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The Los Angeles South Bay B2B Magazine • First Issue 2009 • Volume 4, Issue 2 • www.BusinessInsider.us • Complimentary Copy

insider

The Los Angeles South Bay B2B Magazine • First Issue 2009 • Volume 4, Issue 2 • www.BusinessInsider.us • Complimentary Copy

BUSINESS

5 South Bay Business Veterans Who Don’tLet the “R” Word Get the Best of Them

Business Survival Columns:Tips From South Bay Business Pros

Tax Time Feature:Cash Strapped California Issues IOUs Instead of Income Tax Refunds

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

BUSINESS insider MAGAZINEThe South Bay Los Angeles

Business-to-Business Magazine

Publisher & EditorDavid Whitehead

Contributing WritersKen Roberts, Angela L.H. Sayers,

Kurt Andrew Schlichter,Brian Simon, David Whitehead

Graphic Design & ProductionDavid Whitehead

Copy Editing & ProofingBrian Simon

Advertising Sales ManagerDavid Whitehead

Assistant to the PublisherAlexandra C. Hart

BUSINESS insider MAGAZINEWelcomes Input From The Community:

All press releases or Letters to the Editor should be concise and include the writer’s name, address and phone number. BIM will publish select letters addressing relevant issues and topics discussed in the magazine. We will not publish street address, email address or phone number. If the editor comments about a letter, the reader may respond with at least as many words as were used by the editor. We would like to stimulate a sincere dialogue. All letters become property of BUSINESS Insider Magazine and are subject to editing for length, content, grammar, punctuation, etc. Letters may be submitted by email to:

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www.BusinessInsider.uswww.TheBizBoard.net

BUSINESS insider MAGAZINE makes every attempt to provide business decision-makers with current and accurate information. However, BUSINESS insider MAGAZINEdisclaims any implied warranty about the correctness or accuracy of information published in BIM and www.BusinessInsider.us or its appropriateness for a particular purpose. You assume full responsibility for using the information and understand and agree that BUSINESS insider MAGAZINEis neither responsible nor liable for any claim, loss, or damage resulting from its use. Opinions and/or claims of BIM contributing writers and advertisers do not necessarily reflect the opinions of BIM’s publisher.

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Cover Feature:Surviving a Tough Economy5 South Bay Business Veterans Who Don’tLet the “R” Word Get the Best of Them ... 8

Legal Insider Seven Simple Ways to Law-Proof Your Business During Tough Economic Times ... 10

A Real Estate Pro’s Perspective:A New Year, a New Beginning ... 12

Publisher’s Perspective:Modern Economic Logic:What Goes Down Must Go Up ... 16

Finance and Accounting Insider:Managing Your Business During Tough Economic Times ... 20

Technology Insider:Moving Your Website?Plan Ahead to Avoid Critical Service Disruptions ... 6

TAX TIME FEATURE:The Great Tax Shock of 2009:California Issues IOUs Instead of Tax Refunds ... 24

South Bay Calendar of Business Events:Save the Date! ... 22

In This Issue. . .


Everyone’s Business Plan for 2009:“Surviving a Tough Economy”

As we roll ahead in 2009, South Bay businesses are still shell-shocked from last year’s unprecedented financial cri-sis that is expected to make things dif-ficult for some time. I originally slotted the “Surviving a Tough Economy” issue into the editorial calendar about a year ago. I figured the economic downturn would start affecting more people and businesses by this time, and boy did I get that right. We decided to interview some longtime South Bay business-people who have been through sev-eral recessions before. They tell their stories of survival, and the details pro-vide a perspective of what suffers and what doesn’t when the economy gets challenging. Also, clever people can capitalize on opportunities created by an economic downturn. But that said, surviving this downturn will be a chal-lenge for everyone. Having been hit disproportionately compared to the rest of the country 15 years ago, busi-ness veterans in this area don’t panic at the first sign of an economic down-turn. However, the current situation is one that no intelligent person is going to take with a shrug. If anything, busi-nesses in this area are feeling the ef-fects of fearful consumers who for now are keeping their money in their own pockets. We have columns in this is-sue with helpful tips for running your business more effectively and ways to avoid legal problems that tend to increase whenever the economy gets challenging. This year for our “Tax Time” feature, I decided to write an overview on the outrageous proposal from Sacramento to issue IOUs instead of our state income tax refunds. And to give everyone the big picture view of what’s causing the business cycles to get more ferocious as the global economy gets increasingly unstable, I penned an in-depth perspective piece on key economic factors that create these crazy business cycles and what’s ahead if we don’t fix the system from the ground up. Yes, these are challeng-ing times indeed and Business Insider Magazine will be focusing on the most important issues for the duration.

David Whitehead,Publisher

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6 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 1 S T I S S U E 2 0 0 9

T E C H N O L O G Y I N S I D E R

Last fall I engaged in a long overdue project to consoli-date my web domains with one service provider. I also decided to phase out a convoluted domain I set up in

a hurry when we launched Business Insider Magazine that has been confusing my readers and customers for nearly five years. As tech savvy as I thought I was, I found myself caught up in the usual print publisher behavior of spending too much time putting ink on paper and not enough time gracing cyberspace with my pres-ence. Plus a number of things I was doing years ago are no longer effi-cient or cost effective. Like every-one else these days, I need more ef-fective marketing options that save money. So it was time to address my wasteful and inefficient Internet practices once and for all.Increased competition has driven

down hosting and domain registra-tion costs in recent years. I knew I had too many nifty web concepts spread out over too many servers. It was getting difficult for the Google-bot to figure out what I was doing, and I was overpaying by current standards.From the start, I was reticent about getting too involved in

this endeavor. It felt like I had procrastinated starting a nec-essary clean-up project that was sure to dig up a number of important things I forgot to do (and that at this point , would rather not think about.)One thing that spared me a great deal of aggravation was

Moving Your Website?Plan Ahead to Avoid Critical Service Disruptions

By David Whitehead

to apply Murphy’s Law from the start. As a pioneer office computer user who jousted with “tech support” long before the term was coined, I knew I should get suspicious when-ever anyone said, “Do this and it should work automati-cally.” I also sit up straight and listen intently whenever I hear, “You can do this yourself online very easily.” I know these statements are rarely true, so I prepared for the oppo-site and dealt with the calamities as they occurred.

I had a bad feeling about this seem-ingly easy project from the start. There have been instances when cli-ent emails that have worked for years suddenly started bouncing back as their websites mysteriously vanished for several days, leaving their vendors and customers to believe something was seriously wrong with their busi-ness. Most of the time, this happened because they moved their website and email service to another ISP and didn’t properly manage their domain and file transfers. Whether you are your company’s IT manager or not,

sit up and take notice when someone says they want to move your website. This is not a process to take lightly. No-body thinks there will be a crisis until web functions taken for granted suddenly disappear and then you realize it will take days to straighten out. Whatever anyone says, moving a website is rarely as easy as setting up new directories and moving the files. Web domain names are legally tied to the designated host, and there is red tape involved with having


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 7 1 S T I S S U E 2 0 0 9

them released and moved to another ISP. And why would any company holding the strings to your domain want to make it easy for you to leave? They can’t force you to stay of course, but they can and do set up obstacle courses for you to negotiate on your way out.I didn’t know many details about this

process myself. Once I got the ball rolling on setting up the new service, I called my current provider to cancel the old one. However, customer sup-port was a bit ambiguous about who held the registry on my domain. Al-though a big reason I was leaving this ISP was because of lousy tech sup-port, I have to give these people credit for advising me to keep the current service until the new one was up and running. That turned out to be a wise decision indeed.Even though I am my own webmas-

ter, I found myself on a learning curve when it came time to move the web-sites because I don’t set up or transfer domains very often. I have three regis-tered domains hosted by two compa-nies and I wanted to consolidate them with a newer company that offers bet-ter pricing, systems and support.First, I had to rediscover where I regis-

tered each domain because they were set up quickly at different times with little thought given to the process. Do-main registration and transfer is con-fusing if you are not a regular visitor to www.whois.net. I found one of my domains registered with a company in Australia and another in upstate New York. The third was with a company used by the ISP I was moving to and it didn’t need to be transferred. I nor-mally sent checks every two years to renew the two domains I needed to transfer, but I really knew very little about domain registration companies, their purpose or the bureaucratic pro-cedures to which they were bound. As it turned out, I had to go to their websites and log on to my account to set up the transfer. The other choice I rejected was to do it over the phone while enduring a sales pitch to keep

me from leaving. However, my user names and passwords were long for-gotten, and one company sent me sev-eral pages of paperwork to fill out and fax back signed with a photo I.D. so I could get access to my own account. I think that was its way of punishing me for leaving, and it was time and effort I certainly didn’t anticipate spending. It’s interesting that company didn’t need to confirm my pass codes when it cashed my renewal checks.Then I found out there was a four-day

time delay in the release and transfer of the domains to my new provider. If I had started off by canceling services with my own provider, my website and domain emails would have been down for about a week. Given the pa-perwork and online troubleshooting, one of my domains actually did take about seven days to transfer.Since this move also allowed me

to abandon an early Internet UNIX server, I had to change the names of certain files on the new system. I also learned it can take up to 24 hours for

a new domain to go live, which de-layed things even further.I also had to deal with small details

no one bothered to tell me. For exam-ple, when the first domain transferred to the new provider, it defaulted by pointing to the DNS address of the old provider. For three days, this left me thinking the transfer didn’t go through.When everything was up and tested

on the new site and I knew the files were actually being pulled from the new site, I finally contacted my old service provider to discontinue ser-vice with full confidence my visitors wouldn’t know the difference. One of my less important domains pointed to my main website for about a day while the last transfer went into ef-fect. However, since I have a well-dis-played link on that page going to the proper destination, I didn’t sweat it. I was also too frustrated at this point to care.I was fiddling with this project for

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Continued on page 30

. . . the key was planning and setting up contingencies

for the unexpected to avoid downtime. That was the

difference between a week of anticipated troubleshooting

and the avoidable disaster of losing Web presence for a

week or longer.



