Professional Documents
Culture Documents
Contributing Writers
Ed Burzminski, Bob Gomez,
Ken Roberts, Angela L.H. Sayers,
Brian Simon, Tony Traven,
Cayley Vos, David Whitehead,
R. Boyd Zack
Tax Time
Tax Information From South Bay Financial Pros 22–25
Technology Insider
Managing Your Digital Assets 6
How to Take Full Advantage of Search Engine Optimization and Pay Per Click 8
“I back up my files —
I don’t need a digital asset
management system”
6 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
them for financial gain becomes very
real. One of the threats of improper
management of digital assets is the loss
of control of those assets, as has been
seen in the recorded music industry.
Yet another risk of mismanaged digi-
tal assets is the time and energy loss
associated with improper versions of
files being used. From obsolete versions
of proposals sent to customers to a mis-
directed e-mail message to outdated
versions of application software corrupt-
ing a corporate database, improperly
managed digital assets can cripple a
company very quickly.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 7
T E C H N O L O G Y I N S I D E R
8 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
A R E A L E S T A T E P R O ’ S P E R S P E C T I V E
Stimulus Package
Spells Relief
for California BY KEN ROBERTS
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 9
C U
H O M
L U
AMN N R IE NS SO I U
D RE C
RE S I N S I D E R
B USINESSES OUTSOURCE
OPERATIONS OVERSEAS FOR
MYRIAD REASONS. Gen-
erally sent to Third World coun-
tries, outsourcing can bolster
the bottom line, maximize
profits and turbo-charge pro-
ductivity. Our company was
no different. We were an El
Segundo-based custom pub-
lisher of directories, maps and
visitor guides acting under con-
tract for over 120 chambers of
commerce clients spread over 18 BY ED BURZMINSKI
states and generating over $3 million in
annual revenue. We moved all of our graphic design and pro-
duction labor overseas to a well-trained and very hard work- Sourcing Candidate Companies:
ing labor force in Manila, the Philippines. Consulates and the Internet
Before embarking on this venture, we conducted an in- An Internet search came up with a number of companies, but
depth analysis of our production operations to better under- we decided to approach the Consul General of the Philippines’
stand our cost structures and determine if offshore outsourcing office in San Francisco for direction. It proved to be a veritable
was right for our company. Armed with this newfound infor- treasure trove of information. We received a package with
mation, we spent a considerable amount of time reorganizing descriptions of about 30 companies that had created outsourc-
both the production group and the account management ing services in media. After looking through all the wide-ranging
group in an effort to better match people to their highest and information and myriad offerings, nothing completely fit the bill.
best use and to shorten the cycle. We trimmed a few days here To get more organized, we created a standardized Request
and there, streamlined the process significantly and still came for Proposal (RFP) and sent it to each prospective candidate,
back to the nagging problem: we needed more bodies to pro- giving each 60 days to respond. In the RFP, we described our
cess the sheer volume of ads. Yet with Los Angeles-based company and defined as best we could exactly what we were
labor, there was no way the budget could support an expan- looking to accomplish: namely to move all advertising pro-
sion of direct costs by even one more person. We had to find a duction and ad traffic functions overseas with an eye towards
less expensive labor force where we could add more people ultimately moving all design and layout of the publications
and still save money. there as well.
We first explored different regions in North America, ana- We spelled out the volume of ads, the number of people we
lyzed wages and availability of staff: Memphis, Las Vegas and employed in the targeted positions, the number of people we
Canada and a few other candidates didn’t pencil out; the wage thought were appropriate to get the job done and an expected
differential was just not enough. We then explored local compa- timeframe to be fully implemented. Ten companies sent us pro-
nies to outsource ad production, but the costs actually came in posals. Not a bad response, we thought, considering we were
higher than using our own labor. Subcontracting in North Amer- looking for something unique.
ica was a non-starter. In a large company, the entire process is delegated to a team.
It became crystal clear that the massive difference in U.S. ver- Small companies simply can’t afford that, but all the above steps
sus foreign wages meant outsourcing overseas was a mission- could be delegated to someone, or the owner can tackle it with
critical objective. Finally, with all U.S.-based options exhausted a little help. At this point in the process, senior management
we decided to follow the outsourcing bandwagon and explore needs to be involved to fully understand the offerings and capa-
possibilities in India, Ireland and the Philippines. bilities of each prospective outsourcing partner.
We interviewed each prospect and came up with a shortlist.
Criteria for Choosing a Country One company stood apart from the others as being much further
Since we published in American English, the risk of having along with outsourcing graphic production for magazine pub-
someone create an ad using British English might have been lishers. After much discussion with each of the finalists on pric-
problematic. ing, we determined the best pricing structure was simply to pay
This alone moved India and Ireland lower on the list. In the for FTEs (full-time equivalent staff) just as we did here for full-
Philippines, children learn American English in primary school time positions. We paid a flat monthly rate per person, which
with excellent written language skills. So we chose to focus on was all inclusive of benefits, insurance, etc., and included the
the Philippines as the primary candidate country. vendor’s markup.
10 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
C O L U M N I N S I D E R
Comparing the cost to American labor, we stood to save 50% dened with overhead and marked up for profit. We established
on salaries without factoring in savings in other overhead line a monthly, fixed price for each FTE payable bi-weekly to coin-
items in the profit and loss. The ancillary savings became evi- cide with our payroll. There were no additional costs involved
dent only after we were knee-deep in the process, and were a other than our own travel for visits.
welcome bonus. We needed to be aware of special labor considerations in the
We ran the pricing through a pro-forma P&L to estimate the Phillipines, such as a guaranteed 13th month payroll that is
financial impact, taking educated guesses in some areas like given to employees each year. In effect, it’s a guaranteed annual
workers’ compensation insurance, to prepare for discussions bonus of an extra month’s pay. Also, the concept of employees-
with the other stakeholders and begin the process of gaining at-will is, well, foreign. As part of the agreement negotiated,
buy-in from key stakeholders. many of these issues became the responsibility of the overseas
We discussed our findings with senior managers, line man- provider to handle; we just paid one amount per FTE.
agers and other major staff people who were in the trenches The production group had to follow an American schedule
on a daily basis. Framing the discussions from beginning with for holidays. All human resource issues filtered through the out-
the end in mind, we focused on providing excellent customer source company’s existing HR department and factored into
experience and delivering publications on time and possibly their price.
earlier. It’s important to stay focused on the positive aspect and A point of contention arose around management of staff and
provide solutions for those Americans who will ultimately lose who was to pay for it. An on-site manager was critical with the
their jobs. That bridge is difficult to cross without having volume of work and number of people. We initially factored that
thought through the options. The bottom line was simple: We person in as an extra FTE negotiated as part of their own over-
were there to run a business and failing that, all of us would be head assigned to the client. As things later evolved, it made
looking for jobs. more sense for the cost of a dedicated manager to be generated
Bringing in key managers in the discussions proved invalu- by us. As an extra precaution, we hired a Filipino-speaking pro-
able. These decisions were simply too complex to be made from duction coordinator on our side to make sure communication
the top down. A representative from the overseas company and management oversight was clear.
