Author Archives: Don Harris

About Don Harris

Don Harris is a freelance writer in Phoenix who reports on a variety of business-related topics. He also serves as copy editor/reporter for Arizona Capitol Times. Immediately prior to joining the Capitol Times in 2001, for nearly nine years Harris was a public information officer for two state of Arizona agencies, first with the Department of Commerce and then the Department of Insurance. Harris also covered politics, organized labor and general news events for The Arizona Republic for 19 years, periodically serving as an assistant city editor. At The Republic, Harris covered the Arizona House of Representatives for 10 years, as well as five national political conventions and most major Arizona political races. He has received several journalism awards in Arizona and Chicago, where he had been a reporter for a daily newspaper for a number of years.

5.Men

Shepherding Success: Chamber Works To Help Hispanic Businesses Grow

By Don Harris

For 60 years, the Arizona Hispanic Chamber of Commerce has been at the forefront of promoting the growth and welfare of Hispanic-owned businesses throughout the state.

Arizona Business Magazine, September 2008The vast majority are small operations with one to five employees, but that doesn’t begin to tell the impact the Hispanic community has on Arizona’s economy. Chamber President and CEO Harry Garewal estimates the buying power of the Hispanic community in Arizona is $27 billion. That’s “b,” as in big bucks.

Overall there are about 35,000 Hispanic-owned businesses in the state, Garewal says. The chamber has a membership of 650 of the larger firms, many of which are not owned by Hispanics. Included are 52 corporate members, such as Wells Fargo and the Salt River Project.

Considering the Hispanic community’s economic muscle, it’s no wonder why non-Hispanic corporations support the chamber.  “They want to get into the Hispanic market,” Garewal says.

That fits nicely with the chamber’s mission to “promote the success of Hispanic businesses by facilitating business relationships, development and knowledge.”

Hispanic-owned businesses make up a diverse segment of the economy — professional consultants, lawyers, Realtors, mortgage companies, banks, retail, restaurants, landscaping and cleaning services. Founded in 1948, the chamber has established a reputation as a leader in setting the pace for business growth in today’s highly diversified market.

Historian Frank Barrios, who is writing a book on the chamber’s 60 years, says, “The value of the Hispanic Chamber of Commerce to the Hispanic community and to the Arizona economy is in enabling Hispanic businesses to promote their unique business perspectives, often represented by language and/or culture. It may also allow other non-Hispanics to reach out to the Hispanic community for social and/or political reasons, providing a window into the Hispanic community.”

In the last decade, the number of Hispanic-owned businesses in Arizona has increased significantly. At the same time, roughly one out of four residents is of Hispanic origin or descent.

After Garewal came on board five years ago, the chamber asked its members what they needed.

“As a result,” he says, “the chamber provides diverse technical assistance, including programs in business planning, seminars, marketing consultations, leadership development, networking opportunities, how to become certified to qualify for government contracts, what kinds of licenses are needed, the differences between an LLC, a ‘C’ corporation and an ‘S’ corporation. It’s all about what small business owners don’t know because they have been busy working their business.”

Providing access to capital is another prime function of the chamber. “We help identify financial institutions that will help give them access to capital,” Garewal says. “Maybe it’s just a matter of tweaking their business plan, their financials, so they can become bankable, which enables them to grow their business and create more jobs.”

Another service focuses on procurement. “We identify specific kinds of contracting opportunities,” Garewal says. He provides examples of successes through the efforts of the chamber and the businesses themselves.

A $1 billion Phoenix bond program provided Hispanic businesses with several opportunities for infrastructure services and products.

In Pinal County, a Casa Grande manufacturer wanted to set up a $45 million gypsum plant in Eloy. The chamber arranged workshops in Phoenix, Tucson and Eloy for subcontractors. Garewal says 61 businesses attended the sessions, and $32 million in contracts went to firms the chamber identified.

Garewal also served on a committee for emerging small businesses for the Super Bowl staged in Glendale last February. It was an 18-month project to provide input and access to NFL decision-makers and educate chamber members regarding the opportunities available to them.

More recently, Garewal and Joseph Ortiz, senior vice president of public relations and community affairs for the chamber, were invited to meet with NBA officials to discuss opportunities for vendors in connection with the 2009 All-Star Game, which will be held in Phoenix.

“They want to give everyone a fair chance at the opportunities, and we’ll share that information with our members,” Garewal says.

While the chamber closely monitors and tracks bills at the Arizona Legislature, it does not get involved in lobbying — yet.

“We have a good understanding of how the process works,” Garewal says. “For example, 40 of our members met this spring with the Hispanic caucus. It was the largest such meeting with Latino legislators, and members of the caucus were impressed that we had that many members who are interested in what was going on at the Legislature.”

Issues of interest include access to capital, procurement of contracts and affordable health care, but the main focus is on immigration.

“In the next year or two, we will be in a position to affect how public policy is established in the Arizona Legislature,” Garewal says.

At the national level, chamber officials meet with members of the Arizona congressional delegation. “We have been very engaged in immigration discussions, including border security,” Garewal says. “The federal government needs to take its responsibility seriously.They need to come up with a comprehensive immigration reform act that would address the 12.5 million folks who are here working. The government needs to provide a transition period — a mechanism to have those folks who are here today transition into becoming citizens of the United States. If the federal government tried to send 12.5 million people back to their countries of origin, that would bankrupt the United States. We wouldn’t have the work force necessary for the U.S. economy.”Arizona Business Magazine, September 2008

With the assistance of the chamber, the future of Hispanic-owned businesses in Arizona appears bright.