Continued on page 8

The same mantra has held true throughout the various economic downturns in this country’s history: the jobs will come back, the stock market will go up again and housing will appreciate. No matter how dire

the circumstances ever were, recovery and prosperity always followed sooner than later. Besides, recessions are necessary hiccups in an otherwise sound economic system, right? It stands to reason that sustained growth can’t be expected to continue indefinitely and that the occasional shakeout is part of the program when it comes to free market capitalism.

Cover Feature

5 South Bay Business Veterans Who Don’tLet the “R” Word Get the Best of ThemBy Brian Simon

CONTINUED ON THE NEXT PAGE �


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 9 1 S T I S S U E 2 0 0 9

That said, many worry that the cur-rent recession is different. When the very bastions of corporate reliability—from venerable financial institutions to retail giants and automakers—go down for the count, it shakes the very foundation of consumer confidence. And now that a global economy holds sway, could it be that all bets are off when it comes to the usual prediction that “everything will be fine eventu-ally?”Though undoubtedly hit hard by this

downturn, the South Bay coastal com-munities are fortunate in comparison to most other areas. Prime location, safe neighborhoods, beach properties, quality schools, and a diverse business base continue to fuel demand. At the same time, new construction is nearly at a standstill and listed homes remain virtually unsold. Business Insider Magazine spoke to

five South Bay professionals who have survived several recessions and are determined not to let the current slide get the best of them. Though some are in especially impacted indus-tries, they’ve found a way to navigate through the tough times.

Keeping It “Real”Perhaps no industry has felt the

crunch of the recession more than real estate. With home values drop-ping and inventory sitting unsold, many agents have seen their incomes markedly drop. Others are looking for new work and the immediate forecast is not very encouraging. A real estate agent in Manhattan

Beach since 1980, Sabine Birkenfeld has no plans to jump ship, though she has had her close calls over the years.Though entrenched at the indepen-

dently-owned Homestead Realty for the past 27 years, Birkenfeld did moonlight in the late ‘80s during an especially tough real estate downturn. “I ended up getting a job in the air-line industry to help pay the bills,” she said. “I wasn’t the only one. Several

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Though some (businesses we interviewed)

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the tough times.



Next, review your leases. Ensure your landlord is meeting obligations – and that you are meeting yours. And where your business is the lessor, the same applies. Finally, take a look at your “standard” customer agree-

ments. Chances are that it has been a while since you up-dated them. Make sure they accurately reflect how you actually do business – clients are often just as surprised as I am to see what their homemade agreements contain. There are some things that you should seriously consider

including in any agreement, like an attorney’s fees provi-sion. Unless contained in the agreement, parties bear their own legal fees even if they win a lawsuit over the agree-ment. Without a fees provision, litigation for sums under $50,000 is often economically impractical because legal bills will eat up most of the recovery.

2) Do You Have The Right Business Entity?Many people do business as a sole proprietorship, often

called a “DBA.” That is not necessarily a bad thing – it is cheap and simple – but from a legal perspective, it does place the risk for the business’s obligations onto the own-er. Incorporating or becoming a limited liability company (LLC) can change that. Just as important are the tax issues – your business lawyer and accountant should both have input in deciding what is the right business form for you.

3) Do You Have Disputed Receivables?When things are good, there is often little time to focus on

unpaid bills. But when things are slow, you have the time. Keep in mind that your customers are having a tough time too – in many cases there may be nothing there to collect. Most of your customers do want to get you paid. If the only way to get paid is a payment plan, agree to one. You can also choose to settle a debt for less than the amount due. Memorialize whatever you agree to in writing. Remember the golden rule of collections: Better all of a little than none of a lot. The first step is to choose your fights. Identify the debts

you will probably never collect - you know who they are – and pack them off to a debt collector. If you get a few dollars down the road without risking any further effort, so much the better. For the others, first try a personal phone call. Be polite and constructive. If that fails, take the next

L E G A L I N S I D E R

While the economic downturn will increase most businesses’ exposure to legal problems, it can also be a good time to get your legal house in order.

Companies and individuals in trouble often look to the law as a quick way to avoid debts or to collect on real or imag-ined claims that in good times would be put aside. But when things are slow, businesspeople have the chance to

focus on legal matters they would otherwise exile to the backburn-er, and many lawyers will be eager to help at discounted rates. A small investment

of time, effort and per-haps a little money answering seven legal questions now can help your business avoid enormous costs down the road – and maybe set you up for even greater success when the tough times end.

1) Are Your Contracts And Agreements All They Can Be?As a business lawyer, it pains me to say that many of my

clients’ lawsuits could have been avoided if they had come to me sooner rather than later to talk about their home-made agreements. Whether it is a partnership agreement or a customer contract, a big part of every business lawyer’s workload is devoted to undoing the damage caused by poorly drafted, vague contracts.Start with any agreement among your business’s owners.

Does it still reflect how you are actually running your busi-ness today? Many arrangements evolve over the years, but no one takes the time to update the actual written con-tracts. Simple moves like changes in profit distribution or responsibilities can be drafted by the parties themselves. More substantial changes should go through your business attorney.

Seven Simple Ways to Law-Proof Your Business

During Tough Economic Times

By Kurt Andrew Schlichter, Esq.

mmes


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 1 1 1 S T I S S U E 2 0 0 9

step and have a debt collector or your business lawyer do the negotiating. Some debts will require an actual lawsuit. Many lawyers

will charge $300 per hour or more. Consider a contin-gency arrangement where the lawyer takes a percentage of monies collected – the percentage can be 33 1/3 and up. Go ahead and negotiate with your attorney – maybe he will take 30 percent. Legal fees are not set by law, and your lawyer might be willing to take a loss leader case now to get future work when things are up and running again. Understand that collections work can be time-consuming for the lawyer, and be leery of any attorney who seems to offer too good a deal. If he will not protect his own inter-ests, then he certainly will not protect yours.4) Do You Have Disputed Payables? The converse applies to debts you owe. If you know that

your creditors are having a tough time, it might pay to call them up and propose a deal – cash now for a discount. Remember, suing you is just as unattractive for them as su-ing a debtor is for you. It might also pay to ask your lawyer to consult about some of your bigger debts – settling them at a discount is easier if your lawyer has armed you with a few good arguments about why a collections lawsuit might not succeed. You can also ask your lawyer to handle the negotiations, perhaps at an agreed flat fee.

5) Are You Properly Insured?The best time to find out is before you get sued. Remem-

ber that insurance does two things for you – it pays the claims against you and, equally important, provides you with a free legal defense for covered claims. Review your policies with your broker. You are looking at three things – the type of insurance, coverage and exclusions, and pol-icy limits. Start with your Comprehensive General Liabil-ity (CGL) policy. This is the one that covers accidents and injuries. Does it cover the type of problems you are likely to have? For example, make sure it covers all of your em-ployees’ accidents while on duty, including while driving their own vehicles (yes – the law places you firmly on the hook for negligence and even some intentional acts com-mitted by your workers within the course and scope of their employment… and “the course and scope of employment” is construed very broadly). Also, make sure all your loca-tions are identified in your policies, and review your “errors and omissions” policy, which can protect officers of your business. Make sure the limits are high enough to protect you. Finally, make sure you have workers’ compensation insurance.

6) Are You Complying With the Labor Laws?The labor law field is booming and courthouses are

swamped with lawyers suing businesses on behalf of em-ployees complaining of missed meal breaks and unpaid overtime. There are plenty of resources out there on the

Web that discuss California’s numerous and convoluted la-bor laws. Learn the rules and enforce them. It is stunning how many savvy businesspeople fail to obey the law and are shocked to find themselves facing huge defense fees on top of damage awards and penalties. For more detailed projects like creating an employees’ handbook, you should contact your business lawyer.

7) Is Your Lawyer Right For You?This is a good time to think about it, and a good time to

fix the relationship if it is not meeting your needs. Start with the basics. Can you actually get your lawyer on the phone? If you feel like you are always at the back of the line, you probably are. Do you understand her bills? Your invoices should clearly explain exactly what she is doing during your billed time (but do not be surprised to be billed for phone calls – after all, your lawyer is selling you her time). Are things like faxes, copy and long distance charges a profit center? Fortune 500 companies do not put up with that nonsense and neither should you. Most importantly, are you getting results commensurate with her rates? If not, this might be the time to talk candidly with your lawyer – she might just need you more than you need her right now. And there is a fringe benefit to these tough times. If you are not happy with your business lawyer, this is a great time to shop your business around. Kurt Andrew Schlichter is a business litigator and a partner

at Schlichter & Shonack, LLP, in Manhattan Beach, a six-at-torney law firm primarily focusing on the representation of businesses and businesspeople ranging from Fortune 500 companies to individual entrepreneurs. He writes frequently on legal issues. Kurt can be reached at 310-643-0111.This article does not constitute legal advice and does not

establish an attorney-client relationship. Consult an attorney regarding your individual situation.

A small investment of time, effort and

perhaps a little money answering seven

legal questions now can help your business

avoid enormous costs down the road – and

maybe set you up for even greater success

when the tough times end.