came to the office for several meetings and was a key player in The vendor absorbed telephone communication costs. We
the process. Once everyone was able to get past the idea of lost also installed a toll-free number and used voice-over IP technol-
jobs and put their arms around how many solutions could be ogy for phone calls. After a few bumps with the technology, the
realized, the excitement to move forward snowballed. voice communications were crystal clear.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 11
C U
P O B
L L
U IMSNH EI N
R S
’ SI DPEERR S P E C T I V E
12 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
C O L U M N I N S I D E R
ity of people have no idea how risky these actions are for caused the first run on a bank in Britain since the Great
America’s long-term prosperity. Depression! If you examine these wild rides carefully to iden-
The only difference between Cramer and many enlight- tify their root causes, all roads lead to money bubbles created
ened financial experts who really understand the dynamics of by the Federal Reserve.
monetary policy is his unrestrained candor. To a degree, I
empathize with the call for restraint. This is a business where Bubbles, Bubbles and More Bubbles!
reaction makes reality. For example, the Federal Deposit Insur- Artificially stimulating the economy time and again with
ance Corporation (FDIC) needs some latitude for secrecy to unwarranted expansions of the money supply simply creates
prevent bank runs when it arranges buyouts for failing institu- enormous imbalances that led to the dangerous kinds of
tions. But there are limits. Although off-the-cuff comments blowouts we have seen in the mortgage and credit markets
from central bankers that tend to rock markets should be since mid-2007. Flooding the market with cheap money and
avoided, a lesson Bernanke learned the hard way, glossing gradually deflating the massive bubbles it creates plays fast
over long-term monetary problems to fend off undesirable and loose with the financial future of our nation. The post-911
reactions allows deep-seated problems to fester and grow lending rate dropped as low as one percent to pull us out of
until they reach the crisis stage. To be frank, the American recession quickly while setting the housing market on fire.
people have a right to know the true state of the economy and The Fed was accused of dropping money from helicopters,
what its relationship to the global marketplace truly repre- but the financial opium felt so good that nobody cared.
sents. But if the majority of the American people, including Looking back further, China’s industrial machine went into
most in the political establishment, don’t know enough about high gear more than a decade ago driven by predatory mone-
monetary policy to have an informed opinion about it, central tary policies of its own, which continues to cause foreign debt
bankers with interests of their own are left to operate largely to grow massive. Greenspan’s strategy of gradual rate
unchecked. Shouldn’t we be asking ourselves if this is appro- increases to keep the bubbles he was creating in check simply
priate given the extraordinary magnitude of their decisions? If didn’t work because there was no mechanism to reduce the
Bernanke really doesn’t know what he is doing, as Cramer mounting debt when the value of our main creditor’s currency
alleges, he must be replaced. If he does, the intensely secre- followed ours during the globalization boom. The dollar grew
tive organization he represents has much to explain, and that much too strong in relation to global currencies, but contin-
includes his predecessor Alan Greenspan. ued to grow weaker in real terms as the debt accumulated.
Fed action this past decade created the bubbles that led to This has been going on for years and is now reaching a criti-
the dot com crash and the real estate boom now deflating cal mass.
before us. It prevented the post-911 recession from running All this was allowed to happen because of the collective igno-
deep and long when the economy was due for a major cor- rance of the money creation process and ill-advised trust in a
rection. It allowed the Bush administration to engage in an central banking system that lacks appropriate checks and bal-
expensive war without having to implement austerity mea- ances. The Fed’s decision to aggressively lower lending rates dur-
sures at home. Financial bubbles driven by cheap money ing an economic boom, which is an extraordinary no-no for
transformed appreciating homes into lifestyle enhancing ATM traditional economists, was driven by astounding levels of foreign
machines. Misguided mortgage brokers and homebuyers bet investment. It pushed the overall U.S. trade deficit from less than
the real estate market could rise forever. Is anyone really sur- $100 billion in the early nineties to a recent peak of $758.5 bil-
prised they lost that bet? RealtyTrac.com reported over 2.2 lion in 2006. The deficit dropped approximately six percent to
million foreclosure filings nationwide in 2007 and the blood- $711 billion in 2007 due primarily to the plunging dollar encour-
bath continues in 2008. To make matters worse, unscrupulous aging demand for more U.S. exports. The national debt rose from
securities brokers packaged these time bombs into investment $5.7 trillion in 2001 to a staggering $9.2 trillion in 2008.
packages and sold them all over the world. This actually continued on page 14
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 13
C U
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U IMSNH EI N
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’ SI DPEERR S P E C T I V E
PUBLISHER’S PERSPECTIVE back into the economy. But this move maintaining a favorable balance of trade
continued from page 13 surely to be welcomed by taxpayers is no longer necessary. They now believe
This recent cut in the Fed’s key lending could fuel serious inflation that would central banks manipulating markets
rate transpired in the context of declining cancel out most, if not all of the benefits through aggressive expansion of money
foreign investment and a rapidly declining for average Americans in the long run. supply is prudent economic policy if it
U.S. dollar. Not only is this strategy flawed In any case, it certainly makes mar- stimulates short-term economic activity
because it can’t deal with the debt — it velous sound bites that both parties can regardless of the long-term debt it creates.
has reached the point where there is noth- capitalize upon in an election year.
ing left to draw on to back this new The key problem is that most Ameri- Depressions are too Depressing
expansion of the money supply without cans put all their time and effort into for the Fed to Consider
creating destructive inflation. In fact, many earning money and few pay much atten- Both Greenspan and Bernanke hold doc-
experts would argue the future of the dol- tion to how money is made. They don’t torates in economics and both brag they
lar as the international reserve currency is know they are earning borrowed money, have spent a great deal of time studying
in question and no other economic funda- so when they continue to borrow and re- the Great Depression. The irony is that
mentals can sustain the currency for much borrow previously borrowed money they Greenspan’s radical economic policies
longer. That’s why Cramer is freaking out are not creating wealth, but speculating continued by Bernanke have brought the
about what Bernanke is doing. Yet most on debt-laden assets growing unsustain- nation closer to this kind of economic
people simply don’t get it. ably. At one time, governments allowed, calamity than at any time since the late
and in some cases incited, severe finan- twenties. But this time the economic fun-
Stimulus, Stimulus and cial depressions because they understood damentals are much further out of whack
More Stimulus! to do otherwise would lead to catastro- then they ever were in the early 20th
On February 13, 2008, President phe. The modern paradigm of economics Century. What worked for Greenspan
George W. Bush signed into law a $168 believes that government intervention to can’t work the same way for Bernanke
billion stimulus package including tax keep the money supply in line with pro- because we are reaching the point where
rebates to flush desperately needed cash duction and consumption in addition to the mounting debt simply can’t continue
unchecked. Yet he appears to be engag-
ing in exactly the same policy that cre-
ated this bubble-building situation in the
first place.
There is a critical difference between
the global economy of 1929 and 2008.
The imbalances that led to the Great
Depression resulted from unprece-
dented debt in Europe following World
War I, unprecedented prosperity in the
United States in the twenties driving
production dangerously out of sync
with domestic consumption, and hope-
less attempts by economists and central
bankers at implementing monetary sta-
bilization that called for a return to the
pre-1914 gold standard economy.