“One thing that stands out,” Garewal says, “is that the chamber has always been, in its 60-year history, representative of the contributions that Hispanics have made in the state of Arizona.”

gas

Fueling Change: Higher Energy Costs Are Forcing Valley Companies To Look For Alternatives

Fueling Change

Higher energy costs are forcing Valley companies to look for alternatives

By Don Harris
From the neighborhood car wash to a corporate behemoth such as US Airways, rising energy costs are forcing Valley businesses to search for alternatives to relieve the pressure on their bottom lines.

Arizona Business Magazine, September 2008

On a warm weekend morning in the Phoenix area, a bored but concerned car wash attendant asks the only motorist who pulls up for a cleaning: “Where is everybody?” He then answers his own question: “People aren’t driving as much and their cars aren’t getting as dirty.”

From airlines to car washes to supermarket chains, record-high gas prices are taking their toll, causing businesses to implement strategies aimed at trimming expenses and saving energy.

Alternatives, ranging from solar to wind to biodiesel, are becoming more attractive and cost-effective as utility bills and prices at the pump continue to squeeze the bottom line.

While US Airways made major news when it announced a broad range of steps to cut costs and generate revenue, the airline is by no means alone in its actions. Bashas’ Family of Stores is an example of supermarkets that are feeling the pinch of higher diesel fuel prices, and the trucking industry reports some haulers are considering dropping customers who are in outlying areas.

Even car washes, which depend entirely on customers’ driving habits, are seeing a decline in business. Brian O’Connor, owner of Arizona Auto Wash, with operations throughout the Valley and in Sedona, says his customers are coming in less frequently.

“Instead of once a week, maybe we see them every other week,” O’Connor says. “People are so sick of putting money into their cars. They’re changing oil every 10,000 miles instead of 3,000 miles.”

O’Connor and other gas retailers are victims of what he calls a double whammy. Retailers get 8-to-10-cents per gallon, regardless of the price. Back when gas was $1 a gallon, that was a 10 percent profit. At $4 a gallon, that’s only 2.5 percent.

In addition to hiking the air-conditioning a degree or so, O’Connor has employees check equipment regularly for leaky hose bibs and broken sprinkler heads to conserve water.

Conservation, whether of water, fuel or energy, comes in many forms. For example, there’s solar power. Leah Bushman of Dependable Solar Products in Tempe, acknowledges that businesses, in particular home builders, don’t opt for solar units because of the cost.

“They want to know how is it going to affect their pocketbook, what is the return on investment,” she says.

She tells of a California builder who found that equipping homes with solar units added $18,000 to the cost, even after rebates and incentives. But, those solar homes sold much faster than others in the development.

In addition, a “green” architect in the Valley is seeing more interest in solar energy, Bushman says. “Why? Because more people are aware that we have an energy crisis on our hands,” she says. “We don’t have cheap oil anymore, but we do have the solar technology and the sunshine.”

At Southwest Windpower in Flagstaff, Miriam Robbins, marketing director, says any business could benefit from the company’s system, which is installed directly into the electric grid and does not need batteries or additional backup. The cost of most systems, including installation, ranges from $12,000 to $18,000. Rebates are available.

“The amount of power you get depends on wind speed,” she says. “Larger retailers may be interested to not only help offset electric costs, but also to make it more of a green statement. It can be installed on top of a light pole in a parking lot.”

Rick Katt, an owner of AZ BioDiesel in the Valley, says any business with a large fleet of trucks that runs on diesel should consider biofuel.

“No modification to your vehicle is needed,” he says. “It’s 80 percent vegetable oil, your motor runs cooler in hot weather and it’s cheaper than regular diesel by about 50 to 75 cents a gallon. And it’s better for the environment.”

Kristy Nied, director of communications for Bashas’, says the soaring price of diesel fuel has made it even more difficult for the company to operate in a cost-efficient manner.

“We rely on diesel fuel for our fleet of 97, over-the-road, 18-wheelers that deliver groceries to our stores throughout the state,” she says.

Recently, Bashas’ installed a device on its diesel trucks and eight other trucks that reduces fuel consumption and emissions.

“We’re saving enough fuel to run our entire fleet for a week,” Nied says. “We’ve also achieved a 32 percent reduction in particulate emissions.”

Bashas’ is testing a work-at-home program for certain employees, rewarding those who carpool with gifts ranging from duffel bags to vacations, and giving employees who ride public buses for two months a $25 gift card for store items.

“We’ve seen the number of bus riders go up because of gas prices,” Nied says.

A business decision closely related to the price of gas was the discontinuation of Bashas’ “Groceries on the Go” service.

“The cost of fuel made it extremely difficult for us to offer delivery service at a reasonable fee,” Nied says.

During the hot summer months, Bashas’ encouraged stores to set thermostats 2 degrees higher than normal. The grocery chain also placed nightshades on open freezer cases to reduce energy consumption, and installed energy-efficient lighting in more than one-third of the stores. The goal is to retrofit the remaining stores by the end of next year, Nied says.

To cope with rising fuel costs, US Airways has plans to cut as many as 2,000 jobs and started charging passengers more for items such as drinks, choice seats and checked bags. In the second quarter, the carrier lost $567 million, even though revenue rose 3 percent to $3.26 billion. But that revenue was eaten up by fuel costs. A year ago, the company reported a profit of $263 million.