By Ken Roberts

I couldn’t help but be moved by the outpouring of hope generated by the results of the

presidential election, both here and abroad. Mere words cannot adequately describe how monu-mental a shift in the power of possibility that exists now more than ever before. It has been said that a journey of a thousand

miles begins with a single step. We have taken a giant stride in the direction of one world, one people. There’s no doubt a very long journey lies ahead. At times, real change arises from the aftermath of catastrophe. The possibility for great change lies before us. However, there is still much to do.With the economy in shambles, the banking and auto in-

dustries in tatters, the national real estate market in a freef-all with foreclosures rising like flood waters from Katrina, and a credit crunch squeezing business and consumers alike, one might ask if there a silver lining anywhere. The answer is yes.First, the state of the South Bay real estate market is hold-

ing up far better than some areas in California. Both the San Diego and Orange County markets are experiencing a larger decline in prices than our local marketplace. But this is as disjointed a real estate market as I have ever seen in that price declines vary dramatically even within the same city. Some areas or tracts may have prices stabilizing, while in another area within the same zip code, prices are still falling. Short sales (where the bank agrees to take less than what is owed against the property) and foreclosures that come back on the market as bank-owned properties (REOs) are making appraisals challenging. In fact, new appraisal guidelines for a declining market require appraisers to use at least two comparable sales (comps) from the last 90 days instead of the usual 180 days. They require a pending sale and a current listing—or two current listings—at an equal or higher value than the comps. If the comps support the appraised value but the pending sale and current listing are lower, the appraised value gets adjusted down accord-ingly.Second, the Federal Reserve, as part of the stimulus plan,

announced it will be buying about $500 billion of new mortgage-backed securities from Fannie Mae, Freddie Mac and “Ginnie Mae” between now and the end of June, plus an additional $100 billion of existing mortgage-backed se-curities. This announcement caused mortgage rates to drop and started a mini refinance boom that over the next six months could give borrowers with loan amounts under

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

$417,000 the opportunity to potentially secure some of the lowest mortgage rates of our lifetime. The Fed’s commit-ment as a buyer of mortgages was intended to entice home buyers back into the marketplace to help shore up prices. If the real estate market is stabilized, it is the first step to boosting consumer confidence, stimulating retail spending and thus sparking an economic recovery.As of January 1, 2009, the new high balance conforming

mortgage limit for loans over $417,000 has been lowered to $625,500 in Los Angeles and Orange Counties from the $729,750 limit of last year. We were hoping they would do away with the $417,000 breakpoint so that rates, lend-ing guidelines and loan types would be the same up to $625,500. But that was optimistic. In fact, pricing above $417,000 is not only higher, but depending on the lender and day of the week, it could be anywhere from .25 to 1.0 percent steeper in rate—or as much as two points (each point is one percent of the loan amount) in fees! Pricing is very volatile and guidelines differ slightly from lender to lender. With loan amounts above $417,000, the amount of cash-out in a refinance is limited and there is an additional one-point fee charged by the lender.For regular conforming loan amounts of $417,000 or

less, we now have risk-based pricing depending on cred-it scores. Again, pricing may vary slightly from lender to lender, but just know that a middle credit score below 740 will cost you in additional fees, with pricing increases as high as three extra points for scores below 660. Now more than ever, credit scores are incredibly important. A recent 30-day late payment on a department store card of just $10 can drop your score 80-90 points! Regular conform-ing cash-out refinances with middle scores below 740 also have pricing bumps.In the old days, FHA financing was difficult, expensive,

slow and very finicky about the condition of the property. Escrow periods were seldom less than 60 days. There was only one interest rate to choose from, and the seller would have to agree to pay several discount points for the buyer to get that rate. If a property had any deferred maintenance, it would have to be repaired prior to the close of escrow. And then real estate values rose much faster than FHA loan limits, rendering the loan program nearly useless to even entry level buyers in most of the South Bay. Today, much of that has changed. While owner occupancy is still a re-quirement, FHA loan limits have increased to $417,000 for regular FHA and $625,500 for jumbo FHA. While there are several different FHA loan products today, the most popu-lar is the 30-year fixed rate. You have the ability to buy the rate up or down by paying more or less points instead of being limited to just one rate. Guidelines for regular and jumbo FHA aren’t as dramatically different as they are with

A New Year, a New Beginning



over $625,500. There are a handful of banks, insurance companies and credit unions lending out their own deposits for jumbo loans and keep-ing those loans in their portfolio and servicing them--meaning they collect the payments. By not bundling them up and selling them in the second-ary marketplace to investors, they can choose the rate, fees, loan type and guidelines under which they will lend. For the consumer, that comes with benefits and costs. The most ob-vious benefit is competitive rates. We are seeing three-, five- and seven-year fixed rate ARMs, both fully amortized and with an interest-only payment op-tion, from the low to high five percent range. These are for loan amounts, with some lenders, up to several mil-lion dollars. Thirty-year fixed jumbos are very difficult to find at a good (be-low seven percent) rate right now. The downside, or costs, associated with lenders still making jumbo loans at at-tractive rates are stringent guidelines, high credit score requirements, and very low loan-to-value ratios. In short, only the best of the best borrowers and properties make the cut. Some lending guidelines are a little crazy at times, such as not lending on a condominium project that’s less than 10 units, or 70 percent loan-to-value for single family residences but 55 percent loan-to-value for condomini-ums. How about not counting rental income from an investment property if the tenants are on anything shorter than a one-year lease? Then there’s always payment shock. That means if you are paying low rent in order to save up for a home purchase and your

conventional financing. The biggest difference is that with regular FHA, with compensating factors, you can get a borrower approved with high debt ratios. Jumbo FHA will be more conservative. With the ability to pur-chase a home with three and one half percent down, (all of which can be a gift), add several non-occupying co-signers, (co-mortgagors) while blend-ing all borrowers income and debts in order to qualify and allowing less than perfect credit, FHA is making a major comeback as the loan product of choice for many borrowers. FHA guidelines require the roof to have at least two years of economic life re-maining, and any health and safety violations have to be corrected prior to the close of escrow. That and FHA doesn’t like peeling paint. Any interior or exterior peeling paint has to be re-painted. The biggest limitation is the maximum FHA base loan amount of $625,500. As with conventional con-forming loans, there are price bumps for loans over $417,000 and for de-clining credit scores. Mortgage insur-ance (MI) of a little over a half per-cent is required on FHA loans as well as an upfront MI premium of at least 1.75 percent if the loan amount can be financed by adding it to the loan amount, even if you are at the loan maximum. Some investors who pur-chase FHA loans will allow you to re-move the MI Premium from your loan after a minimum of five years and if the loan is paid down to 78 percent of the original loan balance. In many instances, an FHA loan can be used to refinance when there isn’t enough eq-uity to meet conventional guidelines. Because of the upfront MI premium


that’s added to the loan amount, your holding period for the property should be long enough to cost-justify the re-finance. Once you have an FHA loan, should rates decline, you may be eli-gible for an FHA streamline refinance. It doesn’t require a new appraisal, so it’s possible to refinance even in the face of declining values.If you are a veteran, VA loans are still

around. They also have increased loan limits to a maximum of $417,000 with no money down and no mortgage in-surance. Many former vets may be surprised to learn that today they can still use those benefits to buy a home, even if they had owned a home previ-ously using their VA entitlement. You can be currently in active military duty or honorably discharged. You don’t need to be a first-time buyer. You just have to owner-occupy the prop-erty as your primary residence. If you buy a property using your VA entitle-ment, you can’t buy another property with a VA loan as long as you have an existing VA loan, whether you are still currently living there or not. After it is paid off, however, through sale or refinance, you are free to use your VA entitlement again and again. As with FHA, there are many rate and point op-tions available, making it unnecessary for the seller to have to pay any points on your behalf-- and the 30-year fixed is the most requested loan type. Also of note is that there are some limits on some closing costs charged to the veteran, and some small charges are required to be paid for by the seller for the veteran.There are some lenders still mak-

ing jumbo loans at attractive rates. Jumbo loans are those with amounts

If you think you can time the bottom of either the real estate market or

mortgage rates, how well did you time getting out of the stock market? It’s

much better to get a good rate and a good value even if rates and prices were

to dip a tad further than to miss it by waiting.



people in the office picked up side jobs. Real estate at least allows for flexible hours. A lot of agents also got totally out of the business.”Birkenfeld’s sideline turned into opportunity, as her air-

line contacts brought her new business. She continued her dual career until 1991 when the airline company moved its main offices to Florida. Birkenfeld didn’t want to move across the country. Thankfully, real estate began to pick up again in the early

nineties, though she continued to pursue supplemental in-come by working in property management and event plan-ning.Birkenfeld went into real estate full-time in the late ‘90s

just before an unprecedented period of double digit annual home value appreciation that continued through 2006. Like so many others, she reaped the benefits. “When the market was hot, practically anyone who had a listing, regardless of their knowledge or capabilities, would sell that property and get multiple offers,” she confided. It also helped that she had built community-wide name recognition through her many years in the business. “Persistence and also a good reputation will get you through the tough times as well as establishing trust with clients,” she added.After learning the hard way about the cyclical nature of

the business, Birkenfeld took additional steps to soften the impacts of the inevitable next downturn while the real es-tate market was still at its apex. “I started to take additional educational courses and received my CIPS (Certified In-ternational Property Specialist) designation,” she said. “To survive bad times, for me it was important to build interna-tional clientele. California is such a culturally diverse area, a true melting pot of different nationalities.”In recent years, Birkenfeld also earned Graduate Real Es-

tate Institute status and certification as a Seniors Real Es-tate Specialist. In 2008, Homestead became the first South Bay real estate business to achieve a “green certification” for taking prescribed steps to become environmentally re-sponsible. That too has helped. “The world is changing and people are becoming more aware,” Birkenfeld said. “When I learned that it was possible that you can get “green certi-fied” in a business, it just rang true to me that this wasn’t just going to be a passing fad. Plus, I came across a survey which was forwarded to me by a natural hazard study firm concluding that a high percentage of people would prefer