Financial calamities occurred either
because of draconian action or from
politically charged deviations from
sound economic principles.
Greenspan apparently thought he
had studied the process enough to avoid
the kinds of calamities created by his
predecessors and in many cases did
exactly the opposite of what economists
of past generations would have
espoused. What he did was skillfully
navigate through treacherous situations
as the debt and risks continued to
14 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
C O L U M N I N S I D E R
increase over time. We are now betting on the industry throughout the growth
our future on the idea that uncontrolled period. This further disrupted the balance
debt can grow forever with occasional of trade to astronomical levels. To keep
controlled deflations of the bubbles that this engine going, China began investing
will cause economic pain but not the heavily in U.S. Treasury Bills, at one point
kind of blowouts experienced in the past reaching $15 billion a month. Now the
or more recently in developing nations. debt is so extraordinary, I seriously ques-
The Fed seems to believe we can main- tion the feasibility of a soft landing. We
tain prosperity at home via astute seem to be at a point where this unsus-
maneuvers by central bankers enforced tainable paradigm is drawing to a close
by superpower political influence to and I see no viable plan to replace it.
make sure the dollar remains the world’s Sometimes an economy needs to
reserve currency despite the lack of tan- slow down to prevent a hard crash.
gible economic fundamentals for this sit- Instead, we close our eyes and hit the
uation to continue. That’s the current gas. The Federal Reserve has been pre-
paradigm in case you didn’t know. venting gross imbalances to right itself
The history of the last four decades is for so long that something big must give
even more telling. In the early seventies, at some point. Central bankers seem to
the Nixon administration ended the believe all these things can be fixed with
Bretton Woods policy for post-war mon- a money flush. We won’t know what we
etary stabilization, making it legal for created until the flow stops and all the
trade deficits to proliferate. The $500 bills we can’t avoid come due. That is
billion cost of the Vietnam War was the what people like Cramer are really
final nail in the coffin for the gold afraid of and I share his concern.
exchange standard in the United States.
Since then, foreign investment has been David Whitehead is the publisher of
the key backer of the U.S. dollar. Dur- Business Insider Magazine
ing the early years of de-industrializa-
tion and acute inflation when Japan was
the primary exporter to the United
States, a gradual weakening of the dol-
lar served to flush much of the mount-
ing trade deficit away, which was
calculated but considered manageable
at the time. But the dollar got strong in
the eighties; and during the nineties,
foreign debt began to mount uncontrol-
lably. Also, to this day, approximately
68 percent of the world’s oil is sold
mostly on the New York and London
exchanges in U.S. dollars. This is
another instrument, which former secre-
tary of state Henry Kissinger dubbed
“petrodollars,” that the Fed uses to back
the money supply. Still, once again, this
process creates foreign debt and the
world’s nations are pressing to make the
Euro an alternative currency to buy oil.
When China became the primary
importer to the United States, its central
bank pegged the value of the Yuan at a
low point against the U.S. dollar. This
process further eroded U.S. manufactur-
ing because the Chinese workers were
paid 63 cents an hour or less depending
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 15
H U M A N R E S O U R C E S I N S I D E R
16 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
B U I L D I N G T H E S O U T H B A Y E C O N O M Y
BY BRIAN SIMON
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 17
BUILDING THE SOUTH BAY
continued from page 17
ing manufacturing facilities and con-
verting those to distribution buildings.
From campus-style business parks to
destination resorts and office condos,
the sheer diversity of new product com-
ing down the pike may be unprece-
dented.
The following is a look at some of
the area’s most significant current and
upcoming projects as well as the latest
building trends.
18 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
B U I L D I N G T H E S O U T H B A Y E C O N O M Y
20 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
veda Boulevard just north of Rosecrans
Avenue. Phase 1A has opened incre-
mentally, with three distinct sections
incorporating different architectural
themes and retail types; in all totaling
just under 400,000 square feet of build-
ing space. The final 30,000 square feet
will be completed by the end of 2008.
Notable Plaza tenants include big
box retailers (Best Buy, Borders), an
upscale grocer (Whole Foods), hip fash-
ion stores (Bebe, m. Frederic) and
trendy eateries (Salt Creek Grille, Mar-
malade Café).
Phase 1B, recently approved by the El
Segundo City Council, will add another
70,000 square feet of what is anticipated
to be “high-end retail” at the southern tip
of the site. Mackenzie said crews will
break ground by early summer with a
completion date slated in late 2009.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 21
A PERSPECTIVE BY ANGELA L.H. SAYERS, C.P.A., M.B.A.
22 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
2008 tax season and beyond is wide a different solution by eliminating waste in Angela L.H. Sayers, CPA, MBA has pro-
open and the debate continues. government spending. vided professional tax and accounting
Also pressing Congress is the call for Also, Congress could remove the loop- advice for over 12 years. Her full-service
unrelated tax rebates to stave off a looming holes in the tax law allowing clever CPAs accountancy corporation offers a wide
range of services that provide value and tax
recession, further impacting the federal and tax attorneys to come up with legal
savings, while being small enough to be
budget. This will make it even more diffi- tax strategies that the IRS deems “abusive.” flexible and responsive to clients’ needs.
cult for legislators to come to agreement There are many factors that may determine You may contact Angela at 310-541-1611
on a permanent solution for the AMT. if you are subject to the AMT. To find out or by email at angelasayerscpa@cox.net.
To put the rapid growth of this contro- how the AMT could affect your own situa-
Business Insider Magazine Publisher
versy into in perspective, approximately tion, check with a qualified CPA or tax David Whitehead contributed research
19,000 households paid the AMT in 1970, professional. for this column.
according to www.fidelity.com. In 2005,
3.5 million did. The Washington Post
reported in 2006 that the AMT will likely
apply to approximately 30 million taxpay-
ers by 2010 if indexing for inflation is not
implemented.
Whenever income amounts are used
and geographic areas are not taken into
account, taxpayers in states with a higher
cost of living (i.e. California) are signifi-
cantly more adversely affected than those
in states with a lower cost of living (i.e.
Louisiana). In states with a higher cost of
living, salaries tend to be higher. This
drivers more taxpayers into higher tax
brackets, though the individuals in ques-
tion really have no more disposable
income than those in states with a lower
cost of living and the same disposable
income.
Here’s how the calculation works: The
three elements that make a taxpayer sub-
ject to the AMT are getting married, having
children, and paying state income tax. Even
if we move beyond the obvious lack of
family values that our politicians from both
parties keep talking about, this was not the
initial intent of the law. It is as if the tax
code unfairly punishes taxpayers for getting
married, having children, and paying their
state income tax. Remember, the law was
designed to tax the wealthy more. I have
seen taxpayers with the same income lev-
els, but with different filing statuses (single
vs. married filing joint) where the single
taxpayer is not subject to the AMT, yet it
does apply to the married taxpayer.
