breakfast Mixers: 320 S. Catalina Ave.,
media companies migrate to El Segundo in Time: 7:15–9 A.M. on the first Wednesday Redondo Beach, CA 90277
recent years. In 2007, advertising agencies of every month.
Ignited Minds, LLC and David & Goliath Admission is $15 for members with Thursday, August 14, 2008
moved to El Segundo, as did Internet media R.S.V.P. or $18 for members without Red Robin Restaurant
firm Tandberg Television. 1815 Hawthorne Blvd., #150,
R.S.V.P or for guests.
“It’s no accident these companies are
at the South Bay Galleria
choosing our city,” added McDowell. “We
provide a number of appealing amenities as Wednesday, July 2 Redondo Beach, CA 90278
an ideally situated coastal community not to Marmalade Café, The Promenade on the
mention a favorable tax base, prime and rea- Peninsula, Rolling Hills Estates. Thursday, September 11, 2008
sonably priced office space and unparalleled Location: Captain Kidd’s Fish Market
customer service.” Redondo Beach 209 N. Harbor Dr.,
Gehry is expected to move into the new Chamber of Commerce Redondo Beach, CA 90277
space by the end of 2008 or early 2009. & Visitor’s Bureau
A Toronto native who moved to Califor- For more information about the events San Pedro Chamber of Commerce
nia at the age of 18, the Pritzker Prize win- listed, call 310-376-6911 or go to For more information about this event,
ning architect burst onto the scene in 1972 call 310-832-7272 or go to
www.RedondoChamber.org
with his innovative Easy Edges furniture
www.SanPedroChamber.com.
designs that incorporated cardboard as a
medium. Over his career, he has completed Business After Hours Mixers
dozens of widely acclaimed high-profile Time: 5:30–7:30 P.M. After Hours Mixers:
buildings, many of which have become Admission: $5.00 Members, Time: 5:30–7:30 P.M.
tourist attractions. $10.00 Guests Admission: $5 for members,
His best known works include the Walt $10 for guests. 2 free drinks with paid
Disney Concert Hall in Downtown Los Wednesday, July 23, 2008 admission.
Angeles; the Guggenheim Museum in Bil- Location: Splash Mediterranean Bistro
bao, Spain; Weisman Art House Museum in 300 N. Harbor Dr., Wednesday, July 23, 2008
Minneapolis; Dancing House in Prague; Redondo Beach, CA 90277 Plaza Automotive Center/Park Plaza Shell
Experience Music project in Seattle, and his 990 N. Western Avenue,
1978 residence in Santa Monica.
Thursday, August 28, 2008 San Pedro, CA 90732
Gehry is currently working on more
than 20 new designs, including the $2 bil- Annual Regional Mixer
lion Grand Avenue Project to revive Location: Seaside Lagoon Wednesday, September 24 2008
Downtown Los Angeles and a new mas- 200 Portofino Way, Puesta del Sol
sive-scale Guggenheim art museum in the Redondo Beach, CA 90277 1622 South Gaffey,
Persian Gulf. Be a part of the Redondo Beach Chamber’s San Pedro, CA 90731
38 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 2 N D I S S U E 2008
C O L U M N I N S I D E R
Meeting Rooms
The Cyber Boardroom
The Cyber Boardroom offers three amazingly equipped conference rooms of various sizes
and unique character that are ideal for any occasion. Every room (The Royal, The Lennox
and the Manchester) comes equipped with a 40-inch monitor that can be used for
everything from television viewing to projected presentations, a telephone capable of
conferencing up to four outside parties, and our exclusive “Gigabyte” high-speed Internet
access either through a wired or wireless connection. Each room is an independent sound
zone with an adjustable volume control for presentation audio or ambient music. The
Cyber Boardroom also has a Wi-Fi lounge and a full range of powerhouse computers for
office or graphic work, scanners, faxes and printers.
310-303-7904
4451 Redondo Beach Blvd.
Lawndale, CA 90260
www.TheCyberBoardroom.com
2 N D I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 39