working with a green company, so to me it was a validation that I was on the right track.”Despite her good standing and additional specializations

that can create more diverse business avenues, Birkenfeld is a bit worried about the current recession. “It is worse this time around,” she admitted. “Before there was always a light at the end of the tunnel where you knew everything was cyclical and it’s the routine of the real estate market ups and downs. Now it doesn’t seem just isolated to our area and country. It’s worldwide. As for the local market, when you have a number of listings and advertise them, but they aren’t selling and there is no money coming in, that gets scary.”Still, she remains cautiously optimistic, even though list-

ings no longer “sell like hotcakes.” As she noted, there are still the affluent people who can afford to buy in the area and will continue to do so. The downturn is also creating new opportunity for some. “On a very positive note, I now find myself working with first-time buyers who never even had a chance to purchase anything before, since prices were so inflated,” Birkenfeld said. “I don’t mean Manhat-tan Beach, but the South Bay in general. There are quite a number of short sales and foreclosure properties available, but at least it gives more people a chance with the now lower interest rates and better loan programs to buy one of these homes.”Short sales are up 66 percent in the Los Angeles area over

this time last year as more people can afford to buy homes in the $200,000 to $400,000 range, Birkenfeld pointed out. “Before, nothing much in single family homes was avail-able under $500,000, so there are some positives to this mess,” she said. Still, she has seen some agents drop out of the business because they can’t pay their bills. “Those who have already been through the tough times once or twice before will probably keep going. I’m not planning to drop out of the real estate business and go into other things. Even when the market is slow, as long as I have clients calling me wanting to know what is available out there to buy, I know things will turn around again. It’s a really good time to buy since you’re buying lower, and getting more for your mon-ey. By now I think everyone knows this. Down the road, the market will come back.”In the meantime, Birkenfeld noted that the South Bay

housing market isn’t impacted as badly as some other ar-


Continued from page 9

“Before there was always a light at the end of the tunnel where you knew

everything was cyclical and it’s the routine of the real estate market ups and

downs. Now it doesn’t seem just isolated to our area and country. It’s worldwide.”

Sabine Birkenfeld, Homestead Realty



eas. “The South Bay appeal will always draw buyers and push the housing market upward again,” she said. “Good schools, beach area property and safe neighborhoods will keep the area going. People will always be attracted to the lifestyle our communities offer and that is the very reason why buyers feel their investments will be safer here.”

A Diamond in the RoughNow celebrating its 25th year in business, The Jewelry

Source is tucked away in the sometimes foot traffic-chal-lenged El Segundo downtown district. One would think that a retailer that specializes in luxury goods might be doomed in a slow economy. Yet owner Brenda Newman continues to thrive thanks to a conservative philosophy and a well-timed expansion into the repair side of the coin. “We have weathered the storm since opening in 1984,” she said. “And though jewelry is a luxury item, it is something that women will always need and buy. It is a gift of love and represents something very deep and emotional.”Newman didn’t start out as a retailer, however. She and

(now retired) partner Roanne Mahoney sold a line of beads to major department stores and small bou-tique shops up and down the California coast, working out of an 84-square foot hall-way around the block from the store’s even-tual Main Street loca-tion. Soon enough they began offering their own necklace designs to local patrons and the business caught on from there. The two had

barely gotten their feet wet when the recession of 1987 hit. Nonetheless that year, the business grew 400 percent, al-beit with minimal revenues to show for it. It managed to maintain 100 percent annual growth through 1992 before finally slowing down. Things improved again in 1998 and have basically stayed that way ever since.“We were practical,” she said about the store’s ability to

grow despite recessionary times. “Early on, we had only three employees (two owners and one craftsman), low overhead, low cost of doing business, and one customer at a time. We advertised consistently, but created our own

ads and did direct mailing to communicate with our exist-ing customer base, which still makes up 80 percent of our business. We never took loans out for inventory of any sort and paid for things as we went along. And we stayed posi-tive through any adversity. We may have been a little naive, but it has worked for us.” Newman’s first major investment was a $5,000 gemologi-

cal laboratory bought for cash. Four years ago, she auto-mated the business via computer, which allows her to more effectively reach her customer base by providing new ser-vices such as “wish lists.”Then in 2006, she added a state-of-the-art on-site repair

shop and laser welder—the first jeweler in the South Bay to do so. “This generates a service that isn’t just selling in the showcases,” said Newman. “In a recession, people might decide to repair jewelry they’ve set aside instead of buying something new. Having on-site repair has helped expand the business and provides a service we couldn’t have done otherwise.”While Newman admitted that the current recession has

“devastated lives” and that the worst may not be over yet, she is confident about a full recovery. She also firmly be-lieves that small town, mom and pop-inspired enclaves like Downtown El Segundo—which have suffered due to the advent of chain stores and Internet shopping—may find a revived audience. “I believe the cycle has come back—that the small uniqueness of a community is appealing to peo-ple,” she said. “At some point, people look for something more personal and start to go back to the community they live in and go back to the businesses they are comfortable with—as long as the product is good and the service is great. That’s where we come in.”In the meantime, Newman is also doing more direct ad-

vertising than ever, even though many business owners are cutting back in that area—and despite the fact she consid-ers herself conservative. “I’m a risk taker by being in busi-ness period, but the crunch is here now,” she said. “We’re talking up a storm with people to let them know what we have. It’s just one customer at a time. If they have a good experience, they will tell their friends and neighbors. It’s a very tough time, but we’re all going to make it.”

Pouring It OnWhile certain monthly expenses are more or less fixed,

there are other areas where consumers look to cut costs.


Brenda Newman

“I believe the cycle has come back—that the small uniqueness of a community is appealing to

people. At some point, people look for something more personal and start to go back to the

community they live in and go back to the businesses they are comfortable with—as long as

the product is good and the service is great. That’s where we come in.”

Brenda Newman, The Jewelry Source



P U B L I S H E R ’ S P E R S P E C T I V E

When it comes to economic downturns, some peo-ple believe what goes down must come up again. A scientist applying this logic to physics would

say they got it backwards. Any economist with a grasp on reality would have to agree. We can count on gravity to pull things down. But up requires a deliberate effort from some-where. This is as true with economics as it is with physics.Getting some more up in the economy is what these un-

precedented government interventions are all about. The problem is government and financial leaders are upping in a reckless and dangerous manner.The deliberate effort in this case is accomplished by ex-

panding debt disguised as targeted bailouts to stop the economic freefall experts knew was inevitable for a very long time. As it turns out, something incredibly complex is governed by a very simple bottom line: An economic system isn’t sustainable when downward pressures caused by mounting debt grow exponentially in relationship to upward momentum created by genuine economic growth. But central bankers with the complicity of our government would have you believe otherwise.Economic experts call this phenomenon “the business

cycle.” This is not a normal process within a sustainable economic system. It’s more like a cycle of seizures in a ter-minally ill patient. Experts espousing the status quo point to historical data that suggests no matter how bad a short-term economic trend gets, the long-term “cycle” continues to go up. And because we have been through many of these “cycles” over the decades, most people take it as a given that the long-term trend will always be that way. In fact, we have staked our destiny on this misguided notion and are just beginning to pay the price for our ignorance.The myth of the endless business cycle requires some

sleight-of-hand deception on the part of financial wizards for the illusion to appear real. And those of us fearful of losing what we have spent decades building are eager to believe these illusions because they make us feel safer. Yet illusions are what they are and reality has no conscience. The dark side of this deception must be confronted at some point.

And this alludes to what’s different about this economic downturn. There have been several in my lifetime. I’m not old enough to have experienced The Great Depression. But I do remember Carter administration malaise followed by convulsions in the eighties during the Reagan Revolution. Then the early nineties got so bad, many of us would prefer to forget the first five years of that decade. And just when things were looking good again, we were hit by dot com doldrums in 2000 followed by an astoundingly short reces-sion after 9/11. Short only because former Federal Reserve Chairman Alan Greenspan solved it by bottoming out lend-ing rates, thereby creating a magnificent money bubble. Looking back, I can’t help but notice the downturns tended to get worse and the booms that followed were usually more majestic than any before. This was especially so with the stock market, gold and real estate—all known indica-tors that money bubbles compounded by lopsided interna-tional trade were disguising the fact our currency was and continues to get dramatically weaker in real terms.What’s more, during this time central bankers have grown

increasingly interventionist in their efforts to control the economy, while Wall Street has become increasingly cre-ative in what it calls an “asset” worth selling to investors around the world. This is largely because no one wants to experience another Great Depression. And no Federal Reserve chairman, treasury secretary or

political leader wants to see a large scale economic catas-trophe happen on their watch. So as the problems become more insurmountable, the economic policy becomes more radical and increasingly desperate as the situation gets out of control. So now we have a downturn so dangerous, it has forced everyone to focus on the long-term effects of their actions. It has also forced domestic financial experts and political leaders to remove their blinders and learn about the global causes and effects that spurred, and continues to drive, this financial crisis. The end result is people calling themselves “conservative” proposing interventions in the economy as extreme as any Lenin or Trotsky might have proposed. I find that surreal to say the least.