In announcing US Airways’ second quarter earnings, company Chairman and CEO Doug Parker said he expects the new fees to add $500 million to the airline’s coffers. However, that’s less than half of the $1.1 billion the company paid for fuel in the second quarter.

Industry sources estimate fuel costs for airlines have increased 80 percent over a year ago. Valerie Wunder, associate manager of media relations for US Airways, says the airline is estimating its fuel costs to be $2 billion more than last year.

She explains other moves to save fuel. They include replacing all service carts with ones that are 12 pounds lighter and, in the cockpits, replacing paper manuals with electronic flight bags and maintenance logbooks to remove about 100 pounds of weight on each flight.

“Our fuel-hedging program and fuel-conservation measures such as single-engine taxi, which saves an estimated 5.2 million gallons of fuel annually, and fuel-conserving winglets, which reduces drag and saves approximately 1 million gallons of jet fuel, also help us conserve fuel,” Wunder says.

Karen Rasmussen, president and CEO of the Arizona Trucking Association, says fuel prices led to a record number of trucker bankruptcies nationally in the first quarter of the year. The association has 353 members, including UPS, Bashas’ and Safeway.

“Truckers are struggling,” she says. “They’re doing everything in their power to reduce fuel consumption, such as limiting idle time and keeping tires properly inflated. But, when it’s 113 degrees and they’re in their sleeper cab taking a required break, they have to keep the A/C going.”

In many cases, truckers are installing governors to limit speed or have instituted a companywide policy of keeping speeds between 58 and 62 mph.

“Reducing speed reduces fuel use,” Rasmussen says. “Many companies are looking at markets or customers they won’t serve as part of an overall business plan. They’re sticking with their best customers, the ones that pay their bills on time.”Cover September 2008:  Fueing Change

Fuel formerly was the second highest cost of doing business next to labor.

“Now, it’s the highest in many cases,” Rasmussen says.

The outlook?

“There’s not much to indicate we will get an improvement in fuel prices,” Rasmussen says.

Arizona Business magazine September 2008 “There are too many things on the global horizon indicating we will continue to have shortages of distillate, which is what diesel fuel is made from. There is a huge increase in demand overseas.”

Part of the problem is the weak dollar. U.S. firms are exporting more diesel fuel than ever.

“They can sell it for more overseas,” Rasmussen says. “Wouldn’t you?”

www.bashas.com
www.usairways.com
www.dependablesolarproducts.com
www.windenergy.com
www.azbiodiesel.com
www.arizonatrucking.com

CDRates

CD Rates Inching Higher Again

Bank-issued certificates of deposit rates are inching up, but if your one-year CD is maturing, you’re probably not going to like what’s being offered. That’s because CD rates took a dramatic drop in the past year as the Federal Reserve marched through a series of reductions starting last summer. The downward spiral was triggered by a belt-tightening credit crunch and a pervasive housing downslide.

Rates plunged as much as 325 basis points in the past year, dropping to as low as 2 percent from 5.25 percent.

Early last summer, it was not uncommon to see banks offering 5 percent interest or more on certificates of deposit. Then came the steady stream of rate cuts, and CDs were paying in the neighborhood of 2 percent. Now we’re seeing rates flirting with 3 percent, and teasers that are a tempting couple of percentage points higher.

Does the move to higher ground indicate that an economic turnaround has begun? Not necessarily, say banking experts.

“Rates are down considerably from what a consumer could have gotten last summer,” says Herb Kaufman, professor of finance and vice chair of the Department of Finance at Arizona State University’s W. P. Carey School of Business. “Now they’ve come back a little bit. They’re trending up as banks try to rebuild their deposit base and retain the deposits they have.”

Kaufman and Rick Robinson, regional investment manager for Wells Fargo Wealth Management Group, agree that one of the reasons for the modest increase is the perception that the Fed is not likely to reduce interest rates anytime soon. Another factor is inflation.

Robinson says the Fed is taking a wait-and-see approach to determine how the economy responds to seven rate cuts and whether inflation will remain somewhat subdued or will increase.

Kaufman notes that inflation, fueled by gasoline and food prices, appears to be accelerating.

“As that happens — and the feds are very conscious of that — you can expect banks will have to reflect the rise in inflation with their CD rates,” Kaufman says.

A significant improvement in the credit market adds to the likelihood of CD rates continuing to drift upward through summer, Kaufman says. He expects to see CD rates somewhat higher than they were last spring.

Is the inching up of CD rates a good or bad sign for the economy?

“I’d say it’s a little bit of a good sign,” Kaufman says. “It wouldn’t happen if the Feds weren’t comfortable with the credit market. Concerns have eased. Banks are comfortable to bid up rates, which means some of the constipation in the credit market has eased.”

The rise in interest rates could be tied to various factors.

“It’s usually a signal that the economy is beginning to do well or that the Federal Reserve wants to slow down the economy,” Robinson says. “Or it could mean that interest rates go higher because of supply and demand, because of inflationary pressures.”

But Robinson cautions: “A small uptick in rates is not a signal that we’re out of the woods or that economic growth is turning around. I still think it will be subdued in the second half of 2008. We expected low growth for the first portion of this year, and we expect to pick up the pace slightly in the second half.”

Another word of caution for investors: “Some banks might offer teaser rates of 5 percent for three months,” Robinson says, “but when it matures and resets, the rate will be consistent with what other banks are offering. Any bank in Arizona must remain competitive with the bank on the opposite corner.”