Since this law — the way it is practiced
— is so out of step with its initial intent,
Congress has a moral duty to repeal the
AMT or at least index properly for infla-
tion. If the revenue it generates is so great
that the government cannot do without
this tax, Congress has an obligation to find
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 23
The Capital
Gains Tax Rate: A S A BUSINESS OWNER, YOU
MAY NOT BE INCLINED to
keep yourself informed of
every change in the tax law. However,
quence is the impact of the capital gains
tax when a valuable business is sold.
The 2003 Jobs and Growth Tax Relief
Reconciliation Act (JGTRRA) reduced the
24 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
BY BOB GOMEZ
You may want to consider a Roth conversion if: Bob Gomez is a Financial Advisor with Smith Barney located in
• You are many years from retirement and have the time to Rolling Hills Estates and may be reached at 310-544-3622. This
article is based, in whole or in part, on information provided by
earn back the amount of money paid for taxes when you the Planning Services Department of Smith Barney.
converted your IRA.
• Your Traditional IRA has been opened for a short period Smith Barney is a division and service mark of Citigroup Global Markets Inc.
of time and the contributions have been mostly non- Member SIPC.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 25
S A L E S A N D M A R K E T I N G I N S I D E R
BY DAVID WHITEHEAD
26 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
S A L E S A N D M A R K E T I N G I N S I D E R
the table without properly defining needs is risky for both par- completely understand your needs and the value proposition
ties because chances are costs won’t be evaluated properly for you are looking for, and don’t force them to bid blind on cost
the services that end up being performed. structures — the latter being the biggest recipe for disaster.
Compare this to the transactional sale: It’s not that big a Many companies just send out a request for proposal and are
deal if customers didn’t really need that vacuum cleaner. If it’s annoyed when vendors call to ask questions. Some act like it’s a
not expensive and it picks up dirt, they can always use it. It is poker game and they want to see their cards. Only a fool bids
a huge deal when the customer makes a mistake on a large on a job based on sketchy information. Unfortunately, competi-
capital expenditure essential to the company’s operation that tive sales environments tend to cultivate foolish behavior.
requires ongoing purchases and servicing. Savvy vendors don’t just throw out deals. They ask ques-
tions, even impertinent questions if those are relevant to the
Matching Up the Right Sellers with the Right Buyers bid and affect the capacity to deliver profitably for themselves.
First, we shouldn’t hang the entire problem on the sales team. They know when to push for the business and also when it’s
Let’s examine how deal-hungry buyers create problems for in everyone’s best interest to walk away from the table.
themselves. Many buyers treat complex purchases like “trans- Remember, business that might be good for the company
actional sales,” leading to horrible decisions because they are down the road might not be good for yours. Push the points
thinking about getting the best deal when they should be where your company is strong and make sure they tie in to
thinking about the long-term implications of their decision. If your prospects’ needs before you take the time to craft a pro-
your executive management is rewarding your buyers for cut- posal. Your first appointment should be strictly a fact-finding
ting great deals — stop it! Instead, reward them for finding mission. Back off if you are dealing with someone who wants
great resources for a competitive price that help the company. to play vendors off each other. The winner of that bid is likely
That’s my definition of a great deal. to be the loser on the back end. Recognize that some people
Bidding processes exasperate this phenomenon, especially are great dealmakers, some are great analyzers and others are
when committees and company politics get thrown in the strong transactional closers.
mix. I once worked for a newspaper that dumped a million Buyers need analyzers to find the right program and deal-
dollars into a new publishing system that had one notable makers to step in to negotiate when the best vender is
hitch the buying group didn’t catch until the thing was up and thoughtfully identified. Keep the buying decision in the hands
running. The software couldn’t mix text with graphics. Con- of a few qualified people who really understand what the pro-
sider this for a moment: They are a newspaper for God’s sake ject is all about. Avoid letting these decisions get political,
and they bought a seven-figure computer system that couldn’t which often happens with a committee process.
mix text with graphics. And this was in 1994! I would say Sellers need people who can do all three, depending
someone forgot to ask an important question, but at the time where they are in the sales process, with a strong focus on
I’m sure they thought they got a good deal. I think a good analysis at the proposal stage. The ability to properly analyze
consultative salesperson would have been pulling their hair up front is the key difference between the transactional sales-
out trying to get that group under control. This turned into person and the business development consultant.
expensive debacle that was completely avoidable. In the transaction sale, it’s in the salesperson’s best interest
The lesson to be learned from this story is that when your to not let the prospect think too much about the details of the
purchase is complex and the stakes are high, both buyer and product or service. In a consultative sales situation, the sales
seller need to do their due diligence to determine if they really professional often does the opposite because it is costly for
want the business, and most importantly, exactly what that busi- everyone if the deal isn’t a fit for both parties. The key is to
ness should be when it’s time to sign on the dotted line. This recognize what is best for a specific sales situation and
can only be attained if they work together during the sales pro- respect the need for professionalism from both buyer and
cess. Traditional bidding processes destroy the ability of both seller. This is the best way to ensure what you close is really a
parties to accomplish this. If your company wants to shop good deal in the long run.
around, request proposals from a short list of vendors best
suited to the job, communicate with them thoroughly so they David Whitehead is the publisher of Business Insider Magazine
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 27
B U I L D I N G T H E S O U T H B A Y E C O N O M Y
BUILDING THE SOUTH BAY Memorial Hospital. Owned by New York-based Rockefeller
continued from page 21 Group Development Corporation, marketed by the Klabin
the street, one at another one-time car storage area (30th and Company and now under environmental review, the $100
PCH) and the other on what used to be a pumpkin patch lot million-plus Rockefeller Center will feature medical and pro-
(21st and PCH). fessional offices buildings and office condos for sale.
And in downtown, on Hermosa Avenue and 14th Street, a In the middle of the spectrum, Pacsan Management Corpo-
developer has torn down a building that housed several fast ration will break ground mid-year on a two-story, 88,000
food operations and will build 32 office condos. City officials square foot multi-use business park, the largest of its kind in El
view this as good news. “In the Downtown, we see it as a Segundo ever west of Sepulveda. When completed, the
good balance to get more daytime activity,” said Hermosa Segundo Business Park (at the former International Rectifier site
Beach Community Development Director Ken Robertson. on Kansas Street off of Grand Avenue) will feature 35–40
“Downtown is mostly known for its nighttime activity.” spaces and will cater to businesses in the three to 20-employee
Robertson said the spaces, which have been advertised to range. Units will be split between traditional office elements
sole proprietorships such as attorneys and architects, have and more eclectic space. Pacsan President Lyle Maul describes
been selling and can add a nice influx of property tax rev- the project as the “non-corporate version of Campus El
enues into the City’s coffers. The units themselves start from as Segundo,” targeting area residents and small business owners
little as 350 square feet with pricing from $1,000 per square looking to lease or purchase their own units. “We have
foot and up depending on location. designed all the space so that the individual units purchased
“Candidates will more than likely live by buyers stand-out as individual units
in the area and have either outgrown to show pride of ownership and to make
their home office or are looking for own- “Terranea will be located it possible to have signage on your own
ership opportunities,” said Robertson of on an exquisite bluff with section of the building above your pri-
the potential buyers. vate exterior entrance,” said Maul. “This
expansive ocean and coastal views.