Modern Economic Logic:

What Goes Down Must Come UpBy David Whitehead



The Global Chickens are Coming Home to RoostSince the mid-nineties, we have been indoctrinated to be-

lieve globalization will improve our lives. Just before the outsourcing revolution started in the early seventies, Alvin Toffler described this phenomenon in his classic futuristic book Future Shock as the transition to “super-industrialized man.” But few at the time questioned how a de-industri-alized society could call itself “super-industrialized.” And even fewer questioned how nations could protect their own wealth and avoid the enslavement of debt if they didn’t con-trol their vital domestic resources and produce their own essential goods. This is the conundrum now before us.Toffler’s book was released in 1970, not long before trade

deficits were made legal in the United States. Since then, a dollar with no bullion backing whatsoever has been vola-tile, consumer inflation has been somewhat steady with occasional dramatic spikes, and real estate has soared in comparison to salaries and consumer prices. Foreign in-vestment of various forms has driven the economy, and the ongoing trend has been for public and private sector debt to mount. We are leveraging our position as the world’s reserve currency to keep things going. But that requires global cooperation, which is waning fast.In mid-December 2008, on the heels of the Bank of Eng-

land lowering its key lending rate to two percent—some-thing it hasn’t done since the institution was established in 1694—the Federal Reserve lowered its own key lending rate to a range of 0.0 to 0.25 percent. Stock markets then dipped on the belief the central bank was running out of tricks to stimulate the economy. The market then rallied as 2008 transitioned into 2009. However, the Dow lost an as-tounding 34 percent of its value for the year, the third worst decline in its 112-year history and a fraction of a percent worse than 1930! Finally in the second week of January, the Bank of England broke its record again by lowering the rate another half percent to 1.5 percent.Domestic job losses went into freefall in December, with

540,000 people suddenly finding themselves out of work and unemployment spiking to 7.2 percent, the highest in 16 years. In contrast, unemployment was only 4.9 percent a year prior. In 2008 approximately 2.6 million people lost their jobs, the most since 1945.These statistics are mind boggling. Predicting this as re-

cently as a year ago would have been considered reaction-ary in mainstream circles. That’s why it is a good time to expand your information sources because for years, cred-ible experts have been preaching from the sidelines about these kinds of foreboding events.Perhaps this will be the final bubble of a 40-year debt cy-

cle that will bring this decade’s long cycle of cycles to an end. If there is a “recovery” in 2009 based on these extraor-dinary bailouts, which as of this writing seem to be having a somewhat positive effect on the stock market, many of us will breathe a sigh of relief. But another false recovery sim-ply puts off the inevitable. And if and when the last possible bubble bursts with devastating effect, then what?

W. Orders Up a New Economic Order for the WorldOutgoing President George W. Bush recently held an eco-

nomic summit of world financial leaders to begin what will undoubtedly be a long process to replace the Bretton Woods global economic order established at the close of World War II. This is the great financial order best represented by its institutions, including the International Monetary Fund and the World Bank. Its policies rebuilt Europe after the war. The Bretton Woods institutions have been at the fore-front of developing the globalized society melting down before us and have been governing international monetary policy for over 60 years. The Bretton Woods agreement was originally based on a U.S. dollar backed by bullion to serve as the world’s reserve currency. But the dollar was taken off the bullion standard in the early seventies, becoming a fiat currency with nothing tangible backing it. Not only did

The Myth of the Endless Business Cycle


The myth of the endless

business cycle requires

some sleight-of-hand

deception on the part of

financial wizards for the

illusion to appear real.



P U B L I S H E R ’ S P E R S P E C T I V E

this make it problematic to develop a prosperous domestic economy without incurring destructive loads of debt, it also freed the developing nations to lowball their currency valu-ations to maximize their export potential. This process is at the root cause of the false economy we have grown to rely on and is key to the illusion of wealth we were collectively conned into believing was real.On the heels of the gold standard’s eulogy, the long pro-

cess of de-industrializing and manufacturer outsourcing started and then grew steadily over the decades. With do-mestic industrial output declining at an alarming rate as the world’s nation states were obliged to hold and spend dol-lars, this highly manipulated economic environment drives the business cycles and instability we have seen over the decades. Although the term “globalization” was coined in the mid-

nineties, the modern version has roots as far back as the 18th Century British East India Company. The British Empire called these organizations government chartered compa-nies. They were more than just private sector businesses. These economic behemoths were literally authorized to govern the lands they cultivated on behalf of The Crown. In fact, Cecil Rhodes used this concept to raise standing armies to subdue southern Africa in the late 19th Century so the West could control the gold and diamond industries. The modern contracting system the Bush administration implemented to rebuild Iraq has sinister similarities to its imperial predecessors.The United States first got into the imperial game about the

same time Rhodes was conquering Africa, originally with the United Fruit Company in Latin America. This is the or-ganization that marketed the famous Chiquita Bananas. The United Fruit Company is often referred to as the first global conglomerate and had a reputation for acting as a govern-ment unto itself to the point of initiating coups in emerging

Latin American nations if it suited its purpose. In fact, this is where the term “Banana Republic” originated. This modern global process actually allows financial

powerhouses to collectively act as parallel governments in many situations, and marginalizes the influence of all sovereign nation states in this world. In other words, this is the process that some would argue actually rules our world through raw unadulterated economic power no political leader has the clout to challenge.On a global scale, the nations we once called “third world”

leveraged their devalued currencies and cheap labor to de-velop large scale industries to produce goods for what we still call “developed nations.” All of these nations, including the United States, the United Kingdom, France and Germa-ny, have de-industrialized to some degree. But none have done so to the extent of the United States. And no others could because by not being the issuer of the world’s reserve currency, their money supplies would implode if they tried. In fact, that’s exactly what happened to several Latin Ameri-can countries during the 1970s when they dove headfirst into radical “free trade” before the rest of the world became addicted to it. Conversely, if the United States could not rely on its status as the world’s reserve currency to keep foreign wealth at our disposal to back the dollar, we could not have dug in this deep in unsustainable debt. It is now crystal clear to say that we should not have—at least if it is our intent to defend our sovereignty as diligently as our national security. At this point, I am not at all certain most of my compatriots give much thought to the issue.Americans were easily aroused to fight global terrorism

because 9/11 made it clear to them why it is a threat. But de-industrialization and the possible internationalization of our currency, whether masked by the pegging of the North American currencies to each other or the issuance of an “Amero” style single currency for the continent, doesn’t sink in for most people as a substantial threat to the na-tion. Let’s face it—Spielberg will never fill theaters making a movie about that. But my question is this: How can a nation state call itself sovereign when it doesn’t control the manufacturing of its essential goods, and at this point some of its essential services, or even its own money supply? The fact is, it can’t. And if sovereignty isn’t important to a nation that calls itself the defender of freedom in the world, I don’t know what is.There are no straightforward answers to the problems I

have just laid out. But the global economy will never re-cover in a sustainable way unless people at all levels of government, industry, finance and most importantly, the media, begin asking the right questions. I hope I have pro-voked some from you.David Whitehead is the publisher of Business Insider Maga-

zine. He can be reached at [email protected]


. . . if the United States could not rely on its

status as the world’s reserve currency to keep

foreign wealth at our disposal to back the

dollar, we could not have dug in this deep

in unsustainable debt. It is now crystal clear

to say that we should not have—at least if

it is our intent to defend our sovereignty as

diligently as our national security.



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mortgage payments are going to be more than 100 percent more than your current rent, no matter how high your credit scores, no matter how big your down payment is, no mat-ter how much you have in cash reserves after the purchase, and no matter how big your income is, you will be declined because you don’t have a history of paying a big payment like a mortgage! They can draw lines anywhere they want and cherry pick all they want. At least there is good money out there available for higher loan amounts.The residential mortgage marketplace will continue to be

volatile, but within a range. I am recommending those in-terested in refinancing get all their documentation together, get approved and wait for a favorable day when mortgage bonds put on a big rally, causing rates to dip. Have a target rate determined with your mortgage professional so they are prepared to pull the trigger and lock at the opportune time. Don’t sit around waiting for some perceived bottom only to try and scramble when it comes. If you are not pre-pared, ready and waiting, rates will dip and spike back up and you will miss it.If you are trying to buy in the South Bay market, know

that we don’t have as many short sales and bank REOs as in some other areas. If you find one you like and it is well

priced in relation to the market, it will sell fast, in multiple offers, over full price and to the highest bidder with the largest down payment and the shortest escrow period--usu-ally with almost no contingencies. I have seen offers sub-mitted on both short sales and bank REOs where after two months of waiting, there hasn’t been a hint of an answer. Not an easy road… Sometimes you are better off trying to buy a home that has been on the market for a long time and has a large price reduction from extremely motivated sellers. Timing is everything. If you are buying up in price range in this market, it works well. You may be selling low, but you are buying low… and when prices rebound, your purchase will go up more in value than your sale property. If you are thinking about downsizing, sit down with your mortgage planning professional and see if makes sense to purchase now without selling. If your current residence was your primary residence the previous two years, you can rent it now and buy another primary residence. As long as you sell your previous residence within three years of converting it to a rental, it would still qualify for the capital gains tax exclusion for the sale of a primary residence of $250,000 tax-free for a single person or $500,000 tax-free for married couples. That way you could potentially sell into a higher market later for more money. While there are



