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Online Edition

Tap Your 401k to Buy a Franchise

JANUARY 2009 I ISSUE 478

BusinessOpportunitiesJournal

SpecializinginBusinessOpportunities,FranchisingandRealEstateInvestments
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SINCE1969 | CELEBRATINGOUR40thYEAR

9 Trends
to Watch
in 09
Big winners of past lost in 08
....
Resale stores flourish
....
Some businesses thrive when
the economy dives
....
plus+
09 Bleak for Venture Capital
....
Boom times for the repo Man
....
Masters in renewable energy
Refitting green vehicles
....

44

Fair Trade wine


....

Foreclosure websites
....

Home prices dive in California

BusinessOpportunitiesJournal
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(ISSN 0193-3221)

Business Opportunities Journal

contents

ISSUE 478 / JANUARY 2009

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12

17

29

features

business opportunities real estate investing

9 Trends to Watch in 09 P.4

Some Ore. businesses thrive when the


economy dives P.14

Big winners of the past were losers P.9

franchises
Resale Store Franchise Thrives P.11
Franchise Applicants Increasingly Turn
Toward Financing from 401ks P.12

Foreclosure Web sites offer listings P.25

Venture capitalists to invest less in 09 P.16 Homebuilder sentiment index remains at


record low P.26
Ohio schools offering masters in renewable energy P.17
Firm: California home prices dive 38 perEconomic crunch means big business for cent P.27
SA repo man P.18
Housing resales plummet on Oahu P.28
Backyard mechanics refit vehicles wit batUrban areas struggle to find grocers, fresh
teries P.20
food P.28
Fair trade wine now available in US P.21
Cloud computing looms larger on corpo- New home developments stop in their
tracts P.30
rate horizon P.22

Business Opportunities Journal

feature

back to basics . . .
Business Opportunities Journal

Heres a quick look at some of the trends on the rise in 2009. 2008 saw
tough economic conditions, corporate layoffs, financial scandal and
investment fraud of epic proportions, stock market gyrations and declines, fuel price spikes and housing market troubles. But the country
is, we believe, at its heart entrepreneurial and full of personal industriousness. We predict a return to basics in investing, with an emphasis
on sound fundamentals, a surge in self employment, and a turn away
from luxury and extravagance in general. Entrepreneurs will build new
businesses, bringing fresh hope and opportunity in the new year.

9 trends to watch in 09
5

Business Opportunities Journal

trends
looking ahead

to watch...

2
Hip to be Frugal

Recession resistant biz

Less exciting but more durable businesses will be in, while trendy
get-rich-quick concepts will be out. Entrepreneurs will look
toward historical examples of steady businesses for guidance as
they rebuild after the economic troubles of 2009. Nursing, nonelective health care, security guards and police, automotive repair,
some education related work, repossession and collection agency
work, bankruptcy attorneys and foreclosure services, accounts
receivables factoring and related businesses, pawn shops, resale
shops (see article p. 11), tax preparation work, candy stores, funeral
services and others, depending on whom you ask, have been bantied about as recession-resistant. But only time will tell!

Business Opportunities Journal

Luxury items and status will fade as consumers and


businesses focus more on simple pleasures and
basic values. Appearances in general will be less on
everyones mind as the economic downturn runs
its course. Ostentatious consumption will take a
backseat to respect for living within ones means.

Return to value: at home & work

With less importance placed on appearances and


status symbols, consumers will be turned off by
excessive marketing campaigns and hype. Big
spending on slick advertising or Super Bowl parties
will not be accepted from corporations laying off
workers. Companies will in turn focus on their core
value propositions. Successful businesses will emphasize delivering great value in providing goods
and services.

Green collar jobs on the rise

Gas prices may have dropped dramatically from their summer highs,
but the trend towards greater sensitivity to the environment is
here to stay. For many years to come, people will think twice before
purchasing large SUVs. In purchasing everything from light bulbs
to houses, vacations to pets, consumers will factor the net effect on
the environment in their choices. This will likely spell opportunity for
some savvy entrepreneurs.

Online Buying

The news is full of articles about brick-andmortar stores suffering during the fourth-quarter
shopping season. However, some reports
suggest many online retailers are having strong
sales results. With greater sensitivity to the environmental impact of driving, economic driven
price sensitivity, and the growing convenience
and security features offered by many online
stores, the trend towards e-commerce may be
hastening.

Real Estate Basics

Gone are the days of buying properties on the


speculative assumption prices will continue to rise
untied to underlying fundamentals such as the
prevailing rental rates in an area. Real estate investors will return to the basics, with a look towards
long-term gradual capital gains and steady rental
income.

Business Opportunities Journal

35
7

9
Simple pleasures like pets & fitness
Pet and fitness related franchises and business
opportunities will deserve a second look as consumers look away from luxury and extravagance, and
focus on timeless sources of comfort like mans best
friend or feeling fit.

Self reliance & independence


There might be an upsurge in self reliance in many
forms: self employment (in lieu of lay-off filled
corporate culture), self-managed stock investing (in
contrast to relying on money managers), striving for
debt-free living (in contrast to being dependent on
creditors), and looking to ones family and friends
for happiness (as opposed to mainstream definitions of success). After all, so many of the troubles
in 08 were related to big institutions letting many
HEADLINE
stakeholders down, from the big mortgage banks
Ipsum dolor sit amet consectetaur adipisicing elit,
and financial institutions, to the massive corposed do eusmod temper undid. Ut eplorin vidi temrate layoffs and Madoff scandal. For many, the old
per undid. Ut enim ad minim maganger aditemper
expression if you dont take care of yourself, no one
undid. Ut enim ad minim magange quis, vadi el
else will will take on more meaning now than ever.
plorum in

FEAT:: CLIMB

SomeTake-Aways from08
1. The political landscape has changed. Entreprenuers will be watching closely to see what
the new administration means for the true economic heart of America: the small business.
2. Debt is out. For much of the decade, taking out loans and accessing easy and inexpensive
credit was not only socially acceptable, it was almost expected. The country had a lesson in
Finance 101 in 08, witnessing the damaging effects of debt over-indulgence in the housing
market, the financial markets, and even at the national level as the country continues to brace
for fallout from its heavy indebtedness.
3. Dont believe the hype. Investors may think twice before taking investment claims at face
value after watching the $50 billion Madoff investment scam.
4. Big institutions fail. Watching major investment houses and banks tank, accompanied with
layoffs, creditor and stockholder losses, will give everyone a dose of skeptisicm. What other
institutions might be at risk? Insurance firms, municipalities . . . ?

8
Alternative financing for purchases

A confluence of forces will make tapping ones


401k for the purchase of a franchise more frequent
than ever. With layoffs putting more experienced
business
peopleON
out lokoing for fresh opportunities,
DEP::
HOLD
plus an unstable stock market that seems less and
Ipsum dolor sit amet consectetaur adipisicing elit,
less like a smart place to park ones savings, using
sed do eusmod temper undid. Ut eplorin
ones 401(k) and other savings accounts to purchase
a franchise will likely gain favor. New rules might
hasten the trend (see article p. 12).

Business Opportunities Journal

5. Real estate cycles have not disappeared. Just as investors in the dot-com bubble burst of
2001 learned the hard way that economic cycles had not disappeared in the financial markets, real estate investors in 2008 saw that massive run-ups in value do have their end, and
the end is painful.
6. Car culture is not immortal after all. Who would have thought that the popularity of SUVs,
so strong just a few years ago, would have so abrubtly halted in 08. Of course, Julys spike in
fuel costs has subsided. But consumers will probably remember it for years to come.
7. Fossil fuels have their drawbacks. The fuel price spike was a big takeaway in and of itself.
Something as ubiquitous as the gas station suddenly took on a more antiquated look as virtually everyone had second thoughts about oil as the primary fuel for transportation.
8. Traditional sources of media are under pressure. 2008 was a terrible year for newspapers.
Many, like the Chicago-based Tribune Co., filed for bankruptcy or placed real estate up for
sale. The print news media is clearly undergoing rapid transformation away from its current
economic model. The new model is still unclear.

Big winners of the past were losers in 2008


2008 ends, you may feel like the years
biggest loser is you.

ists union flexed its muscle during an


eight-week strike.

If you have a job, it probably feels shaky.


If you have a 401(k), you cant bear to
open the statements. If you bought a
house in the last five years, you feel like a
sucker (unless you were the winning bidder at a foreclosure auction).

Some winners and losers dont bear explanation -- renters win, owners lose;
retirees with old-fashioned pensions win
-- for the time being -- while those with
401(k) plans lose. Florida, California and
Nevada lose on home price depreciation,
Michigan and Ohio lose on jobs, and
nearly every state seems likely to lose tax
revenue.