The creep upward of CD rates is a good sign for aging investors who rely on income from these investments to maintain their lifestyle. Conversely, the drastic decrease in rates since last summer was hurtful, especially for seniors.

“There is less money in their pocket,” Robinson says. “As their CDs matured, if they reinvested their money they’re more likely earning less than they earned previously. They have less to live on.”

Kaufman, too, says the increase is a good sign for retirees, so long as the rise does not pose a threat to economic recovery. Because of the roller-coaster ride the stock market has been on, some investors seeking a safe haven switched to CDs covered by the FDIC.

The collapse of investment bank Bear Stearns & Co. in March spawned some movement to CDs and safer, less volatile investments, including government-backed bonds. Robinson calls it “a flight to quality.”

“In the summer of 2007, banks went through a confidence crisis,” Robinson says. “Investors were worried. Some banks experienced an outflow of deposits, given investor concerns over their viability. That concern seems to have lessened. As the crisis grows longer, more information becomes available, which lessens the panic. People can understand the viability of their institution.”

The reason for the subtle increase in CD rates is anybody’s guess.

“Some banks might be willing to take a loss on deposits to shore up their capital base,” Robinson says. “They may want to increase deposits because they see opportunities to make loans. There are myriad reasons why rates go up, fluctuating in small increments of five to 10 basis points. It could be strategic or market related.”

ForeclosureFallout

As More People Lose Their Homes, Banks Are Left Holding The Keys

Acquiring real estate through foreclosures is not exactly the type of transaction banks relish. That’s especially true in a down market that is overloaded with raw land and homes — and a paucity of potential buyers.

Estimates of the amount and value of acquired real estate through foreclosures are difficult, if not impossible, to come by, an industry insider says. A lot of the banks don’t want to talk about it.

“It’s ugly for everyone involved and you can’t even get the Federal Reserve to talk about it,” the insider says.

Anthony B. Sanders, professor of finance and real estate at Arizona State University’s W. P. Carey School of Business, sums up the somewhat dismal situation: “Banks are not in the business of being portfolio managers, either vacant land or housing.

“The way they’re trying to get rid of properties is that most banks are doing packaging. They sell packages of defaulted properties to investors around the United States,” he continues. “They started with national lenders, but there was very little interest in that. Then they went to regional packaging. That didn’t work either. Let’s face it, nobody really wants a Detroit-area loan or housing package.”

What’s happening is that hedge funds and equity funds are looking for very specific types of properties. Raw land value is highly dependent on where the land is.

“That’s why they don’t want to buy large portfolios,” Sanders says. “Because on the urban fringe, when you get way out west or southeast of Phoenix, some of that land they cannot literally give away. The reason is there is no foreseeable development going on in those areas.

“They’re looking for anything related to water rights or mineral rights — anything with natural resource implications still has a positive value,” Sanders says.

Until housing makes a comeback, banks are not finding a lot of interest in 40-acre tracts of desert that someday could be converted into a housing development, Sanders says. Some banks have defaulted single-family homes, often in remote areas.

“During the boom, and until fairly recently, a lot of starter homes were built in areas near Queen Creek, where land prices were fairly inexpensive for the Phoenix market,” Sanders says. “That market has really gotten beaten up pretty hard.”

National and regional bidders for those packages are few and far between.

“It brings back the old adage of location, location, location,” Sanders says. “If you’re planning properties located on major golf courses, or some properties in Scottsdale, there’s interest in that. In the classic subprime neighborhoods, which tend to be lower income, there’s not a lot of interest.”

In the meantime, banks are running around trying to peddle their packages. It’s more feasible to sell packages instead of marketing individual properties, because bank real estate portfolios are overflowing.

“Packages provide a good indication of which areas of Phoenix are likely to keep dropping like a rock,” Sanders says. “It’s those areas where there isn’t any interest in bank packages, which means the market doesn’t think they’re near the bottom. In some areas of Phoenix, the bottom may be a little ways away.”

With packaging of perhaps as many as 200 properties at a time, come discounts.

“The nasty part is that some of these properties are being offered at a big discount and they still can’t get rid of them,” Sanders says.

Even so, there continues to be interest in Ahwatukee, Scottsdale and Paradise Valley, which Sanders says means the housing market is showing some signs of life. But he adds this ominous observation.

“This is very reminiscent of the RTC (Resolution Trust Corporation) fiasco after the savings-and-loan debacle. It’s just like when the RTC was putting together packages. That’s the tipoff. Anytime you see packaging, that should make the hairs stand up on the back of your neck.”

At the Arizona Department of Financial Institutions, which regulates state-chartered banks and none of the large national ones, Tom Wood, division manager for banks, also recalls the S&L collapse.

“We had a lot of raw land in the 1980s,” he says. “Thank goodness we don’t have much of that now.”

Most of the real estate banks are trying to get rid of consists of single-family homes, Wood says.

“Very rarely do we see raw land,” he says. “Some banks don’t want to own it because it takes longer to get rid of. If they foreclose on raw land, they probably sell it at a sheriff’s sale.”

Wood expects a continued uptick in bank acquisitions of real estate, but sees very little of that among state-chartered banks. He suggests that some larger banks might be bundling foreclosed properties and attempting to dispose of their holdings through auctions or developers.

Depending on which economist you talk to, a substantial housing turnaround won’t happen until 2010. Some say 2009; and yet, as Sanders says, there are signs of life in 2008.

“For certain areas, recovery is there,” Sanders says, “but if I’m sitting in Buckeye, Avondale, Queen Creek and parts of Gilbert, I wouldn’t look for a speedy return.”