That said he issued a caveat. “More will be a brand-new, custom-designed
sites could be available, but the question It offers a rare opportunity campus setting, destination-style facility.
is will this saturate the market for this to create a world-class It’ll have all the power, parking and
type of product. I think the jury is still oceanfront destination resort amenities such as a little restaurant,
out. It could be a good thing but it showers, lockers, bicycle storage, and of
in the Los Angeles area.”
depends if they are sold and the right course, pride of ownership. In contrast
kind of owners occupy them.” — Robert J. Lowe, to the numerous projects in the South
In neighboring Manhattan Beach, the chairman and CEO Bay selling 300- to 600-square foot
first office condo project approved in that of Lowe Enterprises. offices, we’re catering to the 1,000- to
community’s downtown is set for comple- 5,000-square foot buyer.”
tion early next year at the former Good The project is the first of what could
Stuff restaurant site on Highland Avenue and 13th Street. The spur a redevelopment renaissance for El Segundo’s mixed-use
two-story, 15,000 square foot, general office building will con- commercial/residential Smoky Hollow district (the area span-
tain small units of 300 square feet upstairs and pedestrian-serv- ning south of Grand between Sepulveda and Downtown) that is
ing businesses on the ground level — all for sale. “It was being targeted for eventual revitalization by the City. “Our park
important we could maintain that type of activity (e.g. retail, real is meant to be a prototypical look for what could happen in the
estate, jewelry store), so we restricted the use for the first floor,” future in that area with eclectic office space, warehouse space
said Manhattan Beach Director of Community Development and adequate parking in a green environment responding to the
Richard Thompson. needs of the small entrepreneurial business owners,” said Maul.
Meanwhile, the Manhattan Beach City Council recently So far, Maul has received verbal commitments to fill
approved plans to construct a medical office building with roughly one-third of the projected spaces. The tentative tenant
some ground floor retail at 1000 N. Sepulveda (where Ver- list includes financial and medical (a physical therapist, gen-
sailles restaurant is still located). The developer has yet to pull eral practitioner and dentist have reserved 10,000 square feet
permits, but Thompson sees a certain momentum, especially alone) professionals. The land’s MM1 zoning designation also
given Manhattan Beach’s health and fitness-oriented demo- allows for such diverse uses as retail, research and develop-
graphic. “It seems to be the trend in this area, for both medi- ment and light warehouse.
cal office and general office use… for people who live in the A retail/office condo project has also been discussed for
community, whether they are doctors or other professionals,” Downtown El Segundo at a four-lot site on Main Street and
he said. “They don’t want to work out of their homes.” Franklin Avenue once occupied by the outdoor patio of a local
Another multi-use medical and professional office project pizzeria and a parking area. The ground floor would be divided
with retail is earmarked for a 23-acre vacant site on the south into as many as three separate offices and/or retail businesses
side of Lomita Boulevard strategically close to Torrance with smaller (275 square foot and up) units for sale upstairs.
28 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
El Segundo’s downtown is also zoned for mixed commer- oped by Brentwood-based Lowe Enterprises and slated for
cial and residential uses that promote the concept of living completion by spring of next year, the $450 million Terranea
and working in the district. Several new complexes, including will feature 400 rooms, three restaurants, three pools, a nine-
a shopping center on Grand Avenue and an office building on hole golf course, 65,000 square foot convention and event
Richmond Street, have popped up in the last couple of years space, 25,000 square foot luxury spa, walking and hiking
with tenants residing on top of businesses. trails, plus various shops and other services open to both
The same trend looks to be taking shape in Rolling Hills guests and the general public.
Estates on “top of the hill,” with several proposed projects on- In keeping with the ownership theme highlighted in the
line that would feature first-level retail and residential above. previous section, Terranea also includes a collection of two-
One new development is now under construction at the former and three-bedroom villas and casitas for sale. The properties
McDonald’s site at Silver Spur and Crenshaw. “These aren’t offer direct ocean views, range in size from 1,850 to 2,800
large parcels — they’re one to three or four acres, but that area square feet and start at $2.25 million. Fifty-one of the units
in between Crenshaw and Hawthorne is definitely getting sold in just hours in 2005, while the remaining 31 were just
reused,” said Brian Polkinghorne, who noted that additional released this past January. Limited term use and rental require-
projects of the same ilk are being earmarked at locations that ments apply, so owners may only reside in their villas and
formerly housed a car wash and an “old and tired strip mall.” casitas for a total of 90 and 60 days a year respectively (and
But the biggest pending project in Rolling Hills Estates is an no more than 29 days at any one time).
ambitious plan to build 112 new single family homes, a recon- “Terranea will be located on an exquisite bluff with expan-
figured 18-hole golf course and a 55,000 square foot clubhouse sive ocean and coastal views. It offers a rare opportunity to
and related facilities at the existing sites of the Chandler Quarry create a world-class oceanfront destination resort in the Los
and Rolling Hills Country Club. The quarry section, now a Angeles area,” said Robert J. Lowe, chairman and CEO of
“clean landfill,” would house the new golf course. Then a por- Lowe Enterprises. “Terranea will bring the finest hotel accom-
tion of the existing country club would become the residential modations and resort home ownership opportunities to the
community. “We’d basically be swapping land,” said Rolling coast. The development takes advantage of the local environ-
Hills Estates Senior Planner Niki Cutler, who noted that the pro- ment, providing abundant pedestrian trails and view points
ject is still under environmental review. that will allow people to enjoy the area’s natural beauty with-
out disturbing the surroundings.”
The Last Resorts The road to Terranea was not an easy one by any stretch. The
While the owners of the El Segundo Generating Station hope developer originally submitted plans for a hotel and golf resort in
to land a contract with Southern California Edison so it can April 2000, but ran into numerous roadblocks along the way,
proceed with the long-planned redevelopment of its power most notably having to satisfy over 200 conditions mandated by
plant on the beach, El Segundo City officials have discussed a the California Coastal Commission to incorporate environmental
contingency plan to rezone the area in order to accommodate considerations, preserve the land and any hiking/biking trails,
a resort hotel to replace lost utility user tax revenues with tran- protect fauna and wildlife, and guarantee public use. Any native
sient occupancy tax dollars. trees removed from the site have been stored at a nearby nursery
If the power plant doesn’t move forward (the final decision and will be replanted when the resort is complete. Also, eighty
was expected just after press time), El Segundo might look to percent of all materials removed are being recycled and reintro-
Rancho Palos Verdes for some inspiration where the one-time duced onto the property.