Its cold comfort to know that the financial crash upended everyone -- calloused
Maine lobstermen, french-manicured San
Diego real estate brokers, Rolex-wearing
Greenwich hedge fund managers.
High diesel prices as the year began ran
independent truckers off the road. Soaring
summer commodity costs choked businesses from bakeries to airlines. Frozen
credit markets left small business owners
dialing their moms for loans.
Many of the biggest winners of the past
lost their shirts in 2008.
The kings of Wall Street watched as their
banks either disappeared through mergers or bankruptcy or received injections
of tax dollars to stay alive. The congressmen who once hung on Alan Greenspans
every indecipherable utterance turned
hostile, as the once-revered oracle was
reassessed, and found to be an oaf. Investors who had trusted Bernard Madoff with
$50 billion saw the money manager who
had given them steady returns for decades
admit it was all a Ponzi scheme.
The financial hurricane made the winners
stand out even more.
Hedge fund manager John Paulson made
billions by betting against the housing
boom. Economist Nouriel Roubini and
money manager Peter Schiff, whod been
laughed off as economic Cassandras,
were proven right as their dire predictions
came true, again and again. Despite conventional wisdom that the labor movement is near death, Boeing Co.s machin-

The years many losers and scant winners


are below, listed by group:
LOSERS: Gamblers
Rich men who made big bets used to be
lionized. Not this year.
One billionaire beset by debt was Sumner Redstone, who held a fire sale, selling $233 million of his CBS Corp. and
Viacom Inc. stock as he struggled to restructure $1.6 billion in debt. He also sold
his majority stake in Midway Games Inc.,
which makes ``Mortal Kombat video
games, for $100,000 -- less than one-onehundredth of a penny per share.
Sheldon Adelson, billionaire majority
owner of the Las Vegas Sands Corp., also
got himself in trouble with debt. The companys expansion into overheated Macau
failed to pay off and gambling revenue
dropped in the recession, forcing he and
his wife to come up with $475 million of
their own money to pay down some of
the companys $9.21 billion in long-term
debt. Shareholders are still waiting for a
rescue: The companys shares have lost
about 95 percent of their value this year.
Some bets were personal. Aubrey McClendon, CEO of Chesapeake Energy
Corp. was forced in October to sell almost
95 percent of his holdings -- representing
more than a 5 percent stake in the natural gas giant -- to meet a personal margin call. His fire sale of more than $570
9

million
By ELLEN SIMON
worth
AP Business Writer
of stock
pressed
share prices lower.
LOSERS: Private equity kings
Private equity champ Edward Lampert
looked smart when he bought Kmart out
of bankruptcy, then began selling off its
real estate. Wall Street anticipated another success when he scooped up Sears. It
hasnt turned out that way. While Lampert is great at selling off a companys
pieces, hes less great at the fundamentals of retail: selling more lawnmowers,
bath towels and sweaters. Sears Holdings
Corp. lost $146 million in the most recent
quarter, the stock is down about 60 percent for the year and the company is still
searching for a chief executive, nearly a
year after its last CEO resigned.
Likewise, real estate mogul Sam Zell
burdened Tribune Co. with $13 billion
in debt when he bought the company last
year, leading it to file for bankruptcy in
December. While he blamed the economy, employees and observers blamed
him.
``We knew he was going to take this business under, said Philip Gregory, a lawyer for a Los Angeles Times auto critic
and five former newsroom employees
who sued Tribune in September over
Zells takeover. ``Of course hes blaming
the market, but its really the $13 billion
in debt that he brought into the business.
LOSERS: Pollyannas
Jerry Yang, Yahoo Inc.s chief executive,
kept waiting for Microsoft Corp. to offer
a better price than $47.5 billion for Yahoo. It never happened. Instead, Yahoos
stock sagged near five-year lows, making
his refusal look less like an effort to get
the best price for shareholders and more
like excessive optimism. Yang said in No Business Opportunities Journal

SPECIAL SECTION
vember that hed step down and Yahoo,
in December, overhauled its severance
plan in a move that would save a buyer
somewhere between $462 million and
$2.1 billion.

After they drove to Washington for a repeat visit, the Senate quashed a bailout,
but the Bush administration approved a
$17.4 billion rescue loan.

Former Texas Sen. Phil Gramm, also a


vice chairman of Swiss Bank UBS, made
headlines -- and enemies -- in July, when
he said the U.S. was in ``a mental recession.

``Allowing the auto companies to collapse is not a responsible course of action, Bush said.

``We may have a recession; we havent


had one yet, said Gramm, who was, at
the time, an economic adviser to presidential candidate John McCain. ``We
have sort of become a nation of whiners.

As markets plummeted, the dourest economic observers gained respect.

LOSERS: U.S. automakers


The CEOs of the Detroit Three went to
Washington to beg for billions in bailout
money. But it wasnt on their hands and
knees.
As new car sales cratered, the group flew
private jets to D.C. in November to ask
for billions in bailout money. Worse, they
came without a plan.

Business Opportunities Journal

WINNERS: Cassandras

Nouriel Roubini, a New York University


economics professor, said in 2006 that the
worst recession in four decades was on its
way. He predicted that mortgage defaults
would spread, investment banks would no
longer exist in their current form and Fannie Mae and Freddie Mac would tumble.
Peter Schiff, president of Euro Pacific
Capital, has been saying for years that
the economy was built on too much consumption and not enough saving. ``The
disease is all this debt-financed consumption, he said on a 2006 CNBC appear-

10

ance. ``The cure is that we stop consuming and start saving and producing again.
Thats a recession. Sometimes, medicine
tastes bad, but you gotta swallow it.
Dean Baker, an economist the Center for
Economic Policy and Research, has been
tracking the housing bubble since 2002,
when he published a paper titled, ``The
run-up in home prices: Is it real or is it
another bubble? His answer: Bubble.
Lately, he has been arguing that the best
way to stabilize home prices is to bring
them lower and the best way to rescue homeowners who cant keep up with their
mortgages is to keep them in their homes
-- as renters. Again, few seem to be listening, despite his record.
-----Associated Press writers Michael Liedtke,
Mark Williams and Ryan Nakashima
contributed to this report.

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Franchises M
Resale Store Franchise Thrives in Downturn
In contrast to dismal retail clothing sales figures, Kid to Kid, a childrens resale franchise, has been posting strong sales gains going into
the year end shopping period. In September, the franchise posted an
average sales gain of 15 percent.

I decided to open my store because I wanted to break away from


the headaches of the corporate world, Gylling said. Opening a
business was risky, but having a business that continues to grow in
value to our customers has made it a sound investment.

Septembers growth is not isolated. In August, the National Association of Resale and Thrift Stores (NARTS) issued a statement saying
that two-thirds of its members had seen big increases in year-to-date
sales. In 2008 third quarter comparable store sales, Kid to Kids used
product sales increased 14 percent in July, 15 percent in August, and
17 percent in September.

Gas and food prices go up and down but our prices are consistently
low throughout the yearand that is why I believe resale businesses,
like Kid to Kid, are constantly growing, Gylling said.

New shoppers are learning what our customers have known all
alongthat resale businesses, like Kid to Kid, are a great way to find
quality merchandise for kids at a price that wont break the bank,
said Donna Gylling, owner of The Woodlands Kid to Kid location.
Its a win-win option no matter what the economy is doing.

Kid to Kid opened its first store in Sandy, Utah, in 1992. It currently
has more than 75 stores in 21 States and in Portugal.

NARTS called resale retailers a recession proof investment because


their growth and profitability do not appear to be tied to the market.

On the Net:
http://www.kidtokid.com/franchise.php

The Woodlands store opened in February 2005. Another store in


Spring, Texas will be opening soon.

11

Business Opportunities Journal

finance your franhcise

Honest-1 Auto Cares Applicants


Use Retirement Funds as a Financing Alternative

Franchise Applicants Increasingly


Turn Toward
Financing
from 401ks
With new small business financing difficult to
obtain, many franchise applicants are utilizing
a financing program that draws on retirement
accounts, like 401(k)s and IRAs, to launch their
business.
At Honest-1 Auto Care, an auto repair and
maintenance franchise chain, about 20 percent
of franchise locations, including the newest two
locations in Pennsylvania and Utah, have successfully used this type of financing. Commonly
referred to as the Retirement to Franchise Transfer
plan, individuals can use their retirement funds
to purchase stock in their new franchise business
without triggering early distribution taxes or
penalties. Since funds are being transferred from
one investment to another, franchise owners are
able to use the money for all small business needs,
ranging from purchasing the franchise, paying for
start-up expenses, expanding the business and
covering franchise fees and employee salaries.
As the franchise grows, so does the value of the
owners retirement savings.
For Ransom Towsley, a franchise owner in Bridgeville, Pa., the retirement financing plan granted
him a financial opportunity that he may not
otherwise have had. As a businessman for more
than 15 years, Towsley wanted to join Honest-1s

Business Opportunities Journal

12

successful business model without taking out a


traditional small business loan.
There are a lot of people like myself, baby boomers with a 401K, looking to invest in something
other than the stock market, Towsley said. Now
as my business grows, so does the value of my
retirement savings. When I sell my franchise
at retirement, the proceeds will go tax-free into
my 401(k). Today, I would much rather invest in
myself than in the stock market.
Franchise applicants are finding it increasingly
difficult to secure funding for their new business,
a factor in the growing popularity of retirement
transfer plans. According to the Small Business
Administration, the number of 7(a) loans the
most frequently accessed loan type fell 30 percent in the fiscal year that ended Sept. 30.Honest1s corporate headquarters recommends several
financial firms, which provide individuals with
all of the information needed for a smooth transaction.
With 19 locations across the nation, Honest-1 is
rapidly expanding with plans to double its number

of stores in a year. Honest-1 Auto Care is the only national fullservice auto repair and maintenance franchise chain that is 100
percent ESA Certified eco-friendly.

that you can invest in a business and at the same time lower your
overhead during startup. They are not having to tap into home
equity or secure a bank loan.