B2B collection agencies help companies recoup on unpaid bills, 2008

B2B Collection Agencies Help Companies Recoup On Unpaid Bills

Derailing Debtors

B2B collection agencies help companies recoup on unpaid bills

By Don Harris

Far too many business owners and operators don’t realize that a sale is not a sale until they see the money. They put plenty of emphasis on the front end of their business — development, marketing and selling — but often the back end, getting paid, doesn’t get the attention or resources needed to make a company truly successful.

After three months, the probability of collecting on a debt drops to about 70 percent, according to the New Jersey-based Commercial Collection Agency Association. After six months, the likelihood declines to 52 percent, and after a year, the chances of collecting on a delinquent account drop to less than 23 percent, the association estimates.

That’s where professional commercial collectors come in. They recoup untold millions of dollars for businesses, helping the bottom line in today’s troubled economy. Rates for doing the collection deed are pegged to a percentage of the amount recovered, and many don’t charge anything if they come up empty.

Don’t confuse these collection agencies with the ones that send employees tiptoeing into someone’s house to repossess a refrigerator or jump-start a car in the middle of the night. They’re involved in what insiders refer to as B2B collections — business to business. For the most part, they steer clear of consumer debtors. They do, however, repossess heavy equipment or machinery for which the buyer failed to pay.

Rich Hollerbach, CEO of Singer, Bach & Associates, with operations in Scottsdale and Tucson, says his firm has two paths to debt collection — the soft approach in the early stages of delinquency and more aggressive tactics for troublesome situations.

Hollerbach, who has more than 20 years of B2B debt collection experience, says the key in either scenario is to try to maintain a good business relationship between his client and the debtor.

“We try to find out the reason for non-payment,” he says. “It’s more of an audit-type approach. We become an extension of their in-house collections procedures. A lot of times we find out there was some type of miscommunication, or maybe there was a potential problem with the products or services that were delivered. Retention is the key thing. We want to make sure they will continue to do business with our clients.”

In more difficult collection situations, Singer, Bach & Associates conducts investigations to determine the ability of an indebted company to pay.

“We might go to their business for a face-to-face meeting,” Hollerbach says. “There are several reasons for non-payment. Maybe it’s a cash flow problem in their own business — they didn’t get paid for whatever they’re re-selling — or their industry has taken a hit or it could be a seasonal issue.

“We’re going to want to know who else they owe, how much they owe, do they have any tangible assets, and how well their business is doing. And, we want banking and tax information. We gather all of this so we can make an intelligent decision if we can’t come to a voluntary resolution,” Hollerbach continues. “We do this so we’re better educated and we actually collect from a position of strength.”

Hollerbach recalls instances in which a debtor claimed he couldn’t pay.

“I might say that we found an opportunity for (the debtor) to liquidate this particular asset to take care of (an) obligation to my client,” he says.

Litigation is usually a last resort, depending, of course, on the amount owed. It’s often a case of throwing more money at a bad debt, especially if the debtor is about to go out of business.

Singer, Bach & Associates, which only gets paid if it collects for its client, tape records its phone conversations to protect against unwarranted claims.

“We deal on the negative side of business, and emotions get involved,” Hollerbach says. “A lot of times we’ll find out with this process that we weren’t out of line. The customer just got upset and they’re complaining to a regulatory commission or to our clients themselves. It’s a good control to have in place to make sure everyone’s doing what they’re supposed to be doing.”

The recordings also enable supervisors to critique collection staff members.Cover July 2008

“It’s a great training tool for us,” he says.

Clients include transportation companies, insurance, media, lenders, and commercial leasing.

With baby boomers aging, there likely will be a greater need for wheelchairs, walkers and medical beds. Commercial debt collectors might go after doctors who fail to pay for equipment and products manufactured by a collection firm’sclients. But they don’t try to collect from patients who owe doctors.

“The bottom line in our B2B world, first and foremost, is dispute resolution,” Hollerbach says. “We take the emotion out of the transaction, and we allow each party to understand the importance of resolution. From a client’s perspective, it is obviously to get paid. From a debtor’s perspective, there was something that went wrong. We have to bring both sides together to figure out what went wrong and how we’re going to get past it.”

www.sbacollect.com

 

AZ Business Magazine July 2008 |
Arizona's venture capital market receives boost

Arizona’s Venture Capital Market Receives Boost

Venture capital is still out there, but startups remain starved for investors

Arizona’s venture capital market has received a welcome boost, but startups and early-stage businesses are still looking for financial angels. Experts in the field say a new wave of venture capital is vital if the state’s economy is to continue growing at the pace it has been in recent years. Because Arizona is an attractive place to do business, experts expect to see an increase in interest by venture capitalists, perhaps later this year. They also believe that the flagging national economy is not a factor.

Yet, a PricewaterhouseCoopers’ report shows slippage in 2007, when Arizona companies received $200.7 million in venture capital compared to $262.6 million in 2006. Providing some relief in 2008 is the recent formation of the Translational Accelerator LLC (TRAC), a private Arizona-based, $20 million bioscience venture capital group. TRAC plans to invest between $500,000 and $2 million in any one company devoted to developing diagnostics, services, prevention agents and treatments directed to cancer and central nervous system diseases, including Alzheimer’s and multiple sclerosis.

Barry Broome, president and CEO of the Greater Phoenix Economic Council, calls the TRAC fund “an example of the investors’ commitment in taking the needed risk to help drive Arizona’s economy.”