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



The stock market is extremely volatile and our invest-ment portfolios have plummeted. So how can we keep our businesses running profitably and riding through

the recession without too much turmoil? Small business owners have to manage their companies much more ef-fectively than large corporations on Wall Street regardless of the economic climate. After all, small businesses are go-ing to pull our country out of the recession. Here are some points to help your business navigate through these difficult economic times.First, keep operating costs to a minimum. Success does

not hinge on a posh office and a giant payroll. Rent only the space you actually need and keep it functional. Also, re-tain only the bare minimum number of employees required for the average workload. In addition, find one or two individuals who can help you in a pinch if you have a short busy period but do not need to be on the payroll full-time. In my CPA of-fice, I have one full-time employee year-round, but also one or two others I can pay to come in during tax season to provide extra help. As for the other services, buy only exactly what you need and no more. You do not need to have the latest gadget or computer to do your job efficiently.Also, watch your receivables. If you

do not call or email your clients when they are late in paying you, they may get the idea that they do not have to pay. Do not keep working for clients who do not pay. The only exceptions are those with short-term financial difficulties who at least make the effort to pay when they can.Employees can be our most valuable asset and/or our

worst nightmare. Make sure that your employees remain a valuable asset by always being there in case they need help or encouragement. This economy can be as rough for them as it is for you and, in extreme cases, may cause them to rationalize dishonest behavior by thinking you do not pay them enough or that you are not standing behind them

when they need you. Always remember: internal controls, internal controls, internal controls…Most small business owners believe they see everything

and that they only hire honest employees. Internal controls are only another hindrance on getting the work done. In reality, no company is too small to merit some form of inter-nal controls. Here are a few internal controls that are simple and accomplish what the small business owner needs:

For every expenditure paid, there needs to be a re-ceipt or an invoice regardless of the method of pay-ment. If employees want reimbursement, they need to have a receipt. The page of their credit card state-ment reflecting the charge is fine if there is docu-

mented approval (e.g. your signa-ture). While you must keep the copy of that page of the employee’s credit card statement in your accounting records, black out the employee’s credit card account number (i.e. with a Sharpie).Employees should sign for receipt of all paychecks and that signature should be kept on file with your copy of their pay stub. If employ-ees misplace or damage their pay-checks, issue new ones only after verifying that the previous check has not cleared your bank. If they do not bring the original destroyed

paycheck back with them, issue a stop payment on the replacement check and deduct the bank stop payment fee from their bank.As the owner of the business, you should be the only person who can sign on the account or has ac-cess to the banking website to make payments. You should have sole authority over approving expenses before they are expended. Never allow your book-keeper to sign checks, go online and pay bills or ap-prove expenses. The bookkeeper is recording trans-actions that have already occurred and should not

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2)

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Managing Your BusinessDuring Difficult Times

By Angela L.H. Sayers, CPA, MBA

F I N A N C E & A C C O U N T I N G I N S I D E R



have the ability to consummate a transaction. Their only access to your banking information should be getting duplicate statements and questions to your bank about transactions that have already occurred. They should never have the ability to call the bank and consummate their transaction.As the owner of the business, you should look at the bank statement with the canceled checks before anyone else is allowed to open it. Make sure that everything on the statement is what you authorized, and that there are no extra transactions or washed checks. Also, make sure that all deposits actually are recorded on the statement. If not, you should find out why.If you have a business that uses a cash register, only one person should be allowed on the register at any one time. When that employee’s time on the register is over, the register needs to be properly closed out. When closing out the register, the register should be able to tell you what sales are broken out between the various credit cards and cash. You will then know how much cash should be in the register. The cash and checks in the register should be counted. If the register is short (has less than the amount of cash or checks it is supposed to), you need to find out why. If the register is more than a few dollars short, than the employee that was responsible needs to ex-plain why. If the register is malfunctioning, causing it to appear short, the employee must let you know as soon as possible and you need to have that fixed immediately.If you loan your credit card to your employee to pay for some expenses, that employee should come back with all receipts from the various charges (or at least a list of what was charged) and your credit card. All of these charges should have been approved by you and should match your credit card statement.If you absolutely have to give your employee(s) a credit card (i.e. their job may require significant travel for you), at the end of the month they should

4)

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be required to bring in all of the receipts for charg-es that you have hopefully approved, and match those receipts to the statement that you receive. If they used it for personal reasons, they should give you the receipt for that and make a payment from their own funds to pay the credit card for those expenses. However, that practice should be frowned upon and the exact required procedure should be documented in detail in your employee handbook. Proper employee screening with the help of an ex-perienced human resource professional is an im-perative step. Then have procedures and internal controls in place to keep them honest and hard working. You have to follow the same procedures and inter-nal control rules as your employees to show them the procedures are important. If you do not follow them, you have set a tone that these procedures/in-ternal controls are not very important.

These business tips are important regardless of the state of the economy. Keep in mind that small businesses such as yours—not large companies—are the ones creating new jobs to help the economy every day. If you properly apply the above principles along with offering your clients that great service they are accustomed to, your business can be one of those small profitable companies that cre-ate jobs. Angela L.H. Sayers, CPA, MBA, hs provided professional tax

and accounting advice for over 14 years. Her full-service ac-countance corporation offers a wide range of services that provide value and tax savings, whil being small enough to be flexiblew and responsive to clients’ needs. You may contact Angela at 310-541-1611 or by email at

[email protected].

8)

9)

Small business owners have to manage their companies much more

effectively than large corporations on Wall Street regardless of the

economic climate. After all, small businesses are going to pull our

country out of the recession.



C A L E N D A R O F B U S I N E S S E V E N T S

El Segundo Chamber of CommerceFor more information about the events listed, call 310-322-1220 or visit www.ElSegundoChamber.org.

El Segundo Chamber Installation DinnerThursday, February 5, 2009, 6 -8:30 p.m.Hacienda Hotel525 N. Sepulveda Blvd. El Segundo, CACall the chamber for more information.

Manhattan Beach Chamber of CommerceFor more information about the events listed,call 310-545-5313 or visitwww.ManhattanBeachChamber.net

Manhattan Beach Women in Business“A Night at GROW”Thursday, February 5, 2009, 6:30 – 8:00 pm. GROW The Produce Shop, 1830 N. Sepulveda Blvd., Manhattan Beach, CAFeaturing speaker Barry Fisher, includes food and bever-ages. $15 for Chamber members, $20 non-members.Register online at www.ManhattanBeachChamber.net.

Speed NetworkingThursday, February 12, 2009. 5:30 p.m.-7:30 p.m.Manhattan Country Club, 1330 Parkview Avenue, Manhat-tan Beach, CAIncludes appetizers, sodas and cash barMembers $20, non-members $30Register online at www.ManhattanBeachChamber.net.

Palos Verdes Peninsula Chamber of CommerceFor more information about the events listed, call 310-377-8111 or visitwww.PalosVerdesChamber.com.

Signature Event:Salute to Business/Installation DinnerThursday, February 12, 2009, 6:30-9:30 p.m.Trump National Golf CourseOne Ocean Trails Drive, Rancho Palos VErdesThe PVP Chamber of Commerce and Palos Verdes Sunset Rotary Club will honor outstanding businesses for their

achievements. Awards include:

Best Retail/Service Business: An Uncommon Journey, Palos Verdes EstatesBest Professional Business: Burkley & Brandlin LLP, TorranceBest Restaurant/Art/Entertainment: Frascati Ristorante, Rolling Hills EstatesBest New Business: Rancho Palos Verdes Flowers, Rancho Palos VerdesBest Non-Profit Organization: Peninsula Friends of the Library, Rolling Hills EstatesThe Matt Brunning Business in Excellence Award will be presented to Ralph and Risty Wood, owners of Ad-miral Risty Restaurant.

Tickets are $75 each and are expected to sell out early! “Premier” tables of 10 are $1,000 including preferred seating, complimentary full-page program ad and unlimited wine. Auction items and travel packages offered. Whether you attend or not, congratulatory messages/ads to the honorees can be purchased in the program.

Redondo Beach Chamber of Commerce and Visitors BureauFor more information about the events listed, call 310-376-6911 or visitwww.RedondoChamber.org

Redondo Beach State of the City AddressTuesday, February 17, 2009, 7:30 a.m.Crowne Plaza Hotel300 N. Harbor Dr., Redondo Beach $30 pre-register, $35 at door.

Redondo Beach Economic Summit“Surviving Challenging Times”Thursday, March 19, 2009, 7:45 a.m.-1:00 p.m.Redondo Beach Library (upstairs)303 N. Pacific Coast Hwy., Redondo Beach Come out to the Redondo Beach Economic Summit to learn more about our local economy, the challenges we face and how we can overcome those challenges. In addition to enjoying a keynote presentation by Steven Little, INC Magazine Business Growth Expert, attendees will hear great panel discussion on topics

Save The Date!



that include (1) how to get access to capital, (2) Los Angeles County economic challenges and (3) how businesses can, and should, tap into the Web 2.0 world.

Below is the agenda, which is subject to change:

7:45 - 8:15: Registration & Continen-tal Breakfast8:15 - 8:45: Mayor’s Welcome & City Presentation8:45 - 9:45: Panel of Business Re-source Experts9:45 - 10:00: Break10:00 - 11:30: Keynote Presentation by Steven Little, INC Magazine Busi-ness Growth Expert11:30 - Noon: Luncheon BreakNoon - 1:00: Keynote Presentation continues1:00: Adjournment$30.00 with advance registration$40.00 at the door. Registration in-cludes: Continental breakfast, lunch and a complimentary copy of Steven Little’s book, “The 7 Irrefutable Rules of Small Business Growth,” courtesy of Northrop Grumman.

Networking Events

Network CaféEnjoy a great lunch and learn about Chamber members and their busi-nesses while promoting your own. Each person will get to present a 30-second commercial in front of the whole group. Advanced reservations are required and will save you $5. Members with reservations are $20 and guests and members without a reservation are $25.

Thursday, February 12, 2009, 11:30 a.m.-1 p.m.Delzano’s By the Sea179 N. Harbor Dr., Redondo Beach

Thursday, March 12, 2009, 11:30

a.m. – 1 p.m.First Federal Bank Meeting Room2233 Artesia Blvd., Redondo Beach

Torrance Area Chamber of CommerceFor more information about the events listed, call 310-540-5858 or visitwww.TorranceChamber.com.