Two firms Honest-1 works with that assist franchise applicants


with this process are Guidant Financial Group and
Benetrends. Guidant Financial Group reportedly
completes about 200 of these transactions a month.

On the Net:

www.honest-1.com

The process starts with the establishment of a new


C-corporation for the new franchise. The C-corporation in turn creates a new retirement plan. Firms
such as Guidant Financial Group or Benetrends
assist by developing the required documents, including the basic plan documents and enrollment
forms, as well required federal filings.
Funds from an existing retirement plan are rolled
over into the new C-corporations new retirement
plan. The retirement plan then acquires stock of
the C-corporation. The transfer company will see
that appropriate procedures are followed and stock
certificates are issued.
The ability to tap into retirement funds, is a concept
that has been used as a resource for small business
finance for years, said Tim McCarthy, vice president of franchise development at Honest-1. A lot
of potential small business buyers are now learning

Honest-1 Auto Care is rapidly growing, aided not only by its ESA Certified eco-friendly services and inviting
lobby , but by some of its franchisees innovative use of 401(k) funds as an alternative source of financing.

Papa Johns Surpasses $1 Million in Mobile Web Orders


Papa Johns International, Inc.
(NASDAQ: PZZA), recently
announced that it has surpassed
$1 million in sales by mobile
Web since launching the technology in July.
The milestone is the latest in a
rapid rise in alternative ordering channels and sales for the
chain, which earlier this year
eclipsed $1 billion in overall
online sales. The chain has
embraced a number of new
technologies, even recently
rolling out a Facebook page that
captured more than 175,000
fans in less than a week. In addition, the brand is offering a new
iPhone application to its suite
of digital widgets, launched in
December.
Papa Johns recognizes that
people are using their handheld
devices to make everything

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they can more convenient, and


that includes viewing an entire
menu before ordering their
pizza, said Nigel Travis, Papa
Johns, president and CEO.
The trend now is to leave the
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Almost everything can be done
right from your phone.

High quality limo operators, we invite you


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Papa Johns online sales have


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Today, more than 20% of all
Papa Johns sales come online
or through text, widget, or smart
mobile device, and the company believes sales via alternative
access channels could one day
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Tel: 800-538-5466
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13

Business Opportunities Journal

BUSINESS OPPORTUNITIES

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& Ent
Some Ore. businesses thrive when the economy dives

By JOE MOSLEY
The (Eugene) Register-Guard

EUGENE, Ore. (AP) -- Take a timber baron, a mega-landlord and


a purveyor of fine chocolates. Blend in some widespread financial
woe. And there you have it -- a recipe for turning economic lemons
into entrepreneurial lemonade.

a bankrupt sawmill and launched the company that would become


Roseburg Forest Products.
``It was just hard work and total commitment, says Fords son,
Allyn, who is now the companys president and CEO. ``Through
his determination and stubbornness, he was able to get through
that period.

The Ford family of Roseburg did it in the Great Depression, laying the foundation for Roseburg Forest Products -- now one of the
largest privately owned wood products companies in the nation.

Kenneth Ford was still in his 20s when he laid the groundwork for
the long-term stability of his emerging wood products company in
the 1930s. Using the sawmills revenue and his own good credit,
he began buying repossessed and otherwise distressed timberland
in Douglas County -- about 160,000 acres by the mid-1940s.

Chuck Shepard of Coburg found opportunity in the deep recession


of the early 1980s, accumulating many of the 1,700 rental units
now owned by his company, Umbrella Properties.
Bob Bury launched his business experiment on a shoestring budget
during that same recession and found his road to success paved
with chocolate. His Euphoria Chocolate Co. now sells its trademark
truffles and dozens of other products at four Eugene locations.

Roseburg Forest Products continued piling up its cache of timberland, making its last significant acquisition two years before
Kenneth Fords death in 1997.

``It was really low risk, Bury says of his companys modest start.
``We bought our first 500 pounds of chocolate, and that seemed
like a risk. But I guess we could have eaten it.

It now owns an estimated 800,000 acres in Oregon and Northern


California and ranks as Oregons fifth-largest private company.
``It wasnt what youd call a stroke of lightning event, Allyn Ford
says. ``It was a lot of hard, hard work and perseverance.

``Its nice to have assets you can eat.


Billionaire investor Warren Buffett offers perhaps the most famous
tactic for negotiating both the highs and lows of economic cycles.
His advice is to ``be fearful when others are greedy and to be
greedy only when others are fearful.

The connection may seem tenuous between timber in the Great


Depression and chocolate during the deep recession of the 1980s,
but the two stories share some underlying principles.
Bob Bury was working at Wagon Works, an automotive repair
shop on West 13th Avenue, when the companys owners decided
to branch out with a restaurant in the building next door.

With the current recession deepening and becoming more widespread, other business strategists across the country have weighed
in on how to survive -- or even thrive.

Their Cafe Central -- in the spot now occupied by Cafe Soriah


-- became immediately popular among Eugenes young professionals, and it also gave Bury and his wife, Sue Subbot, access to

Kenneth Ford could have been reading from that playbook when,
in 1936, he bought a few pieces of equipment and machinery from
Business Opportunities Journal

14

a kitchen for their own experimental business.

``Going into the recession (in the 1980s), I saw it coming, and I put
more of my assets in a liquid position, he says. ``My success is
that I was patient; I watched what was going on, and even though
I saw a good deal, I didnt jump on it.

They launched Euphoria Chocolate Co. in 1981, just as the Northwests deepest recession on record was settling in.
``We didnt know any better, Bury says. ``It was really kind of
a crime of opportunity.

``Part of it, too, is I had faith that the market was going to come
back.

Euphoria and Cafe Central both benefited from a shift into highend cuisine that began in the San Francisco Bay area and was
sweeping the West Coast.

Shepard says he saw the current recession coming a few years ago,
but this time he chose not to sell because his business priorities
have changed.

But Bury says he learned a lesson during that recession, and it has
held true during each period of economic decline since then: A
chocolate truffle is an ``inexpensive luxury that consumers feel
they deserve and can afford.

Rather than building inventory, his primary concern is to maintain


Umbrellas current stock of housing and the jobs that his businesses generate.

``(Euphoria) actually took off pretty fast, he says. ``I was willing
to sell a few hundred truffles the first month, and we sold 4,000.
It was really the right time, the right place.

So Shepard has decreased leveraging on his properties to acquire


other properties, and in general is trying to minimize debt.

Not that Burys company does its best business in a recession


-- it doesnt.

``Try to maintain liquidity, be careful and stay on top of your business, he says. ``We are trying to be real careful with watching our
cash flow in and out, so we dont get ourselves into a short-term
problem that could develop into a bigger, long-term problem.

But with an appealing product and good business practices, hes


learned to ride out the low points of a cyclical economy.
``Weve been through two or three pretty tough recessions, and
one of the things weve done thats stood us well over the years
is weve never gotten too overextended, he says. ``Weve taken
risks, but theyve been calculated risks.

Shepard says he has been a ``pretty picky buyer the last couple
years, although Umbrella did add 300 apartment units and 600
storage units a year ago and is in the process of buying another
100 housing units.

``My advice is to find some way to get through it -- lean out your
business. And when you do (get through the recession) and come
out the other side, youre going to make some money because
your competition is going to be gone. Make sure youre going to
get through it, because it pays off in the end.

In the last big recession, real estate hit its low in about 1984.
Shepard says he believes the current market is a couple years from
a comparable turning point.
But he says the economy already has had a significant impact on
prices, affecting both buyers and sellers.

Chuck Shepard would add that a little bit of foresight can also
improve your chances of success in tough times.

``I think for single home buyers, there are good deals to be had,
he says. ``For somebody trying to sell their home in Eugene, if they
cant give up the idea of getting what it was once worth, theyre
just being foolish.

Shepard first began buying rental units in 1975, but sold all he
had accumulated -- four apartment complexes and a few other
properties -- in 1979.
Real estate prices had been soaring, and he expected a correction.

Shepard says his own limited buying over the past year or so has
been driven only partially by price, with market position and other
factors also weighing in.

That began a couple years later, and by the time Shepard began
reinvesting -- primarily in duplexes -- prices had dropped by about
40 percent.

``There havent been great deals, but there have been good deals
that have worked well for us, he says.

``I wouldnt say I was successful during the 80s, but my success
came from the decisions I made during the 80s, says Shepard,
who now owns Hoodoo Mountain Resort and its campground
management arm in addition to Umbrella Properties.
15

Business Opportunities Journal

BUSINESS OPPORTUNITIES

Survey: Venture capitalists to invest less in 2009

By MICHAEL LIEDTKE
AP Technology Writer

SAN FRANCISCO (AP) -- Venture capitalists are bracing for their toughest year
since the dot-com bust as they try to survive
the bursting of an even bigger investment
bubble.

on the survey of 400 venture capitalists


polled in the United States from Nov. 12
through Dec. 12 by the National Venture
Capital Association, the industrys main
trade group.

tors, media, entertainment and telecommunications will likely have a particularly


hard time raising money next year. The vast
majority of venture capitalists said investments in those niches will fall next year.

The bleak outlook that emerged in a survey


released in December isnt a surprise, given
the economic havoc wrought by a credit crisis that began with a reckless home lending
spree on the heels of the last U.S. recession
in 2001-2002.

Fifty-six percent of the VCs predicted the


economy would worsen next year while
another 25 percent expect the dreary conditions to remain the same. Only 19 percent
forecast better times by the end of 2009.