Broome says reports indicate that virtually all of Arizona’s recent venture capital funding is in late-stage activity, funding mergers and acquisitions of built-up companies.

“The key component is getting a venture-capital model more aggressively focused around seed and startups,” he says. “That’s where you’re going to get long-term economic benefits.”

Venture capital peaked in 1999-2000 with the telecommunications industry and Internet-based companies. But since the dot-com bust, venture capital has yet to recover.

“People took big losses on them,” Broome says, “and subsequently there was a cooling of venture capital.”

Terree Wasley, director of entrepreneurial services at Arizona State University, sees gradual improvement in the venture capital arena, with no huge moves forward or back.

“Things are on a slow but steady incline going forward,” she says. “But if we’re looking at some sort of downturn in the economy, I’m not sure what impact that might have.”

Wasley says ASU Technopolis, which hosted the Invest Southwest Capital Conference in December, and ASU entrepreneurial services strive to train entrepreneurs who are worthy of investments.

“Our mantra is: ‘Good ideas always find funding, even in tougher times,’ ” she says.

Arizona’s venture capitalists often partner with out-of-state firms.

“They’re looking for good deals,” Wasley says. “They hear about them from other investors. Arizona is turning out a lot of good local talent. Investors look for that.”

Investors also look to stay within their geographic area, which bodes well for Arizona’s potential to attract some of the many venture capitalists in California.

“It’s an advantage for Arizona,” Wasley says.

Dee Harris, senior managing director at Alare Capital Securities LLC, an investment banking firm, doesn’t blame the economy for a shortage of venture capital.

“The primary problem is that venture capital firms in Arizona are basically fully invested,” Harris says.

Being fully invested is a two-sided coin.

“It’s a good sign in that they were able to find some good investments,” Harris says. “But, presumably, it’s a bad sign, because until they raise their next fund — which could take months — they’re not going to be much of a player in Arizona.”

Most of the interest is in life sciences, which means venture capitalists are not investing in technology information and semiconductor companies, Harris says.

Bob Morrison, executive director of Desert Angels in Tucson, says angel investors are not necessarily swayed by the general economy. Angels typically invest their own money, unlike venture capitalists who manage the pooled money of others in a professionally-managed fund.

“It’s a fairly small percentage of their total net worth,” he says. “Generally speaking, it’s their mad money. Nobody puts their lifetime savings into very many of these ventures that can be so risky.”

He dismisses suggestions that venture capital is drying up.

“For ventures that are well conceived and have a reasonable prospect for success, there is ample money,” he says.

But angel investors are reluctant to invest in biotech, he says, because it often takes a long time to make money, especially if the project requires approval from the Food and Drug Administration.

What can the state do to improve the venture capital climate? Broome says Arizona could dedicate 1 percent of the state’s pension fund for early-stage investment, as other states have done.

“If well managed, the use of 1 percent, or even one-half of 1 percent, of the pension fund into a venture strategy would be a major source of capital,” he says.

Wasley says angel investment tax credits also could help.

“Anything that gives investors any kind of incentive to invest in Arizona versus someplace else would be welcome,” she says.

For more information visit the following websites,
asuresearch.asu.edu
gpec.org

Job Hunting with Jobing.com - AZ Business Magazine February 2008

Good Job Hunting

For Jobing.com, it’s the people, not the technology, that makes the difference.

 

At Jobing.com, The Wall says it all. Scrawled on walls that wrap around a busy office and down a hallway are comments from countless clients, partners, association groups and government friends expressing their appreciation for a job well done. Aaron Matos, the 35-year-old brains behind the fast-growing Jobing.com, says The Wall just kind of happened.

“It originally was just images and our mission statement and some things we wanted internally,” Matos says. “One day a client came in and wanted to write on the wall. He signed a little note — and suddenly it caught on.”

Launched in Phoenix in 2000, Jobing.com was named to the Inc. Magazine 2007 list of the 500 fastest growing privately owned companies in the country for the third consecutive year. It also received an Economic Engines of Arizona Award last year from Arizona Business Magazine.

Jobing.com serves 18 markets in eight states, including Colorado, New Mexico, Texas, Florida, California, Nevada and Wisconsin, matching local residents with local jobs. Nationally, Jobing.com counts 35,000 employers among its clients, gets 3 million hits a month from job seekers, and provides leads for 80,000 different types of jobs, spokesman Joe Cockrell says.

In the Phoenix area, health care related jobs make up a large part of the firm’s business. It’s free for job-seekers; employers pay a fee to advertise based on a variety of factors.
“Prior to starting Jobing,” Matos says, “I was in human resources for 10 years. It became clear to me that what really helps drive a business is recruiting the right talent. You could never train the wrong person to do the right job.”

A native Arizonan, Matos worked full time in HR-related jobs while attending Glendale Community College and Arizona State University West, earning a bachelor’s degree. He holds a master’s in business administration from Northwestern University.

“I found early on most people didn’t love their jobs,” he says. “It was clear to me that when people loved what they did, they performed better and were passionate about their lives.”
Sports sponsorships with the Phoenix Suns and Arizona Diamondbacks led Matos to explore opportunities with the Phoenix Coyotes hockey team.

“We decided to think big,” he says, referring to a 10-year naming rights deal for the Glendale arena that houses the Coyotes and is considered a first-rate concert venue.
“We felt it would catapult our brand and the awareness of the company,” he says, but declines to disclose how much the deal cost.