Marineland site will soon be a Mediterranean-style destina- When the project broke ground last spring, RPV Mayor Tom
tion resort hotel spread over 102 acres on the coast. Devel- continued on page 31
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 29
CAPITAL GAINS TAX RATE to mention that a presidential election (and substantially reduce the net returns to
continued from page 24 possible a party shift in the White House) is business owner sellers. With rates cur-
are inclined to vote for a raise in the rate. on the horizon, tax advisors are predicting rently — and perhaps temporarily — at a
This dissension among political parties that rate increases are more likely to occur; historic low, financial services compa-
has caused rates to fluctuate widely in the at a minimum, the 15% rate is expected to nies suggest that now may be an optimal
past, rising as high as 35% and changing an revert to 20% in 2010. time to consider selling a privately held
average of every 4.5 years. Now that we are An increase in the capital gains tax business. We realize that the decision to
entering the fourth year of the lowest rate in rate has important implications to busi- sell a business is neither purely tax-
recent history, and given that the Democrats ness owners when it’s time to sell the driven, nor even a purely financial con-
are once again in control in Congress, not business. A higher capital gains rate can sideration. Business sales are usually
motivated by personal factors. However,
because we estimate that it can take any-
where from 6–18 months to sell a private
business (on average, one year), we sug-
gest that business owners thinking of sell-
ing in the near future should prepare
now so they can take advantage of what
we believe to be an excellent and proba-
bly impermanent opportunity.
30 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
Calendar of Events
BUILDING THE SOUTH BAY
Save the Date!
continued from page 29
El Segundo Chamber of Commerce throughout the South Bay and Los Angeles County
Long told the Palos Verdes Peninsula For more information about the event listed, call regions. Sponsor our Entertainers, the Beer
News that it was time to find a produc- 310-322-1220 or go to Garden, Food Court or have a street named after
www.ElSegundoChamber.org. your business!
tive use for what had been vacant land
for nearly a quarter center. “It’s been Thursday, March 13, 2008, 5:30–7:30 P.M. Business After Hours Mixers
essentially vacant and mostly unused Mad March Mixer Time: 5:30–7:30 P.M.
since Marineland closed … The city is Flight Path Learning Center Admission: $5.00.
6661 W Imperial Hwy, Los Angeles.
looking forward to having it occupied Thursday, March 20, 2008
again, and it’s a great setting for a resort,” Manhattan Beach The Canterbury, 5801 W. Crestridge Road,
he said at the time. “I think Lowe Enter- Chamber of Commerce Rancho Palos Verdes.
For more information about the events listed, call
prises had good vision in picking the 310-545-5313 or go to www.MB-Chamber.com. Thursday, April 17, 2000
site, and we hope they’re successful.” Kiwanis Club of Rolling Hills Estates (Location to
So far, so good. In addition to the Business Tool Box Meeting be announced)
sales of the villas and casitas, the hotel Wednesday, March 12, 2008, noon–1:30 P.M.
AdventurePlex 1709 Marine Ave., Manhattan Beach. Redondo Beach
is already taking advance reservations Ed Myska from Bank of Manhattan will speak on Chamber of Commerce
for weddings and corporate events. “Banking 101.” Lunch is available for purchase. & Visitors Bureau
For more information about the events listed, call
Business After Hours Mixers 310-376-6911 or go to www.RedondoChamber.org
Green Projects: The Next Wave Time: 5:30–7:30 P.M.
Terranea is one of a growing number of Admission: Free for Chamber members, $10.00 Business After Hours Mixers
area projects with a strong environmen- for guests. Time: 5:30–7:30 P.M.
Admission: $5.00 members, $10.00 Guests.
tal emphasis. In fact, the quest for cities
Wednesday, March 19, 2008
to “go green” is changing the way devel- Critics Choice Catering and Event Production, Wednesday, March 19, 2008
opers and the rest of the world look at Inc., 2806 Phelan Lane, Redondo Beach. Location: Gourmet Cheese & Wine Market, 1815
building. The event will include fine cuisine as well as Hawthorne Blvd., #250. (inside the South Bay
hosted bar service. Additionally, vendors pertinent Galleria, second level, near Nordstroms),
In 2004, Redondo Beach became to the entertainment and event industry will be on Redondo Beach.
one of the first cities in the region to hand to showcase all they have to offer. Everyone will be GREEN with envy that you’re
draft a sustainable development strate- going to the St.Patrick’s Day Business After Hours
Young Professionals Kickoff Cocktail Hour Mixer Mixer, so be seen in green & celebrate!
gic plan after a “green team” identified
Thursday, March 27, 2008
policy areas for land use, building, eco- Twelve + Highland. 304 12th St., Manhattan Beach. Wednesday, April 16, 2008
nomic development, energy, water Come join our new Chamber’s Young Professional Location: To Be Determined
resources, materials and recycling, and (MBYP) group for a great opportunity to network It’s going to be a home run, so come to the
after hours. Invite your friends and business Business After Hours Mixer. We’re doing a
transportation. acquaintances! Please RSVP to the Chamber at Baseball theme this month, so wear your favorite
In January, the City of Manhattan info@manhattanbeachchamber.net. team hat.
Beach began requiring more sustainable
building practices in new construction. Palos Verdes Peninsula Thursday, May 22, 2008
Chamber of Commerce Location: To Be Determined
“We produced a green team report For more information about the events listed or It’s CRAZY SHADES month for our Business After
which looks at all opportunities for our sponsorship opportunities, call 310-377-8111 or Hours Mixer. Get out those Crazy Shades you’ve
city to become more environmentally go to www.PalosVerdesChamber.com. saved all these years & wear ‘em with pride!
responsible,” said City Manager Geoff Signature Events Network Café
Dolan.” Though nothing has been Looking for ways to get the most exposure out of Time: 11:30 a.m. to 1 p.m.
adopted yet, the Manhattan Beach City your marketing dollars? Look no further! The Palos Enjoy a great lunch and learn about your fellow
Verdes Peninsula Chamber of Commerce offers Chamber members and their businesses while
Council will soon consider issues such as high-profile marketing opportunities through promoting your own. Each person will get to
retaining on-site stormwater, achieving several sponsorship programs. Signature Event present a 30-second commercial in front of the
LEED certification, recycling demolition sponsors range from $1,000 to $3,000. Program whole group! Advanced reservations are required
ads range from $90.00 to $175.00. and will save you $5. Members with reservations
debris, incorporating drought-tolerant
are $20, and guests and members without a
plants, and of course, maximizing energy The next Signature Event is Citizen of the Year, reservation are $25. Please call 24 hours in
efficiency. April 3, at Trump National Golf Club, advance to cancel. No shows will be invoiced.
One example of such a project is a 1 Ocean Trails Drive, Rancho Palos Verdes. Bring a door prize to further market your business.
The event honors Frank and Pat Brown and Louise
mixed-use office and residential build- Brown as our 2008 “Citizens of the Year.” Thursday, March 20, 2008
ing now under construction at the cor- Donate auction items for events and mixer raffles Phuket Thai Restaurant, 901 N. Pacific Coast
ner of Manhattan Beach Boulevard and to market your business! Hwy., #100B, Redondo Beach.
John Street, which features a landscaped
The Palos Verdes Street Fair and Music Festival, Thursday, May 8, 2008
green roof, among other energy-con- scheduled for the weekend of May 31/June 1, Sammy’s Woodfired Pizza, 2575 Pacific Coast
continued on page 36 attracts 35,000 fairgoers and is widely publicized Hwy., Torrance.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 31
T I P S F R O M A S O U T H B A Y B U S I N E S S B R O K E R
A EXIT STRATEGY.