Venture capitalists themselves expect to


have a hard time raising money, with 96
percent of the survey respondents predicting their investment partners will be reluctant to contribute to funds next year. Some
pension funds and college endowments
may even try to sell their existing venture
capital stakes to adhere to asset-allocation
requirements dictating how much exposure
they can have in higher risk investments.

That last downturn was triggered, in part,


by venture capitalists ill-advised investments in unprofitable Internet companies,
a splurge that also reeled in stock market
investors before eventually collapsing. The
fallout saddled venture capitalists with huge
losses, prompting them to decrease their
investments in 2002 and 2003.
This time around, venture capitalists are
caught up in an even larger mess that had
far less to do with their investment choices.
``Todays issues are systemic, with broader,
deeper reach and a longer duration, said
Roger Novak, a general partner with Novak Biddle Venture Partners in Bethesda,
Maryland.
To cope, most venture capitalists are planning to curtail their investments in startups
while remaining on the lookout for possible
bargains.

The tough atmosphere will depress investments, according to 92 percent of the


surveyed venture capitalists. Those findings
echo another poll of venture capitalists
released this month by KPMG LLP.
Venture capital investments have been on
the upswing since 2003, although there
could be a slight dip when this years final
numbers are added up.
Extending recent trends, 48 percent of venture capitalists expect money to continue to
pour into ``clean technology -- alternative
energy and other projects aimed at causing
less pollution. Twenty-five percent of the
polled venture capitalists believe biotechnology investments will rise next year.
``There is no recession on innovation and
great ideas will get funded, said Mark
Heeson, president of the National Venture
Capital Association.
But entrepreneurs involved in semiconduc-

If the recession worsens, companies that


already have gotten funding from venture
capitalists might be under pressure to sell
at a discount if they arent already making
money on their own.
And there should be opportunistic buyers
lining up, reasoned Rory ODriscoll, managing partner for Scale Venture Partners in
Foster City, California.
``Unlike 2001, these are companies with
viable and efficient business models that
are cheap -- not because they are broken but
because the world is broken, ODriscoll
said. ``Once the world heals, they will
bounce back strongly.
But a rebound isnt likely next year, based
Business Opportunities Journal

16

The stock markets turbulence is expected


to close another important financial avenue
for venture capitalists. To realize a return
on their investments, venture capitalists
typically groom their portfolio companies
for initial public offerings of stock.
Just one venture-backed company, Rackspace Hosting Inc., has gone public in the
past nine months. Nearly three-fourths of
the polled venture capitalists expect the IPO
drought to extend through 2009.
Venture capitalists like Venky Ganesan of
Globespan Capital are betting the economy
will be on the mend in 2010. ``We will need
to take strong medicine now and if we do, I
am very optimistic for the future, he said.

Ohio schools offering masters in renewable energy

By JAMES HANNAH
Associated Press Writer

DAYTON, Ohio (AP) -- Several Ohio universities are offering


the states first masters degree program in renewable energy in an
effort to address the need for clean and economical energy sources
and create new business opportunities.

became interested in renewable energy when she worked for a company in Germany, helping the firm with solar and wind projects.
Then last summer, she worked for a Chicago company that audits
commercial buildings and shows companies how to save energy.

``I dont think the energy problem is going to go away any time
soon, said University of Dayton
student Fiona Martin, 22, who
is among the first students to be
accepted into the new program
beginning next month. ``This
isnt something we can ignore
anymore.

``Its nice to be able to kind of contribute, to be able to have an impact on the environment and
to help people save money,
especially in times like this
when money is very tight,
she said. ``Renewable energies are great, but they are
still not as efficient as they
could be. The technology is
coming. But the opportunity
right now is really to reduce
energy consumption where
we are using it excessively.

Degrees will be awarded by the


University of Dayton and Wright
State University, with classes
also held at Central State and
the Air Force Institute of Technology at Wright-Patterson Air
Force Base. Classes will focus
on developing energy-reducing
design techniques and better
forms of solar energy, fuel cells
and biofuels.

As part of the masters program, Martin will direct


students to do similar energy
audits of low-income housing, churches and buildings
owned by community organizations.

The program builds upon interest


among college students in wind
power, solar power and other
renewable energy technologies.

After getting her degree, she


plans to go back to work
with the Chicago company.
After that, she might go into
business doing energy audits
of homes and maybe teach at
the university level.

Hocking College in southeastern


Ohio began offering an associate
degree in alternative fuel technologies in 2003 -- offering one
program that focuses on wind,
solar and other technologies
and another program focusing
on hybrid vehicles and batteries.

Paul Talley, 55, of Huber


Heights, intends to apply for
the program at Wright State.
Talley is a manufacturing
engineer for auto supplier
Delphi Corp., but the plant
where he is working is closing at the end of the year.

``We literally started this campus


in a cornfield, said Jerrold Hutton, dean of advanced energy
and transportation technology at the Hocking College Energy
Institute in Logan.

Talley believes finding cheaper energy is necessary to revitalize


U.S. manufacturing and that graduates of the program will be in
demand.

The first class had three students. This fall there were 41 first-year
students, and Hutton expects twice as many next fall.

``Alternative energy -- if were going to survive, its absolutely


inevitable, he said. Martin also believes there will be a healthy

Martin, a mechanical-engineering major from Chesterton, Ind.,


17

Business Opportunities Journal

BUSINESS OPPORTUNITIES

Economic crunch means big business for SA repo man

By ROBERT CROWE
San Antonio Express-News

SAN ANTONIO (AP) -- The court order


that Greg Castro sees before he repossesses
a car does not explain why a person lost
the vehicle.
This San Antonio repo man doesnt necessarily want to know. But Castro often finds
out after a shocked car or truck owner runs
outside as hes loading the defaulted vehicle
onto a wrecker with the lighting speed of
a pit crew boss.
``Eighty percent of them are people whose
life got the better hand of them, and they
just cant pay their bills, Castro said as he
prepared to repossess a Honda SUV from
an upscale neighborhood near Stone Oak.

continue to lay off employees next year, the


automobile industry and banks are taking
steps to curb repossessions, as they ultimately cost businesses more while simultaneously hurting consumers, experts said.
San Antonios economy is in better condition than other parts of the country -- local
unemployment was 4.9 percent for the
quarter that ended in September, while the
national rate was 6.1 percent -- but some local repo men say car seizures are increasing.
``Id say weve seen a 10 (percent) to 15
percent increase, said Gary Amezcua,
owner of San Antonio Recovery Inc.

In previous economic cycles, seizures increased, in part, because of subprime loans


to people with poor credit and unstable
employment.
``We saw people with two or three repos
on their records that could get a car with a
big down payment, said Michael Waldron,
owner of Prime Time Adjusters Inc., which
employs Castro.
As subprime credit dried up, underwriting
practices changed in recent years to make
it harder to lend to people who could not
truly afford vehicles.
``There really arent subprime lenders extending credit to people with credit issues
now, Waldron said.
Banks now are further limiting auto loans to
people by insisting on higher credit scores
and bigger down payments, Webb said, and
so repossessions could drop off. And banks
are trying to work with borrowers, experts
said, because lenders lose money when
they seize and auction vehicles to used car
dealerships.
``If youve got a $20,000 balance on a car
thats worth only $10,000, youre taking a
serious loss by repossessing it, Amezcua
said.

In this battered economy -- with unemployment at a 14-year high, a rate that threatens
to climb even higher -- car repossessions
are on the rise.
``Job loss is the No. 1 reason for repossession, said Tom Webb, chief economist for
Atlanta-based Manheim, an auto auctioneer
of repossessed vehicles.
While economists predict companies will
Business Opportunities Journal

Nationally, more than 1.5 million cars were


repossessed last year, up 10 percent from
2006, Webb said. There has been another
10 percent increase to date this year. Such a
change isnt unusual, but the rise is significant because many of the cars repossessed
recently involved ``good loans to people
with high credit scores, Webb said.
``The economic times just caught up with
people, Webb said.
18

In many cases, the banks will renegotiate


loans after vehicles have been repossessed.
Once a car has been repossessed, car buyers
have 10 days to pay off the past due balance
or work out a deal with the bank.
Three years ago, 10 percent of people with
repossessed vehicles would get their cars
back from Prime Time Adjusters. Now,
Waldron said, 65 percent of repossessed
vehicles are being redeemed.
``The banks would rather them redeem
them on good faith than take an average
loss of $8,500 to $10,000 at auction, said
Waldron, a 20-year veteran of San Anto-

nios repo business.


Many repossession companies include the
word ``adjuster in their names because it
refers to service of adjusting a loan, which
was the practice banks preferred before
repossession became popular in the 1980s,
experts said.
The debt-strapped people who walk into
the office of Rick Flume, a San Antonio
bankruptcy lawyer, often are expecting a
car to be repossessed at any moment.
``You need your car to keep your job so
you can pay your bills, he said. ``Filing
(Chapter 13) bankruptcy may be the only
way to avoid a repossession.
In some situations, filing bankruptcy is
the only way to stop repossession while
renegotiating a loan with lower payments,
Flume said.
Waldrons company works with the countrys biggest auto lenders. In previous years,

he would receive court orders to seize a


vehicle after a buyer had fallen behind two
months on a loan.
``Now were seeing cars that are four
months behind, he said.
One major reason for repossession is that
people dont keep in contact with lenders.
Flume said car buyers have a better chance
at renegotiating a loan if they show good
faith to the lender.
In the weakening economy, Waldron has
repossessed everything from airplanes to
speedboats and the entire pickup fleet of a
small business.
``This is the worst Ive seen it in 20 years
of doing business, he said.
Waldron worries the people he encounters
in the field -- often in the early morning
hours -- will only become more hostile.
Its not uncommon for repo men to be
confronted with guns and baseball bats.