South Bay Regional EconomicOutlook AddressWednesday, February 25, 2009, 11:30 a.m.-1:30 p.m.Torrance Marriott3635 Fashion Way, TorranceJack Kyser, Chief Economist for the Los Angeles County Economic Development Corporation, will present the Torrance Area Chamber of Commerce Economic Outlook address to enlighten the South Bay business community on future finan-cial patterns. Kyser is responsible for interpreting, forecasting and analyz-ing major industry economic trends. The Los Angeles Business Journal calls Kyser “the guru of the Los Angeles economy.”Kyser is the founder of the Kyser Center for Economic Research for the LAEDC, a not for profit organi-zation focusing on the economic base of Los Angeles job retention and creation. His analytical research work and insightful knowledge of the regional economy help the LAEDC gain recognition as the source of economic information and projection in Southern California.Admission: $35 per person or $350 for a table for 10 people with reserva-tion.

no guarantees about real estate values being higher in three years, we have a much better chance of having higher prices in three years here in Southern California than in many other parts of the country.Because banks are teetering on the

brink, pricing is all over the place and lenders will swiftly move in and out of the market. Banks may offer com-petitive rates one month, but will then raise them if they get more business than they can handle. For that rea-son, it makes sense to work with a mortgage planner who has as many lending sources as possible. Dealing directly with one bank can really limit your choices. We have a six-month window, at least, for great mortgage rates. No one knows how low rates will go. No one knows how low real estate prices will go. I do know there is a big inflationary cycle coming at the end of this economic disaster. With the Federal Funds Rate near zero and the Fed throwing around hun-dreds of billions of dollars to try and fix the mess we are in, that spells I-N-F-L-A-T-I-O-N in a big way later. The Fed will have to raise short-term rates in the future like crazy to try and hold off a runaway freight train of inflation-ary pressure that will show up. That means a period of higher mortgage rates before things settle down again in a range. We need to position our-selves to take advantage of low rates now. When the time is right, mortgage rates will move higher in a blink com-pared to real estate values. If you are going to refinance, do it soon. If you are going to purchase, do it as soon as you find the right property. Wait-ing for the absolute bottom is not a good strategy. It begs the question, “If you think you can time the bot-tom of either the real estate market or mortgage rates, how well did you time getting out of the stock market?”





T A X T I M E I N S I D E R

As the stalemate surrounding its budget crisis deepens, the State of California is poised to run out of money to pay its bills in February, requiring taxpayers to be

issued IOUs instead of their highly anticipated income tax refunds. Try paying your own bills that way and see if you get a favorable response.I was caught off guard when I learned our governor with

the consent of the State Legislature can do this legally. It hardly seems fair and I think it should elicit outrage from all of us. However, California’s political establishment is keenly aware of this and I do realize it is holding its nose with the rest of us in a desperate attempt to address the cur-rent $15 billion budget shortfall. Only once since the Great Depres-

sion has the State resorted to sending IOUs instead of refunds to taxpayers. And as of this writing, it is not certain if this likely proposal will extend beyond the first round of refunds to be issued in February.ABC News reported on January 5 that

if the budget crisis prevents the State from making refund payments to tax-payers for an extended period of time, interest would clearly be owed, which could be as high as five percent. Given the bleak investment prospects with the current economy, that’s not necessarily a bad return, but it’s really the principle of the matter that makes this out-rageous, not to mention the fact that a wide range of State financial obligations will have to be addressed the same way. And let’s face it—interest paid by the State is really tax-

payer money in the end. It’s not so bad if it is simply coming back to us at a later time, but interest paid to people and agencies running operations on behalf of the State would amount to more debt and more government waste in a dif-

ferent form than we typically complain about. The differ-ence is, this is waste forged out of desperation that no one really wants.State Controller John Chiang told the Merced Sun-Star on

January 9 that many agencies, which include hospitals and clinics, may be getting IOUs instead of cash. Chiang has been telling media organizations the State

has already started to notify agencies of possible IOU pay-ments. The IOUs could start in Feb-ruary. This will include 1,700 elected officials plus their staffs, in addition to California residents who are due tax refunds.Apparently, only some programs can

legally be addressed with IOUs. Ob-ligations to us, the citizen taxpayers, are among them. The list also includes a wide range of student aid programs necessary to prepare the next genera-tion to run our government’s financial affairs more intelligently than the cur-rent crop of goofballs serving in our famously dysfunctional State Legis-lature. However, under California’s constitution, schools themselves and bondholders get first dibs on cash in the State coffers. I think a state initia-tive to include taxpayers on that list would be the “Proposition 13” of our

generation and would gain widespread support from angry taxpayers. But the sad truth is the public sector has run its finances so miserably for so long, we would bankrupt our vital public institutions if we actually tried that.If we just look at how the State’s $15 billion budget short-

fall affects tax refunds alone, last year 10 million taxpayers received back $8 billion. That figure alone for a single year is more than 50 percent of the current total budget shortfall. So I wouldn’t expect getting your refund paid back for some time. To make matters worse, the State’s budget deficit is

The Great Tax Shock of 2009:

Californians May Get IOUsInstead of Tax Refunds

An Overview and PerspectiveBy David Whitehead



expected to swell to $42 billion over the next 18 months.The last time the State did this wasn’t

so long ago. In 1992, in the wake of a serious recession, natural disasters and the L.A. Riots, California had to send out IOUs instead of refunds to taxpayers. But this time, the financial crisis is global with far more major fi-nancial institutions in serious trouble and public and private sector debt getting beyond the range of control.In addition to delays on paying tax

refunds and other obligations, Gov-ernor Arnold Schwarzenegger has or-dered State offices to close on the first and third Fridays of every month.“The State is going to run out of cash

in weeks if we don’t have a budget so-lution,” Aaron McLear, the Governor’s spokesman recently told the Wall Street Journal. “The Governor has a responsibility to save money wherev-er he can.” According to McLear, Cali-fornia will save more than $1.3 billion because of the furloughs. Schwarzenegger espouses dras-

tic steps to reduce the budget gap. These include shortening the school year by five days and raising the sales tax, in addition to taxes on oil extrac-tion and alcohol. The Governor is in the uncomfortable position of asking Republicans to accept $14 billion in tax increases and painful budget cuts throughout the State system.It’s truly a great irony for the char-

ismatic bodybuilder, turned actor, turned Conservative politician who came into office on the heels of a con-troversial recall election spurred by the “drunken sailor” spending spree conducted by his predecessor, former Governor Gray Davis.To the astonishment of fiscal con-

servatives everywhere, the budget crisis has become so intractable that the hugely controversial spike in the State’s car tax, the single issue most responsible for inciting the recall election in the first place, is back on the table for consideration. Surely this is not how the “Governator” would like his legacy to be remembered.

But thanks to years of fiscal misman-agement, there is nowhere left to go without imposing obnoxious, if not debilitating taxes on people and com-panies already feeling the stress from the economic downturn, or letting vi-tal services fall by the wayside.No one wants to see dramatic in-

creases in the state sales tax for in-

stance. That affects everything and everyone who buys anything. No one wants to see parks shut down or roads and bridges in a desperate state of re-pair continue to deteriorate.Labor unions are already fighting the

Governor’s furlough plan, and expect citizen groups of every kind to lobby




One thing that immediately comes to mind is eating out, particularly at the more upscale establishments. This hasn’t been a major challenge so far for Hermosa Beach’s venerable The Bottle Inn, an upscale Italian restau-rant with a four-star wine list and a 35th anniversary this year.Long-time general manager Silvio Pe-

toletti said prior recessions didn’t affect the restaurant much even though The Bottle Inn’s location on a side street just outside of Hermosa’s busy down-town area makes it more challenging to find new patrons. “We would have more of a captive audience if we were on Pacific Coast Highway,” Petoletti said. “Any restaurant that is more of a destination needs to do something to bring more people in and also to keep regulars coming back. We’re more of a destination and we’re Italian. In our business, figuring out how to get more people in is something we work on

24/7.”Working within customer economic

limitations was one solution that has worked wonders. About six years ago, The Bottle Inn began offering Sunday and Monday sunset dinners—a three-course meal for $12.95. “It wasn’t due to a recession, but to pack the place on Sunday and Monday,” said Petoletti of the decision to offer the deal. “Money talks and more people are coming in to eat on the special nights. But the regulars are coming in both on their normal nights and supplementing on the special nights. When we went to $12.95, we worried our check average would drop. Before that it was $25, but it has actually increased. People are now buying a bottle instead of a glass of wine. They’re buying a bottle that they wouldn’t normally buy.”The restaurant also recently added a

Wednesday night (“Midweek Crisis”) trattoria-style three-course meal for $19.95, and dropped corkage fees

during the month of January. And Peto-letti reported that sometime this year, 60 percent of The Bottle Inn’s wine list will become “reasonably priced,” as compared to 40 percent previously.While getting creative to entice more

diners, management must also look at the bottom line. “We do what all busi-nesses do—we look where we can cut costs and do what it takes to ensure we have good cash flow,” said Peto-letti, emphasizing that one area not being shaved back is advertising and promotion. “You can’t sacrifice what’s going to bring in business.”On the other hand, employee and

restaurant hours have been reduced some, as has inventory. “We’re buy-ing more often, but less… in order to minimize waste. In the wine cellar, we were on a three-year program to increase the wine we have, but it’s not fashionable for mom and pops to carry what hotels do. So we’ve been decreasing the wine list, though we’re keeping all the big favorites.” Despite a particularly slow Novem-

ber, The Bottle Inn rebounded nicely in December with more banquets and parties than usual. Petoletti wasn’t sure if the reason was due to a morale issue where more companies provid-ed events to cheer up their employees during a tough time, or if it was just simply “our turn this year.”Regardless of turn, The Bottle Inn

trudges on in part thanks to its con-sistency. “It’s a restaurant people can rely on,” said Petoletti, who noted that more than half of his clientele are regulars. “We have a bigger follow-ing simply due to attrition and partly because we’ve been here for so many years.”Though just being around long

enough helps, you still have to do things the right way. Petoletti has some advice for fledgling restaura-teurs, especially those hoping to make ends meet in a tight economy. “After seeing what has happened to several other restaurants I’ve been involved with, you need a really nice atmo-sphere and a personable and caring





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www.webster.edu/laafbstaff with good management,” he said. “After that, it comes down to a great chef, good menu and great food. It’s a simple recipe that has worked for us, along with being creative when we had to.”