MONG THE MOST MISUNDERSTOOD ISSUES I
TRUE EARNINGS ARE AND HOW THAT NUMBER WILL IMPACT THEIR
Public companies are tion. The reason SDE is important is that most business sales
highly regulated. They are SEC require some form of financing. The SDE becomes the busi-
compliant and have audited ness’ profitability line item that does a couple of things. It ser-
financial reporting standards. They vices the payment on the acquisition debt, pays the salary of
are required to publish 10k and Annual Reports. Public com- a new owner and/or provides Return on Investment for the
panies change hands at a multiple of earnings. Generally this buyer. We call this financial analysis a transaction that “cash
happens as a Multiple of “Earnings, which is what the busi- flows.” At the end of the day, if the transaction does not cash
ness earns, Before Interest and Taxes” (EBIT). flow with the businesses SDE, it will not get completed. This
Private companies on the other hand are often family run. hard reality is sometimes in conflict with an owner’s percep-
This ownership structure can mean inclusion of discre- tion of value or even an academic valuation supporting a
tionary perks as business expenses which really only directly higher transaction price.
benefit the owner. Private companies will also change hands Documentation is everything in regard to SDE add backs.
at a Multiple of Earnings, but in this case it is a multiple of Business owners should understand ahead of time that a
the “Seller’s Discretionary Earnings” (SDE). The definition of shoebox full of credit card receipts from Costco will not be
SDE is “Earnings, Before Interest, Taxes, Depreciation and considered an allowable add back by a buyer or a financial
Amortization” (EBITDA), PLUS the owner’s salary, benefits institution looking at financing the sale of your business.
and perks. Proper documentation will allow you to maximize the
These line item earnings adjustments for determining SDE value of your transaction and facilitate your retirement or exit
are identified by performing a recast of the operating state- plan.
ment and are called “add backs.” The simplest form of add
backs would be the interest, taxes, depreciation and amorti- Local Business Broker George Hicks is a sought after speaker
zation expenses and the owner’s salary. Other more compli- and author on subjects like “Buying, Selling and Valuing a
cated add backs are found in the owner’s benefits and perks. Small Business.” He has been interviewed on KNX radio and
They include things like family members working in the busi- spoken, authored or given educational seminars for the Inter-
ness at more (or less) than the market value for the job national Business Broker Association, the California Associa-
tion of Business Brokers, UCLA Extension’s Entrepreneurial
description, personal autos, an owner’s retirement plan con- Program and numerous other professional trade associations
tributions and medical insurance policies. There may be and special interest groups. George is a licensed Business Bro-
seller owned real estate and it may be leased at above (or ker with Business Team Business Sales and Acquisitions in Tor-
below) market value. There are often non-recurring or one rance and has been awarded two coveted industry
time expenses such as the business being relocated, lease- designations: the Certified Business Intermediary designation
(CBI) by the International Business Brokerage Association
hold improvement expenses or section #179 depreciation. (IBBA) and the Certified Business Broker (CBB) awarded by the
When the sale of a business is part of an owner’s exit strat- California Association of Business Brokers (CABB). He may be
egy, SDE will be one of the primary focuses of the transac- reached at 310-539-8300 george@business-team.com
32 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
KEN ROBERTS
continued from page 9
inaccuracies and credit theft, makes
credit scoring a very important asset to
monitor regularly.
The timeframe for the increase in
loan limits to take effect is still a bit up
in the air. Some say it will happen as
soon as the first week in March while
others believe it will be at least 30 days
from the date it was signed into law.
Usually in anticipation of a loan limit
increase, lenders will start funding con-
forming loans at the projected loan
amounts and they will hold them until
the secondary market actually starts
buying them. That may not happen this
time around, as some believe there
may be special underwriting guideline
changes associated with the loan limit
increase and possibly pricing bumps as
well.
Either way, the time to prepare for a
potential purchase or refinance with a
loan amount up to $729,700 is now.
Because the stock and mortgage bond
markets have been extremely volatile of
late, with both gyrating wildly up and
down on short notice, I recommend get-
ting ready and being in a position to
lock your loan on a dip in rates.
There are some brand new mort-
gage products in the marketplace that
can help you pay off your mortgage in
5–15 years without making extra prin-
cipal reduction payments! It is as pow-
erful a new concept as I have seen in
30 years in the real estate industry and
a safe, proven method to retire sooner
with more assets. You may consider an
annual mortgage and credit check-up
with a mortgage planner to ensure
your credit score is as high as it can be
and that you are in the best possible
loan product for your circumstances.
Don’t put it off until later. There is a
window open until the end of the year.
And the clock is ticking. The race is
on. Ladies and gentleman, start your
engines!
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 33
C E
R OCL R
U U
M INT M
I N
ESN ITD E
I N
RS I D E R
W
E HAVE ALL WORKED
WITH PEOPLE WHO
FIT THIS DESCRIPTION
AND HAVE BEEN ASKED TO
IMPROVE THEIR PERFORMANCES
AND MAKE THEM MORE PRODUC-
TIVE IN THEIR EXISTING ROLES.
YET, HOW MANY TIMES HAS THIS
PROVEN TO BE EFFECTIVE?
It is very important to understand what it
takes to modify and change work behaviors
and why it typically does not succeed.
Most people are flexible enough to adapt
behaviors for short periods of time and
almost everyone can put on a show when
BY TONY TRAVEN
the boss is around. The fact remains that
people will modify the job to suit themselves, instead of the Let’s look at the issue again from another angle. How about
other way around. clearly understanding what people do best and then structur-
Have you ever tried to change an ingrained habit? Multiply ing the work to suit them? Give it some real thought.
this difficulty factor by 10 and you start to see how hard it is to If you clearly understood what people love to do and you
change a core work trait and the behaviors that come from them. assign them this type of work most of the day, what do you
If you’re an executive or business owner, take a closer look think would happen to their productivity? What about doing
at yourself and you will see that you modify or change the job this with a whole workgroup? What would happen to profit?
to suit you. You delegate the regular tasks you don’t like to do Employee morale?
to others: i.e., you assign a multi-page flash report you don’t The current economy is uncertain to say the least. If your
want to put together for a corporate finance meeting to some- industry is still projecting growth and prospering, then you
one you trust who enjoys this type of work. have an opportunity to find better talent. But if your company
I spoke with a regional sales manager who took a position is on the other end of the scale and you are forced to do more
running a 30-person phone room that required a tremendous with less, then you have to figure out how to maximize pro-
amount of daily paperwork and preparation. He accepted the ductivity with what’s already there.
job so he would get better at handling the details, since he A very successful businessman said to me that he loves it
would be focusing on detail-oriented tasks daily. Within two when the economy slows down because he can raise the bar
months, he streamlined the processes and then reassigned on performance and find more talented people who will make
these tasks to someone else. his company stronger. This may seem cold-hearted at first. Yet,
So what do you do? How about looking at this situation I believe the best thing a business owner or executive can do
from a different angle — one that takes into account what peo- on behalf of their great employees is surround them with peo-
ple do best, enjoy the most and are most productive doing. ple who will make them even better.