19

While seizing a Cadillac in 1996, Waldron


was shot by the car owners neighbor. The
shooter was convicted in the incident and
remains jailed.
In Texas, a state that gives property owners,
and even their neighbors, much latitude
in using deadly force to protect property,
repo men have the law on their side. The
Uniform Commercial Code permits repossession so long as it ``is peaceful.
Waldron and his employee Castro say
theyre often called the most vile and filthy
things, but they try to keep the peace by
explaining to car owners that theyre just
doing a job. He says the daily surprises
and threats he encounters keep the job
interesting.
``Things get pretty freaky, said Castro,
who has had guns drawn on him. ``I like
the thrill of the hunt. I do want to go home
at the end of the night, but then I do like
the chase.

Business Opportunities Journal

BUSINESS OPPORTUNITIES

Backyard mechanics refit vehicles with batteries


By CURTIS KRUEGER
St. Petersburg Times

ST. PETERSBURG, Fla. (AP) -- Cornelius


Cronin bought a $900 Chevy S-10 pickup
and spent several weeks removing things
he didnt like mainly its dirty, gas-guzzling
engine. He fitted an electric motor and batteries under the hood, and now purrs around
Oldsmar in a red truck that uses no gas
and emits no air pollution. A documentary
film asked: Who killed the electric car?
Maybe a better question is: Who built the
electric car?
At a time when the federal government is
investing in hydrogen fuel cell research,
and big automakers are working on more
sophisticated hybrids, a growing number
of creative tinkerers and small businesses
around the Tampa Bay area are taking a
different tack.
Theyre fashioning their own electric cars,
one battery at a time, without waiting for
Detroit or Japan to catch up.
Some of their friends say its crazy to pour
their dreams and sweat into cars that go
only 25 to 50 miles before they need to be
plugged in for several hours to recharge.
But Cronin, 47, says he loves saving money
on gas and helping to preserve the environment. ``Its so simple, its so clean, he said.
Hes proud of what he put together with
his own hands. ``Im looking forward to
building another one.
Car buyers seem increasingly willing to try
new technologies like the hybrid Toyota
Prius. But hybrids rely on gasoline, even
though they use electric power as well.

So he bought two 1965


Volkswagen Beetles for
$2,000 each and spent
some time poking inside
them and taking measurements. After the engines came out, he and
his colleagues custombuilt a special mount
and installed an electric
motor and batteries. The
entire process, from
design to driving, took
about three months.
Now Bourgeois drives
an all-electric Beetle
to work each day and
said he doesnt mind
that it needs recharging
every 25 or 30 miles or
so. Thats less than his
daily commute. He also
doesnt mind the cost of
recharging his batteries:
He figures hes paying
about 2.5 cents per mile,
or 75 cents per recharge.
He also has started selling the conversion kits
through a new company, RebirthAuto. The
$7,000 kits include the motor mount which
they designed, and soon will include a specially designed controller that regulates the
electric power.

Some people are looking beyond the gasoline era.

Parts like these are scarce, which might


explain why there are so few homemade
electric cars. ``This business has sort of
been stuck in its infancy for years, said
Jeffrey Jenkins. Hes a partner in a business
with Bourgeois to develop and sell electric
conversion components.

Like Sebastien Bourgeois. As president


of a St. Petersburg manufacturer of solar
pool heaters, Techno-Solis, he had access
to a full machine shop and some clever colleagues, and an itch to try something new.

The U.S. Census Bureau estimated that


about 56,000 electric cars were on the road
in 2004 -- less than one-tenth of 1 percent
of total U.S. cars, not counting hybrid
vehicles.

Business Opportunities Journal

20

RebirthAuto says it has sold 10 of the


$7,000 conversion kits. To Bourgeois,
electric cars make so much sense that he
said he wonders why they arent common.
``It blows me away, Bourgeois said.
``Why dont we have more cars that are
electrified?
Electric cars date to the late 1800s, and
once were more common than gasolinepowered cars.
To the average driver, they are still an
oddity, but some believe that will change.
Surely, gas prices will go up again. And
advocates say electric cars cause far less air
pollution, even when powered by electricity
from coal-fired plants.

So besides the hobbyists converting old


cars in their garages, some big manufacturers are rolling out electric vehicles as well.
But some sound like works in progress.
Theres a ``neighborhood electric vehicle
on the market called the Zenn (zero emissions, no noise), but its top speed is only 25
mph. It is sold at the Transportation Station
in Clearwater.
Theres a high-performance electric sports
car called the Tesla, which can be yours for
$109,000. Chevrolet is preparing to roll out
an electric car called the Volt, but its not
available yet.
A Tarpon Springs shop, Black Bay Tech-

nologies, hopes creative designs will set


it apart.
Company president George Keramas
proudly points to an elegant black, threewheeled chopper with a distinctive look: no
motorcycle engine mounted on its frame.
This is the ``electric trike, powered by
an electric motor and batteries that sit in a
cube-shaped case between the rear wheels.
``The main thing is the look, Keramas
said. ``Weve tried to come out with something thats very sleek looking.

He also is trying to develop a sports car


and an off-road stealth vehicle for the military. After all, electric motors run quietly,
and its hard to sneak up on anyone in a
gasoline-powered Humvee,
None is your average car.
But Keramas has three reasons he hopes
his vehicles will sell: ``People are looking for ways to save money, help save the
environment and reduce our dependence
on foreign oil.

The electric trikes retail for $19,900, and


Keramas said a dealer bought the first two.

Fair trade wine now available in US stores

By MICHELLE LOCKE
Associated Press Writer

OAKLAND, Calif. (AP) -- Coffee, tea or ... fair trade wine?

represents tremendous hope and pride.

TransFair USA, the Oakland-based group that has certified everything from coffee and tea to bananas and flowers as being ethically
produced, now is putting its seal on wines from Chile, Argentina
and South Africa.

The fair trade movement has been established in Europe for decades -- fair trade wines have been available there for five years
-- but is gaining momentum in the United States.
Last year, sales of fair trade products, passed $1 billion for the
first time, according to TransFair and the Fairtrade Labelling
Organization.

The wines -- which are available nationwide this month at grocers


and liquor stores nationwide, including Whole Foods Market and
Sams Club -- are a first for U.S. consumers.

A Fair Trade Certified product means TransFair has determined


that farmers got fair prices, workers got decent wages and the
product was produced in an environmentally responsible manner.

``Youre getting award-winning wine that has just fantastic quality


that also has an incredibly uplifting effect on the lives of literally
thousands of farmers and farm workers, says Paul Rice, president and CEO of TransFair USA. ``Its a great product that also

Importers and retailers pay a premium -- the wine premium is 10


cents per bottle -- that is earmarked for community improvement,
such as a new water system or educational scholarships.
Charles Redfield, senior vice president of fresh food for Sams
Club, says fair trade products offer high quality and are popular
with customers. Company buyers, meanwhile, see the benefits of
the system firsthand.
``Once you go out and experience it as an individual, it changes
your whole lens of sustainability.

21

Business Opportunities Journal

BUSINESS OPPORTUNITIES

Cloud computing looms larger on corporate horizon

By MICHAEL LIEDTKE
AP Technology Writer

plications package so far, isnt ready to abandon Microsoft entirely.


Its still licensing Microsoft programs like Word for writing documents and Excel for creating spreadsheets.

SAN FRANCISCO (AP) -- Todd Pierce recently put his job on


the line.
To meet the computing needs of 16,300 employees and contractors at Genentech Inc., Pierce took a chance and decided not to
rely entirely on business software from Microsoft, IBM or another
long-established supplier that would have let Genentech own the
technology. Instead, Pierce decided to rent these indispensable
products from Google Inc.

Typically, companies own their own software, which requires


installing programs on disparate computers followed by years of
expensive upkeep to keep the technology humming. In contrast,
cloud computing lets companies have someone else run their software remotely for a monthly or annual fee, with users accessing
the programs over live Internet connections.

The Internet search and advertising leader will run Genentechs


e-mail, as well as some word processing, spreadsheet and calendar applications, and it will do it over an online connection -- an
unconventional approach called ``cloud computing.

The idea has won over small business owners, government agencies and schools, and now larger companies are taking a closer
look, particularly as they look for ways to save money during a
brutal recession.

The decision has turned Genentech, a biotechnology pioneer,


into a lab rat for Google and other alternative software services
trying to convince skeptical corporate decision makers that cloud
computing is more than a pie-in-the-sky concept.

``Almost everyone already runs a lot of their personal life on the Internet and there is no doubt that the future of business applications
will be there too, said Zachary Nelson, head of cloud computing
specialist NetSuite Inc. ``Its just a matter of when companies are
ready to make the move.

In the process, Google Inc. hopes to bleed revenue from Microsoft


Corp. and surpass its biggest rival in the race to control the gears
of computing.
Genentechs chief executive, Arthur Levinson, sits on Googles
board of directors, but Pierce insists those ties didnt propel his
leap of faith.