Ironically, when Jobing.com holds a job fair in the Phoenix area, Jobing.com Arena is too small. Held in the adjacent University of Phoenix Stadium, the fairs typically attract more than 300 employers and 7,000 to 10,000 job seekers in a day, he says.

Another marketing tool is the fleet of some 160 multicolored small vans that Matos calls “moving billboards — they get Jobing’s name out into the community.”

Every employee gets one and the company reimburses them for the monthly payments, plus pays for gas, but not insurance.

Matos was interested in computers at an early age.

“I’ve always been a computer guy,” he says, “but the passion behind this business is on the human resources side, not the technology side.”

Matos came up with the idea for Jobing.com while working for a publisher of niche newspapers. Today, his company is the fifth largest of its kind in the country. His goal is to cut into the market share of his two biggest competitors, Monster and Career Builder, and to tap into help-wanted ads that newspapers are losing.

The reason for the growth of the industry, he says, is that advertising online is more cost-effective and it’s easier to reach a targeted audience.

Kent Ennis, deputy director of the Arizona Department of Commerce, sees Jobing.com as a perfect fit for the state agency.

“Commerce tries to recruit businesses to the state, which includes new jobs, and Jobing.com recruits the work force,” he says.

Matos doesn’t consider Jobing a tech company, even though the connection between employers and job seekers is via the Internet.

“We consider ourselves much more of a services media company, serving HR professionals and job seekers,” he says.

Ron Schott, executive director of the Arizona Technology Council, says Jobing.com combines the human element with technology, using a state-of-the-art computer system. Job hunting on the Internet is the wave of the 21st century, Schott says, “until a newer wave comes along.”

Jobing.com is riding the current wave.

“It’s a great company and it’s great that we have them headquartered in Arizona,” Schott says.

Matos, reflecting on the growth of Jobing.com, says, “When I look at what we’ve done, maybe we’ve only finished chapter one of a really long book.”

Visit jobing.com for more information.

 

Arizona Business Magazine February 2008

Public Policy, AZ Business Magazine Oct/Nov 2006

Greater Phoenix Chamber Of Commerce Outlines Its Most Pressing Public Policy Efforts

Public Policy in Focus

Greater Phoenix Chamber of Commerce outlines its most pressing public policy efforts

 

Virtually any group that has experienced the give-and-take of supporting or opposing legislation at the state Capitol is aware of the truism—half a loaf is better than no loaf at all. Indeed, that’s how the Greater Phoenix Chamber of Commerce views the 2006 regular session of the Arizona Legislature. And for those who didn’t get everything they wanted, there’s always next year.

Public Policy in FocusTodd Sanders, vice president of public affairs for the chamber, sees the organization’s public policy efforts as challenges, not necessarily hits or misses. One of the chamber’s biggest challenges, Sanders says, was and still is the issue of employer sanctions in connection with the growing problem of illegal immigration.

“We believe employer sanctions are necessary,” he says. “But in drafting legislation, it was difficult to put something together that was tough, but fair to employers, something that businesses can implement. There is a federal requirement that we check IDs, but the way the bill was conceived, even if we do that and find someone who is illegal, we could still be subject to sanctions.”

The Greater Phoenix Chamber and other stakeholders representing restaurants, homebuilders, small businesses, the Arizona Chamber of Commerce and Industry and other chambers of commerce worked with legislators trying to craft an acceptable bill. What was drafted was combined into an omnibus bill dealing with illegal immigration that Gov. Janet Napolitano vetoed.

The chamber was silent on other parts of the bill, including border security, but Sanders says, “We were in favor of employer sanctions. It was drafted in such a way that it was tough, but our members could still implement it.”

One of the biggest obstacles is that federal law requires employers to check IDs, including Social Security cards and driver’s licenses, but those are easily forged, Sanders says. “Business owners are trying to make money,” he says. “They’re not ID experts or document experts. It’s one of the issues we’ll be looking at in the next session. There is a misperception that we were against employer sanctions, which we were not.”

Regarding border security—a hot topic in the general election—Sanders says, “We need to get this done at the federal level. Fixing it at the state level is very dicey at best.”

Another issue and a top priority for the chamber was property tax cuts. “It was quite a process, a lot of give and take,” he says. “The governor wanted a rebate and we wanted a tax cut. We got the cut. Actually, it’s a suspension for three years, so we’ll probably want to go in again for a permanent elimination of that tax. It was our biggest win, given the valuation increases, to protect taxpayers from massive tax bills in the future.”

Elimination of the property tax doesn’t affect the counties, because programs formerly financed by the tax will receive money from the state’s General Fund, Sanders says.

He recalls the big push at the Legislature for eminent domain reform, which the governor vetoed, and the possibility of such an initiative getting on the November ballot. In her veto message, Napolitano has said the bill would have ended existing slum clearance and redevelopment areas and inappropriately restricted the ability of cities to deal with slums and urban blight. “As a chamber, we favor strong private property rights protection,” Sanders says. “We want to make sure it’s balanced. Protection is very important to us.”

AZ Business Magazine October / November 2006The chamber chose not to weigh in on funding for all-day kindergarten and teachers’ raises. “We have supported all-day kindergarten, but with a full phase-in over time,” Sanders says. The chamber was active in efforts to establish and fund the 21st Century Fund. The money is to be used to build and strengthen medical, scientific and engineering research programs and infrastructure, with a non-profit corporation expected to provide matching funds. “We wanted $100 million, and they came in at $35 million,” Sanders says.