Pooling ResourcesWhen he started his business in the

late ‘70s as a teenager, Enviroscape owner Mike Garcia envisioned him-self as a gardener for the then blue collar communities of Manhattan Beach and Hermosa Beach. Little did he know that the local landscape would change and these coastal towns would become, as he termed it, “the new Beverly Hills.” The business began to take off in the

mid-’80s with a strong real estate mar-ket that reached its pinnacle in 1989. “That year was the equivalent of 2005 in terms of housing,” Garcia recalled. “I was getting calls from real estate agents asking me if I had anything to sell since there was so much demand and little to no inventory.” By that point, the business expand-

ed beyond lawn service and mainte-nance to full-scale installations of nat-ural waterfalls, ponds, and high-end irrigation systems that have become Enviroscape’s hallmark.Fortunately for Garcia, he had built

up a decade of basic service clien-tele that would help him stay afloat between the down years of 1990-92. “In ’90, the Iron Curtain fell and the whole area relied on the defense in-dustry,” he said. “People in the thou-sands began to lose their jobs and property values dropped. A big black hole developed in real estate that bot-tomed out in 92.”The economy began to slowly re-

bound in the mid-’90s before sky-rocketing beginning in 2000. Other than the brief period after 9/11, Gar-cia and other contractors enjoyed a six-year run unparalleled at any time previously. Home values appreciated by double digits annually, new con-struction peaked, and life was good.




Continued from page 27“It was like a rocket ship to the stars,” Garcia said.That ship has landed for now. The struggles began in 2007

and the recent confirmation of the country’s recession ce-mented them. Garcia noticed a huge difference. “When news came out about the economic crisis, the phone stopped ringing,” he said. “I’m used to getting 30 calls a day from potential new clients. Now, it’s down to one or two.”Yet Garcia remains undaunted despite the fact that instal-

lation work has virtually stopped. Being established and having the security of existing clientele for a few decades helped. “Com-panies that have been around a long time seem to weather the storm since they have a huge amount of referrals, whether land-scape or real estate—and I have 30 years of backlog,” he said. “It’s true of every business. If you’re newer, it’s not a bad idea to see if

established companies are hiring and even be willing to work at a lower rate just to figure out how they do it.”While waiting out the latest slowdown, Garcia is adamant

about keeping a high profile. “Now is not the time to skimp on your advertising, especially when your competitors are pulling out of theirs—if anything, now is the time to in-crease your advertising,” he said. “I am absolutely com-mitted to weathering the storm. I don’t look at failure as an option. In the early 90s, I was a lot more involved in the service and maintenance aspect. As the 90s proceeded, there was more of a call for new construction landscaping, so I rode that wave and the business was heavier on the installation end. It was tempting to let the maintenance go because it’s not a lot of money, but I hung onto it as a safety net for the hard times. I’m glad I did.”Garcia is thankful that he can still service his existing cus-

tomers, though reality has set in that his business may have come full circle. “The installation part is over now,” he ad-mitted, adding that other builders have problems of their own. “Contractors are hoping to sell the projects they’ve been working on and live off the proceeds. After that, they’re just going to live off the savings for awhile.”Though servicing homes won’t make Garcia rich, they do

pay the rent. “The maintenance aspect is what keeps us going,” he said, noting that people still need existing pools maintained even if they aren’t building new ones right now.Garcia continues to contact his clients when he has ser-

vices to benefit them, but does so minus any hard sell tac-

tics. He views himself as a “problem-solver” rather than as a salesperson. “Very few people do this,” he said of his business niche. “Not many people build waterfalls or put in a specialized irrigation system that will save money and also help the environment. We’ve always promoted the en-vironmental aspect and built into our name. People have no problem spending money even in this economy if it can save them in the long run. Some people had ponds 10, 20 years ago with big, energy-guzzling pumps. I can save peo-ple $200 a month ($10,000 in four years) with an energy efficient system. Tell me people won’t want to do that. And it helps the environment. The system costs $1,600 versus a solar panel system that may take 12-15 years to make back your money. It’s gotta be how you can help your client and the environment. If you can help achieve what they want, you can get what you want…”

Accounting Their BlessingsIf any business professionals have a beat on what’s hap-

pening with the economy, it may be certified public ac-countants. More than anyone, they hear about and see first-hand evidence of the financial nuts and bolts of how the recession has truly impacted businesses. Fortunately for some CPAs, the recession might just represent a boon for them personally.As an example, Torrance-

based accounting firm Brigante, Cameron, Wat-ters & Strong, LLP is do-ing more consulting than ever these days, thanks to client concerns about the economy. John J. Camer-on, a long-time managing partner for the firm, said he has to do his share of “hand-holding” to help businesspeople navigate through a treacherous pe-riod. “They’ll call about their stock portfolio—not that we’re security advi-sors, but they ask if they should cash out today,” he said. “With this recession, there is more fear and caution than before. It’s certainly played up in the media to every extent it can be and it’s touching everybody—not just one industry. Before it was savings and loans or aerospace.”While benefiting somewhat from the recession as more

clients turn to it for advice with increasing frequency, BCWS has always kept a tight ship when it comes to its own budgeting process. Other than quality of labor, which Cameron said the partners will never sacrifice, the firm has cut back considerably in equipment resources and quantity

John J. Cameron

Mike Garcia



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with safety and liquidity in mind.

of personnel. “We’re using technol-ogy where it should be used and have less people because of that,” he said. “We can do more with the people we have than we did 10 years ago. We went paperless in 2001, so that streamlines our process, and we can do everything electronically. We’ve also trained business clients to submit electronically through Excel. We car-ry a computer to see our clients—not paper.”About a year ago, the firm also im-

plemented a program on a computer site to eliminate most of its servers in favor of virtual servers that are easier to maintain and save energy. It’s part of today’s trend to go green while also being a money saver. The same phi-losophy is extended to clients. “We look at what they’re doing and how they’re doing it so we can help them save money as well,” Cameron said. “Businesses need to be cautious and look at labor and costs—getting the best deal from suppliers. You have to look strategically and long-range. You don’t want to create a bigger problem than when you started. At the same time, you have to protect your people as much as you can. Good people are hard to come by, whether it’s good times or bad times.” Despite the importance of keeping

those good people, Cameron said he has noticed some layoffs among his client base—a diverse list that in-cludes businesses from manufactur-ing, service, and distribution, among other industries. Yet there are ways to

get creative when one wants to cut costs without losing personnel. “A large service company client is doing rolling layoffs of one group at a time in order to keep employees but reduce payroll,” said Cameron. Cameron believes it could take six

months to a year before the economy begins to get back on track. In the meantime, the firm plans to continue

its role as a confidant as the recession continues. “We’ve always had a phi-losophy that along with compliance work, we have to offer consulting and communicate with our clients on an ongoing basis. Just talking to them and reassuring them is something they find comforting.”Brian Simon is a freelance writer who

lives in El Segundo.



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about eight days and probably spent the equivalent of three days work get-ting it completed. Frankly, someone who knows what he is doing could have done it in a day or less. Was it worth the effort? Well, I was spending about $30 a month for hosting services

that included two actual websites and three domains, plus a lot of limitations on expansion without spending more. The new plan is $6.99 a month and I can create unlimited domains myself online. I had been paying about $70 per domain for a two-year registra-tion, and now all three are less than

$8 each per year. Another ongoing productivity dividend is the fact my new provider gives excellent tech sup-port over the phone. My old provider was usually terrible and often kept me on hold for extended periods. I think for the long haul, it was the right thing to do. I also learned enough about the domain registration process to be truly self sufficient as a part-time web-master. So as a business owner, there was an educational dividend realized as well. But the key was planning and setting up contingencies for the unexpected to avoid downtime. That was the difference between a week of anticipated troubleshooting and the avoidable disaster of losing Web pres-ence for a week or longer.David Whitehead is the publisher of Busi-

ness Insider Magazine. He can be reached at [email protected].


hard for their own interests while damning the big picture view.The governing institutions of the

world’s eighth largest economy are in dire straits, but our state is not termi-nally ill by a long shot. In many ways, we’re doing better than other parts of the country hit harder by the sub-prime mortgage meltdown.California will ride through this and

remember, we have been through tough times in the past. Our one weak-ness is that with most of the popula-tion in the southern half of the state, we low-key So Cal types often don’t

pay attention to our dysfunctional government in Sacramento. This has led bad political policy to go by un-checked for far too long. The only way for us to fix this mess is to get a grasp of the intractable issues, identify the painful compromises we are going to have to make to keep our state run-ning as we have grown to accept it, and not let intransigence deepen the crisis any more than it already has.David Whitehead is the publisher of Busi-

ness Insider Magazine. He can be reached at: [email protected].


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business insider magazine - mag - vol 4, issue 2 - first issue 2009

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