Former Oracle executive Marc Benioff planted the seeds for the
cloud computing movement nearly a decade ago when he brazenly
declared ``the end of software and started Salesforce.com Inc. to
sell subscriptions for a customer management program accessed
over the Internet.

After lengthy internal testing, Pierce became convinced that


Google can trusted to provide critical software programs for
Genentech as adeptly as it deciphers Internet search requests to
sell ads.

Benioffs San Francisco-based company is now the largest cloud


computing service for businesses, with a market value of $4 billion, about 52,000 customers and revenue totaling $1 billion in its
past four fiscal quarters.

``You dont want to get caught clinging to the past, said Pierce,
Genentechs chief information officer. ``I feel like we are surfing
in front of the wave instead of the back of it.

But Salesforces income of $37 million during that time translates


into a measly $3.70 profit on every $100 in sales. That looks anemic
alongside Oracles net margin of about $24.80 for every $100 in
sales in the comparable period.

Cloud computing has already swelled into an estimated $36 billion market this year, representing roughly 13 percent of global
software sales. The big question now is whether it can turn into
a technology tsunami that sweeps Microsoft and other software
industry staples into obsolescence.

And San Mateo-based NetSuite still hasnt eked out its first quarterly profit after a decade in business, despite steady growth that
boosted its revenue during the past four quarters to $143 million.
The slim profit margins reflect the expenses cloud computing providers must absorb to build big data centers and hire the engineers
to run their software applications, while they charge relatively
modest fees to use their service. Whats more, they dont require
their customers to pay additional money for product updates and
maintenance -- a gold mine for traditional software makers.

Yet for all the potential and hype surrounding cloud computing,
breaking old habits wont be easy -- particularly with businesssoftware powerhouses Microsoft, IBM Corp., Oracle Corp. and
SAP AG all maneuvering to protect their existing, lucrative software franchises while also setting up their own online services to
compete with the industry upstarts.

Amazon.com Inc. is among the other prominent backers of cloud


computing. The Seattle-based retailer runs a Web services arm that

Even Genentech, the biggest U.S. company to buy Googles ap Business Opportunities Journal

22

Nelson insists Ellison hasnt lost faith in NetSuite. ``We can be as


profitable as a traditional software company, Nelson said. ``We
are still in a growth cycle.

leases data storage space and computing power to businesses much


like a utility dispenses electricity, as needed, to its customers. The
initiative has attracted hundreds of thousands of business users
during the past two years, but analysts say it has been a financial
flop so far. Amazon.com doesnt break out the units results.
Google doesnt disclose the results of its business applications
division, but its relatively small, too. The Mountain View-based
companys non-advertising operations generated combined revenue of just $540 million during the past four quarters, while
Googles advertising sales totaled $20 billion.
After studying cloud computing trends, Sanford Bernstein analyst Jeffrey Lindsay predicted Googles applications will rake in
revenue of about $1.5 billion by 2012, a small share next to the
estimated $18 billion for Microsofts desktop office software.
Oracle CEO Larry Ellison doubts cloud computing will ever produce big enough profits to finance the hefty investments required to
develop products sophisticated enough to satisfy major companies.

Microsoft is angling to protect its position as the worlds largest


software maker by planning what it calls a new operating system
for cloud computing, called ``Azure, that is supposed to make it
easier to toggle between programs stored on a hard drive and on
the Web. Microsoft has also said it will launch Web-based versions of its Office programs, including Word and Excel, but has
not yet set a date.

Ellison has gone so far as to draw derisive comparisons between


cloud computing and Webvan, an online grocery delivery service
that was supposed to spell the demise of traditional supermarkets,
only to go bankrupt in 2001.

Dave Girouard, who heads Googles cloud computing services for


businesses, believes Microsofts expansion will only bring more
credibility to the concept and help his company sign up more
paying customers.

``Its ludicrous (to think) that cloud computing is taking over the
world, Ellison said during Oracles annual shareholders meeting
in October.

Although it refuses to provide a specific breakdown, Google acknowledges most of the roughly 1 million businesses, government
agencies and schools using its office applications rely on a free
version. For nearly two years now, Google has been peddling a

The dismissive remarks were striking given that Ellison was an


early investor in Salesforce and even sat on the companys board
before getting into a rift with Benioff. Whats more, Ellison is the
majority owner of NetSuite, with a 53 percent stake in the company.

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Business Opportunities Journal

BUSINESS OPPORTUNITIES
more sophisticated package that costs $50 annually per employee
account.

having the choice between the competing programs offered by


Google and Microsoft. In the first several weeks of using Googles
software, she found its word processing and calendar programs
helpful for jointly working on projects with more than 50 people
spread across her division.

The economics appealed to Genentech. Based on the number


of Genentech employees granted Google software accounts, the
South San Francisco-based company is paying at least $800,000
per year for the online package.

Collaborating on team projects is easier on Googles applications


because employees can edit their work from any computer with an
Internet connection and then store their work so it can be reviewed
and possibly expanded upon by another worker somewhere else.
In contrast, employees jointly working on Microsofts traditional
office programs must send revisions back and forth.

Buying and maintaining a similar software package from Microsoft, Oracle or IBM would have cost considerably more, though
Genentech declined to say how much it saved by subscribing to
Googles office package. Whatever the figure, the savings for Genentech wont stop there. Pierce figures the company eventually
would have had to invest $70 million to $80 million to build a data
center, full of computer servers, to run its software and might have
had to hire more engineers and technical specialists.

But Nielsen still feels more comfortable using Microsofts Excel


program when she needs a spreadsheet application, partly because
she prefers its features.
``We are just starting to be enlightened about the Google applications, Nielsen said. ``I dont see them as a replacement for
Microsoft. I see them more as a companion.

``Thats a huge amount of cost that wont generate $1 in sales for


my company, Pierce reasons.
Barbara Nielsen, a management associate at Genentech, likes

sk AP: I am a real-estate agent and


I have a client who recently had an
incorrect, negative entry removed
from a credit report. They checked their
score again, and it had gone DOWN by 50
points, even though nothing changed on the
report other than the error being removed.
This meant my client no longer qualified
for a particular mortgage.
Is anyone responsible for regulating credit
scores?
Carol Skees
Albuquerque, N.M.
-----Three national credit bureaus -- Equifax,
Experian and TransUnion -- generate credit
reports, which are used to determine credit
scores, also called FICO scores.
The Fair Credit Reporting Act requires the
three bureaus to give you a free copy of
your report once every 12 months. Youre
also entitled to a free report if your score
resulted in a company taking negative ac Business Opportunities Journal

tion against you, such as denying you a


job or a loan.
If you notify a credit bureau of an error,
FCRA requires the credit bureau to investigate it, usually within 30 days. The
company that provided the information in
dispute must also investigate.
If the company confirms there was an error,
its required to notify all three credit bureaus. Once your credit report is corrected,
the impact on your score should be immediate, according to John Ulzheimer, president
of consumer education for Credit.com.
You can also request that the credit bureau
send a corrected report to prospective
lenders.
If you cant get a negative item removed
from your report, you have the right to attach a brief statement (100 words or less)
to your credit file. But Ulzheimer cautions
that the note might be irrelevant since most
lenders only look at your score.
Errors in credit reports are common and
can happen for any number of reasons,
including mistaken identity, out-of-date
24

information or mere typos. So its important to check your report regularly -- and
especially before you apply for a new loan.
Your clients score might have gone down
if the item in error was an account in good
standing, such as a credit card with a high
limit. Her score might also have dropped
for reasons unrelated to the error that was
corrected.
In very rare occurrences, the removal of an
error might lower a score by giving more
weight to other, more negative factors in
your report, said Barry Paperno, a spokesman for Fair Isaac Corp., the company that
developed the FICO score. Even in such a
circumstance, he said, a 50-point drop is
unlikely.
--Candice Choi
AP Personal Finance Writer
New York

t
n
e
m
t
s
e
v
n
I
Real Estate
Opportunities
Foreclosure Web sites offer wide range of listings

By ALEX VEIGA
AP Real Estate Writer

LOS ANGELES (AP) Foreclosure search


Web sites have grown increasingly popular
as more would-be homebuyers have begun
focusing on finding distressed properties.
But discerning which site works best isnt
easy: Most boast theyve got the most listings
and charge users a fee for all but the most
basic property details.
Their results can vary widely, too.
I searched a single ZIP code in the Los Angeles area on several of the better-known
sites and found as few as 53 listings to more
than 1,000.
The sites find foreclosures through a variety
of ways, with some collecting information
on foreclosure-related filings from various
county recorders offices, title companies,
lenders and other sources.
Several types of documents are generated
when a home enters the foreclosure process,
beginning with a notice of default, a phase
some refer to as pre-foreclosure. This stage
reflects that a homeowner has fallen behind
on their mortgage payments, but could conceivably catch up and not necessarily lose
their home.
Other documents the sites look for are notices
of trustee sales and notices of repossession,
when a property goes back to the bank, also
known as a ``real estate owned property
or REO.
If popularity is any indicator, Foreclosure.
com and RealtyTrac.com are among the top
foreclosure sites at the moment.