If your first reaction is: I am the boss and I just tell them this The next best thing is to figure out who in the organization
is the way it is and make them do what I want… does this are misplaced and reassign them. These are the individuals
approach truly work? Sure, for short periods of time when you who work very hard but just don’t fit the position — not the
are there cracking the whip. But does it make for a healthy and ones who should be asked to seek employment elsewhere.
productive work environment? At a small company with only 12 employees, there was a
Or maybe you have historically taken the performance salesperson struggling to meet the new sales objectives. He put in
appraisal route, pointing out all the weaknesses people have the necessary effort, but just was not able to reach his goal. Once
and explaining that in order to be well-rounded employees, we looked at his work traits, we noticed he was perfectly suited
they will have to improve in these areas. So how does this for sales support and management instead of sales. By reassigning
strategy work? I was talking with a top salesperson, who told him to manage sales support and splitting his old territory among
her boss: “Why don’t you just photocopy last year’s perfor- stronger salespeople, profits increased by $300,000 in one year.
mance appraisal that says the same things that I don’t do well In any company or corporate division, you have people you
and want me to fix, along with the one statement that I lead cannot live without and those you cannot figure out. You have
the company once again in revenue and new accounts?” people proactively moving the company forward and making you
34 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
R E C R U I T M E N T I N S I D E R
a fortune and others costing you money. that have been and should only be used
Through a simple analysis and with- in team building workshops.
out ever meeting your staff, most organi- It is worth your time to learn how to
zational consultants can look at the strategically align people within your
results and tell you with a high degree of company based upon what they do
accuracy who falls into which group. best. Knowing precisely instead of trying
Plus, they can identify those who are to guess makes the difference. When
misplaced. you can focus most of your time on
There are many services available growing your business or division
that measure work traits or behavior and instead trying to fit square pegs in round
can be used to conduct this type of holes, you can dramatically change the
workplace analysis. These processes dynamics of the workplace and signifi-
have gone through extensive validity cant impact your bottom line.
studies, are designed to meet and
exceed the EEOC guidelines for testing Tony Traven is a licensee for Culture
Index in the Los Angeles metro area.
and accuracy, and can be used in the Tony works in the field of organizational
hiring process as a selection tool. Of development and can be reached at
course, there are some well-known tools 310-683-3607 or tonytraven@mac.com.
1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 35
B U I L D I N G T H E S O U T H B A Y E C O N O M Y
BUILDING THE SOUTH BAY future development is environmentally Segundo Mayor Pro Tem Eric Busch.
continued from page 31 friendly. The decisions will no doubt be Various business leaders are
serving amenities. “Developers for the tough: while cost-efficiency is always a already paving the way. In El Segundo,
past year or so have been incorporating priority, sometimes the ecologically cor- BT British Telecom will complete the
sustainable building elements on their rect decision will entail spending more county’s largest solar panel project this
own,” added Richard Thompson. “The in the short run on materials and labor. summer, reducing carbon emissions
market is dictating it.” “One goal will be to change the capital by an estimated 642,000 pounds a
El Segundo recently established an procedure itself such that when we year. Several office developments,
Environmental Committee comprised of approve capital projects, part of the pro- including Campus El Segundo, hope
members of the residential, business cess will be determining how will this to achieve LEED certification — the
and school district realms to ensure that affect the environment,” said El nationally accepted standard for envi-
ronmentally responsible buildings and
developments. TG Construction, the
contractor for both the Pacsan and
Downtown El Segundo projects, has
achieved the highest-level platinum
certification for three of its own green
projects. “The design of the building is
intended to reduce carbon footprint
and electrical usage by incorporating
opening windows, more shading,
open-air hallways, more efficient air
conditioning, solar paneling and addi-
tional insulation,” explained Lyle Maul
about Segundo Business Park.
Other communities are following
suit. Last spring, Torrance pledged to
reduce its carbon footprint and encour-
age green building practices. It already
requires recycling of 50 percent of all
construction materials. City of Hermosa
Beach Assistant Planner Eva Choi said
discussions are now underway to for-
mulate an ordinance providing incen-
tives to go green. That city’s Residential
Green Committee, comprised of local
citizens and architects, is behind the
campaign to promote environmental
practices and energy savings. And in
Rolling Hills Estates, the City has
adopted a resource-efficient land use
policy and mandates water conservation
for new landscaping in commercial,
office and other developments.
Conclusion
The evidence appears overwhelming:
Reuse has indeed re-energized South Bay
commercial development. The question
may be how long developers can ride
out the crest until the market is saturated.
Indeed, certain communities may have
already tapped out their potential. But for
the foreseeable future, it appears the
South Bay market is in full stride.
36 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
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C O M N
N O
I NLSO
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1 S T I S S U E 2008 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 37
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SEARCH ENGINE OPTIMIZATION back to your site, you’re getting a subtle on a search engine results page that also
continued from page 8 endorsement from that site. Users who has your site as part of the natural search
day and see your ad on a regular basis, trust and respect the linking site will results. About 20% of users don’t know the
they’re gradually going to think of your extend that trust to you, and search difference between natural and sponsored
site when they need something related engines trust it as well. When these links, so having both simultaneously is the
to your business. users decide to visit your site, you’re no holy grail of Internet marketing.
In other words, don’t limit yourself to longer a pure stranger. Even the title tags, and the name of
thinking that a banner ad is a one-shot The same phenomenon occurs with your website itself, can have benefits
tactic. It won’t cost you anything to try the articles, news releases, blogs, and beyond your search engine status. “Vin-
getting more mileage from every click, forum postings that are often a big part of tageAutoParts.com” looks more credible
so you might as well develop a long- SEO. If you do your job right, almost and relevant than “HarrysGarage.com.”
term strategy that supports your SEO. everything you do for Search Engine Opti-
mization can be tied to your PPC cam- Tying It Together
The Long View of SEO paigns and you can drive targeted visitors With Landing Pages
If you’ve implemented a Search Engine to your new content using paid search. A landing page is targeted to a specific
Optimization campaign with the hopes The ultimate reward comes when product or service offering. It contains
of a payoff half a year later, you might you get the highly-treasured “double minimal distractions and a strong call to
miss out on some immediate benefits. link.” This happens when your ad shows action. The goal of a landing page is to
SEO can enhance your online market- up on a site where you’ve posted con- get the website visitor to complete a
ing campaigns almost from day one. tent. Users see your site in the content, certain action, such as subscribing to a
This is true because content, code, and somewhere on the same page they newsletter, filling out a contact form, or
and a presence on other websites are all see a paid advertisement for your site. signing up for a special offer.
important parts of SEO, and they can be This results in an exponentially higher You may want to create a unique
used to enhance sales as well. Click Through Rate. landing page for each keyword group.
For example, consider the power of Another version of this is when your For example if you have a website sell-
links. Every time another website links paid Google, Yahoo! or MSN ad shows up ing clothing, you would want to create a
landing page focused on women’s
shoes. The page would feature graphics,
text and a specific call to action targeted
only at women shopping for shoes.
38 S O U T H B AY B U S I N E S S I N S I D E R M A G A Z I N E 1 S T I S S U E 2008
C O L U M N I N S I D E R
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