In the four weeks ended Dec. 13, Foreclosure.com received 26.5 percent of all online
traffic visits after users searched Web sites
for the word ``foreclosure, according to the
research firm Hitwise.
RealtyTrac was ranked second, with 17.1
percent of visits, in the same period, Hitwise
said.
ForeclosureStore and ForeclosureToGo each
have been on the rise of late, entering the top
100 real estate Web sites in November.
The more popular real estate listings Web
sites, such as Zillow.com and Trulia.com,
typically display foreclosure filings culled
from other sites.
Zillow lists foreclosure listings from Foreclosure.com, while Trulia displays listings
from RealtyTrac Inc.
So it makes sense to go to the source.
Many of the sites I tried had common search
features, allowing users to look up homes
in some stage of foreclosure by ZIP code,
city and state. Some break out listings according to where they are in the foreclosure
process and also include homes involved in
a bankruptcy, for sale by owner and those
with tax liens.
Most sites allow users to see a partial address, and some details on the property, such
as how many bedrooms and bathrooms and
square feet.
But for a full look at foreclosure data on listings, users have to pay monthly fees ranging
from $39.80 to $79.95, going by the sites I
25

examined. Many offer a free trial period of a


week to try the full services, although a credit
card is typically required to do so.
RealtyTracs free access gets you listings
with incomplete addresses, although I found
a couple of exceptions.
It also breaks out results by foreclosure stage
and in addition to displaying photos when
available and other basic details, it provides
an aerial shot of the properties.
To access enhanced features, such as a map
of comparably priced properties, a listings
loan history, liens, and when and how the
property has changed hands, for example,
one must sign up for the a subscription,
which runs $49.95 a month.
Rick Sharga, RealtyTracs vice president
for marketing, says the site has 1.9 million
foreclosure and bank-owned properties, with
about 1 million of those listings homes that
have yet to be repossessed.
By comparison, Foreclosure.com boasts
more than 1.8 million listings, which users
can sort through by stage of foreclosure.
The site says it gets its listings from foreclosing lenders, government agencies and
corporate sellers. A subscription costs $39.80
a month.
A site eerily similar in look, feel and pricing
to Foreclosure.com is ForeclosuresToGo.
com.
In my test drive, the site returned listings
missing with photos and other basic information, such as the number of rooms. The site
Business Opportunities Journal

REAL ESTATE OPPORTUNITIES


offers a status for the properties, but only one
was labeled as ``new.
A relatively recent entrant to the foreclosure
listing search business, ForeclosurePoint.
com, has sought to stand out by letting users
see listings full addresses for free.

at $79.95 a month, and includes the ability


to track multiple properties at a time and
receive timely alerts on when they are up for
auction, opening bids and more.

who has done the most foreclosure transactions, because theyll generally have the most
up to date information on a listing.

Those extras, Brazeman notes, are aimed


more for professional real estate investors.

RealtyTrac: http://www.realtytrac.com

That can enable a buyer to approach a homeowner who might be in default and willing
to pursue a short sale, says ForeclosurePoint
spokesman Cary Brazeman.

For regular homebuyers, experts suggest


they avoid paying fees at all and use the Web
sites merely as a way to benchmark what
foreclosure prices are like in a given area.

``If youre a homebuyer interested in a single


home ... why pay anybody? he says.

``Theyre not always up to date, theyre dont


always have the most current information,
says Delores Conway, director of the Casden Real Estate Economics Forecast at the
University of Southern California.

The site, which launched in June, says it


tracks filings on about 2 million properties
in some stage of foreclosure, although its
reach only extends to 34 states. Its premium
membership is among the highest around

Instead, she suggests homebuyers approach


real estate brokerages and ask for the agent

On the Net:
Foreclosure.com: http://www.foreclosure.
com
ForeclosurePoint: http://www.foreclosurepoint.com/
ForeclosuresToGo: http://foreclosurestogo.
com/
ForeclosureStore: http://www.foreclosurestore.com/
Trulia: http://www.trulia.com/
Zillow: http://www.zillow.com/

Homebuilder sentiment index remains at record low


AP Wire Service

LOS ANGELES (AP) -- A key


gauge of homebuilders confidence remained at a record
low this month, as builders continued to be overwhelmingly
discouraged in the prospects
of a housing turnaround amid
a worsening U.S. economy
and rising unemployment and
foreclosures.
The National Association of
Business Opportunities Journal

Home Builders/Wells Fargo


housing market index held at
nine in December for the second month in a row.

this fall in the wake of the U.S.


financial crisis, slipping three
points in October and then five
points in November.

foreclosure relief programs if


we are to end this negative spiral that is weighing so heavily
on our national economy.

Index readings higher than 50


indicate positive sentiment
about the market. But the index has drifted below 50 since
May 2006 and has been below
20 since April. The slide in
builders confidence sharpened

``The crisis continues, NAHB


Chairman Sandy Dunn said in
a statement. ``Congress and
the Administration must step
in with substantial incentives
to bring qualified buyers back
to the table as well as effective

Homebuilders have asked Congress to enact a 10 percent tax


credit of up to $22,000 for
homebuyers that purchase a
home over the next year. They
also are seeking a temporary
interest-rate reduction on 30-

26

year mortgages.
Government incentives are
needed, homebuilders contend,
because many buyers are fearful of jumping into the housing
market due to uncertainty over
the economy and how much
longer the three-year slide in
home prices will continue.
``We have seen no improvement
over the past month in terms
of sales conditions for new
homes, said David Crowe, the
associations chief economist.

a survey of 426 residential developers nationwide, tracking


builders perceptions of market
conditions.

``In fact, certain factors have


gotten progressively worse,
not the least of which is the job
market, where massive layoffs
are having a devastating effect
on consumer confidence.

The builders gauge of current


sales conditions fell one point
to eight, while expectations for
sales over the next six months
declined two points to 16, the
NAHB said.

Major public builders such as


D.R. Horton Inc., KB Home,
and Centex Corp., have seen
their stocks hammered as housing woes have worsened.

Regionally, builder confidence


declined in the Midwest by
one point to six. In the South,
it slipped two points to 10. The
index held steady in the Northeast at 11 and rose in the West
by one point to seven.

The index of foot traffic by


prospective buyers remained
unchanged at a record low of
seven.

The latest builder index reflects

Firm: Statewide home prices dive 38 percent


The median price for homes and condos
there dropped to $350,000 last month from
$629,000 in November 2007.

LOS ANGELES (AP) -- The median home price in California


dived 38 percent in November from a year ago, as foreclosures
propped up sales but eroded prices, a real estate tracking firm said
in December.

AP Wire Service

The peak median price -- $665,000 -- was reached last summer.

The median home price dropped to $258,000 last month from


$414,000 in November 2007, San Diego-based MDA DataQuick
said.

A total of 5,756 homes and condos were sold in the region last
month, up 12 percent from the year-ago period.

A total of 32,163 homes and condos were sold statewide, up 26


percent from the year-ago period.

``Considering the times were in, November turned out to be a


decent month from a sales volume perspective, Walsh said.

``Indicators of market distress continue to move in different


directions, DataQuick said. ``Foreclosure activity is at or near
record levels, financing with adjustable-rate mortgages is near
the all-time low.

Foreclosures accounted for about 47 percent of all sales of existing homes last month in Northern California, up from 10 percent
in November 2007.
Solano County led the way, with 63.6 percent of sales last month
involving foreclosed properties.

Meanwhile, rates on 30-year fixed mortgages dropped this week to


the lowest levels in at least 37 years. The average rate dropped to
5.19 percent, down from the years previous low of 5.47 percent
set last week.

Earlier this week, DataQuick said the median home price in a


six-county region of Southern California plunged 35 percent in
November from a year ago, dropping to the lowest mark since
April 2003.

``A glimmer of hope for sellers in those areas is the governments


interest in driving down mortgage rates and loosening credit,
DataQuick president John Walsh said. ``Eventually it could help
ignite more move-up buying.

The median price for homes and condos tumbled to $285,000 last
month from $435,000 in November 2007.

The typical mortgage payment that homebuyers committed to pay


in November was $1,198, down from $1,951 a year ago.

The drop occurred as 55 percent of those who bought preowned


homes and condos seized on bargain-priced foreclosed properties.

DataQuick previously said the median home price in the ninecounty San Francisco Bay area plummeted a record 44 percent in
November to the lowest level since September 2000.

There were 16,720 homes sold last month in the region, up 27


percent from the year-ago period.
27

Business Opportunities Journal

REAL ESTATE OPPORTUNITIES

Housing resales plummet on Oahu

AP Wire Service

the previous month.

HONOLULU (AP) -- Condominium resales on Oahu plummeted


47 percent in November, while resales of single-family homes
dropped 30.6 percent, the Honolulu Board of Realtors reported.

``Although Oahu residential home sales declined substantially in


November, our prices are still exhibiting much more stability than
those for cities on the mainland, said Dana Chandler, the boards
president. ``Time will tell what the complete effects of the current
economic conditions will be, but were hopeful that the slowdown
will be shallow and only of short-term duration here in the islands.

``The demand for housing sales was the lowest in 10 years but,
interestingly, the inventory of both single-family homes and
condominiums actually contracted a bit last month, said Harvey
Shapiro, the boards research economist. ``This lack of inventory
buildup indicates a slowdown in our market rather than a collapse
as some mainland cities have, unfortunately, experienced.

November saw only 170 single-family homes sold on Oahu, down


from 245 in the same month last year. November condo sales tallied 201, compared with 379 in November 2007.

The median sales price for single-family homes in November


was $594,500, down 4.9 percent from October. The median sales
price for condos last month was $316,200, off 2.5 percent from

Urban areas struggle to find grocers, fresh food


By SHAYA TAYEFE MOHAJER
Associated Press Writer

by nutritionists and community activists to eradicate so-called


food deserts.

LOS ANGELES (AP) -- Selma Lozoya didnt realize how tough


it would be to help her obese mother lose weight until she had to
forage for fresh groceries in the inner city.

``Deserts are naturally occurring things, said Joanne Kim, chief


operating officer of the Community Coalition of South Los Angeles. ``We call this food apartheid because people have chosen
to locate elsewhere even though there is substantial purchasing
power here.

For Lozoya, 17, not having a drivers license was part of the challenge. But the dearth of supermarkets in her South Los Angeles
neighborhood choked with liquor stores, auto repair shops and
warehouses made it even harder.

Between the three major Southern California grocery chains


-- Ralphs, Albertsons and Vons -- there are six supermarkets in
South Los Angeles, serving a population of about 688,000. By
comparison, 19 supermarkets serve West Los Angeles population
of about 395,000.

``I cant drive yet so Im not gonna do anything extraordinary like


jump on my bike and ride it for two or three miles and ride it back
with tons of stuff on it, oh no, said Lozoya.
Seizing control of her kitchen, Lozoya helped her mom shed 50
pounds by banning lard from tamales and poaching chicken instead
of frying it -- and she is expanding her efforts to help her neighbors.

Retailers blame theft in urban supermarkets, high employment


turnover and lack of space for choosing to locate their stores
elsewhere.

Lozoya is working to bring better food to one of the poorest communities in America, where neon lights illuminate a greasy fastfood vista and obesity and diabetes are rampant. While grocery
stores and healthy restaurants are scarce, corner stores are stocked
with beer, cigarettes, fried snacks and fatty sweets.

While farmers markets and trucks peddling fruits and vegetables


have taken root in South Los Angeles, they are inconsistent and
inadequate for the areas population, Kim said.
Some cities are trying to get more supermarkets into urban areas.
The state of Pennsylvania invested $30 million five years ago and

Lozoyas work with high school classmates to urge bodegas to


stock healthier options is part of a larger campaign nationwide
Business Opportunities Journal

28

got 61 supermarkets opened in rural and urban areas.

makeover through a grant from The California Endowment, a


private health foundation that aims to create healthy communities.

Chicago and New Orleans are considering similar programs, but


legislation to bring the same assistance to California cities died in
the Legislature in 2006 due to budget constraints.

Chips and candy were removed from the front aisle of the store;
a large cooler in the back was stocked with fresh fruits and vegetables; fruits were carefully laid out to avoid bruising; milk and
cheese chilled alongside beer.

The food disparity in South Los Angeles is an echo of the areas


history, marked by decades of segregation and racial strife, dating
back before the deadly 1965 Watts riots.

``These problems are really killing our communities, said Marion


Standish, a program director for the endowment. ``Theyre really
disabling young people all over the state and limiting their potential
in very serious ways, and limiting all of our potential as a result.

In the states post-riot report, residents alleged price gouging and


the sale of stale bread, rancid meat and rotten produce -- complaints
that re-emerged decades later after race riots erupted in the wake
of the Rodney King verdict in 1992, said City Councilwoman
Jan Perry.

Its those limitations that Lozoya is trying to push past -- even in


her own quiet ways at home.

South Los Angeles has shifted from a mostly black to a mostly Hispanic community in the last decade, with Latinos making up about
two-thirds of the population, according to 2006 Census figures.

A few times, shes convinced her parents to drive 45 minutes to


Beverly Hills, where her father, a contractor who doesnt consider a
meal complete without red meat, balks at the price of the perfectly
ripe berries Lozoya piles into the cart.

Today, fast food is king in South L.A. Nearly three-quarters of


restaurants offer food on the go, compared to 42 percent in pricier
neighboring West Los Angeles.

``When we get to the checkout he says, This is the last time! Never
again! Lozoya said, wagging her finger in imitation. ``Now, me
and my mom try to pay when he isnt looking.

The citys Community Redevelopment Agency estimates the area


could support 14 new grocery stores and 74 more restaurants. But
few businesses are biting
on incentives that include hiring tax credits, 35 percent electricity discounts for a year
and low interest loans.
``You throw public
subsidies at them, and
they still dont come,
Kim said.
Like many residents of
Lozoyas community,
where 28 percent of
households live below
the federal poverty
line, she relies on the
small corner grocery
a few blocks from her
home for chicken, fruit
and vegetables.
Until recently, Los
Compadres Market
and Restaurant looked
like most others. But
Lozoya and her classmates gave it a healthy
29

Business Opportunities Journal

REAL ESTATE OPPORTUNITIES


By PAUL FOY
New home developments stop in their tractsAP Business
Writer
SALT LAKE CITY (AP) -Roland ``Rollie Walker, the
owner of southern Utahs largest incomplete subdivision, is
being forced to sell the trees to
keep his project afloat. Creditors are posting foreclosure
notices on his land, and banks
are refusing to loan him money.
Walkers ``Elim Valley is by
far the largest of the housing
developments stopped in their
tracts around St. George, once
the second-fastest growing
U.S. metropolitan area. It is
by no means the only one.
Ivory Homes, Utahs largest
homebuilder, says its having
trouble finishing its own subdivision when other lots around
St. George are going for half as
much. And many builders have
been pushed into default.
Theres a whole lot of projects

Business Opportunities Journal

you stop, youre dead.

that are in deep trouble all


over, said Alan Carter, owner
of Southern Utah Title, who
said he was handling a lot of
``short sales (properties that
sell for less than the balance
owed on a mortgage).

Nearly four square miles in


the redrock desert, Elim Valley
has been laid out with roads,
utilities, sidewalks and street
lights. Walker has approval for
``every square inch of a dense
New Urbanism-style community of as many as 10,423
housing units.

St. Georges golf courses,


wide-open public lands and
national parks attract many
active residents who are looking for cheaper living in a mild
climate. And while economists
say St. George should pull out
of the real estate recession faster than other regions, Walker
says he needs new loans and
buyers to step forward now,
before creditors take over his
land.

But there isnt a single house to


be found at Elim Valley, nor a
sign any are being built.
Still, Walker is determined,
even upbeat -- ``were doing
property tours every day
-- hoping to salvage his companys biggest parlay into
real estate, which he launched
at the peak of the boom in
2006. The next year, ANB Financial National Association,
an Arkansas-based bank that
invested heavily in southern

``Theres no such thing as


stop, said Walker, chief executive of McNeil Development, Idaho Falls, Idaho. ``If

30

Utah and initially financed his


development, collapsed and
was taken over by the government last May.
ANBs failure pulled the plug
on hundreds of millions of
dollars of housing projects in
southern Utah, according to
Southern Utah Title.
``Our problem is the instability
of banks, Walker said. ``As
banks stabilize, well have the
money.
The housing recession, though,
is unlikely to end soon, predicts
Jim Wood, director of the University of Utahs Bureau of
Economic Research.
The market, Wood says, ``is
as bad as Ive ever seen. The
turning point came abruptly
three months ago.
``September hit and it just

stopped, he said. ``Builders stopped building.

his tree farm -- 7,500 trees growing for up to two years, with 75
species from blue spruce to hardwoods.

Utah is saturated with about 3,500 newly built and unsold homes,
some half-finished. Around St. George, 550 of these homes are for
sale, according to NewReach Inc., a Salt Lake City-based market
research company.

``We really want him to succeed, said Kent Nobis, a principal


for Rosenberg Associates of St. George, the civil-engineering firm
owed money on Elim Valley. ``For one thing, we get paid back.

Among overextended builders and developers, ``theres a lot of


grief, said Wood, who warned that slump will last for at least a
year if not longer. Utahs homeowner foreclosure rate, now 1.5
percent, could double.

But Walker also owes at least $10 million to a group of short-term


real-estate investors who arent interested in a tree swap.
The investors are suing to recover money spent on land and water
rights. Walkers lawyers have temporarily blocked a foreclosure
in state court.

That is not what Ivory Homes wants to hear.


The homebuilder mapped out a subdivision called Hidden Valley
Estates in 2006. Of the 1,072 planned residences, only 120 have
been built. Just 37 sold this year. Ivory Homes is offering townhouses starting around $190,000, for thousands less than a year ago.

``We just want the money back, said Greg Walker, director of
risk management for Cypress Capital XI LLC of South Jordan,
Utah, who is not related to the developer.

``We can go out and buy lots cheaper elsewhere, said David
Wolfgramm, chief financial officer for Ivory Homes. ``We are at
a crossroads.

``Its simply: We loan some money, take collateral. They pay it


back, we return the collateral. We know the economy sucks. But
we have a fiduciary responsibility to our investors, he said.

The possibility Ivory Homes might walk away was enough for
the state, which leased the land for development, to lower royalty
rates of up to 20 percent on home sales and make the houses less
expensive. And its not clear that will be enough.

Rollie Walker insists the loan from Cypress isnt due yet. And
despite his troubles, Walker believes he is in better position than
many developers around St. George.

Over at Elim Valley, a development that sprawls across 2,300


acres, Walker is haggling with creditors.

``Im not without my problems, but Id rather be me than anyone


else I know, but he quickly added, ``Im not trying to rain on
everybody else.

He owes his civil engineer around $300,000 and said he plans to


pay it off -- in trees. To make good on the debt, he agreed to cull

31

Business Opportunities Journal

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