Regarding a constitutional proposal to establish a state minimum wage of $5.95 an hour effective July 1, 2007, to be raised to $6.75 an hour on July 1, 2008, and thereafter adjusted for inflation each year, Sanders says, “It’s a safe bet we will be opposed to that measure. We generally oppose those mandates, when government mandates what to pay someone. It’s got a built-in yearly inflator, and that’s where the real pushback will come. In good times, like now, it’s different and maybe business could absorb it, but in bad times it becomes problematic.”

www.phoenixchamber.com

Arizona Business Magazine Oct/Nov 2006

Katie Pushor - AZ Business Magazine October/November 2006

CEO Katie Pushor Adds Fresh Ideas To Greater Phoenix Chamber Of Commerce

New President and CEO Katie Pushor adds fresh ideas to Greater Phoenix Chamber of Commerce


Katie Pushor gets a rush as she looks out of her 27th floor office, taking in the booming development in downtown Phoenix. The president and CEO of the Greater Phoenix Chamber of Commerce mentions the expanding ASU campus, the expanding convention center and the TGen headquarters. “I just like to see what’s going on,” says Pushor, who took the helm of the 4,000-member chamber early this year.

“The most important thing I bring is the knowledge of actually running a business, being in business in the Valley for 27 years, and I understand the challenges that business owners and executives face,” Pushor says. “When we look at programs or events or opportunities we might have here at the chamber, I am able to say, ‘When I was in the business community, would that have had value for me? Is that something I would have wanted to go to?’”

Pushor agrees with others who say her leadership style is “calm and collaborative.” But she feels she is most noted for building superior management teams, “and getting accomplished through a team, what you could never accomplish through a collection of individuals.”

She’s also process-oriented. “I see structure,” she says. “Here at the chamber, I’ve been very interested in understanding our business processes and improving them so that they can better serve the needs of our growing community.”

Her main strength, Pushor says, is the diversity of her experience, but that’s not all. “My genuine interest in people and wanting their business to be successful is probably my greatest strength,” she says. “That’s what provides my motivation and passion when I come to work each day. I love to hear about other people’s business models, I like to understand what makes it work, how they get their customers, what their profit margin is, what their challenges are.”

Not surprisingly, Pushor says her weakness is impatience. “I’m able to see exactly what needs to get done, and I have a hard time understanding why it wasn’t done yesterday,” she says.

Working at the Arizona Lottery provided Pushor with a bridge to her current role. The Lottery is a quasi-public business that deals with 2,600 retail outlets, does a lot of consumer advertising and acts like a privately-held business, but is bound by legislative mandate.

“It was an opportunity for me to learn what it’s like to work with an administration and with elected officials and how to work within a legislative cycle,” she says. “And how a great deal of our value to the business community is advocating for them within the legislative and executive branches.”

Since coming on board at the Phoenix Chamber, Pushor has made it her business to meet with chambers and other groups in the Valley, such as the Greater Phoenix Economic Council and other economic development officials.

“That has helped me understand what they do, and helped me to differentiate in my mind what we’re doing,” she says. “What is the unique slot that we’re fitting in and where can we be of help to other people? Where can we join forces? A lot of it is communication and to be willing to be a student, and not come in and think you know all the answers.”

While high-tech is a key driving force of the Arizona economy, and a sector where Pushor excelled for several years, she now takes a broader view. “What the chamber really does is accelerate business growth and retention within the Valley,” she says. “What’s different about us is we look horizontally across the Valley. We don’t see you only as a bioscience company or only as a technology company or only as an agricultural company. We see you as a business partner.”

So the focus is on the challenges that all businesses face, such as workers’’ compensation, safety, human resource issues and employee retention. Pushor says her mission is to get the word out to non-member businesses about the services the chamber provides. “That’s why they hired me,” she says.

And she emphasizes that the chamber is not competing with business recruitment organizations. “They’re looking out of state, out of the country, to bring people here,” Pushor says. “We want you to start here and stay here and grow here. If they bring the fish in, then we’re the aquarium.”


Quick Facts about Katie Pushor

Katie Pushor’s resume reads like a been-there, done-that array of business and executive experience. She came to the Greater Phoenix Chamber from the Arizona Lottery, where under her leadership, revenues and profits soared. Beginning her career as a CPA, Pushor has started and operated two small businesses, held several executive positions at MicroAge starting in 1989, and in 2002, co-authored a book, “Into the Boardroom.”



Arizona Business Magazine October/November 2006

Home Run

Playing The Economics Of Sports In The West Valley

Home Run

Playing the economics of sports in the West Valley

 

It’s not so much a case of “if you build it, they will come” that is turning the West Valley into a sports mecca. Rather, it’s the other way around. People have come to the West Valley in droves, setting the stage for an economic explosion and a sports megalopolis. The Arizona Cardinals stadium opens this month, the NHL Phoenix Coyotes play in adjacent Glendale Arena, five Major League Baseball teams conduct spring training at West Valley sites with two cities avidly seeking other teams to call their own and Phoenix International Raceway stages two major NASCAR races a year.

home_runEconomist Elliott Pollack says population growth came to the West Valley first. Contrary to the view of some, Pollack says, “The Phoenix area grows like a balloon in a very orderly manner, at its periphery. Growth got to the west side and the area was looking for an image.”

He calls Glendale Mayor Elaine Scruggs “a very smart lady,” who took advantage of the situation—a population explosion and an abundance of available land. The growth is happening not only in Glendale but in Peoria, Surprise, Goodyear, Avondale and Buckeye as well.

Cardinals Stadium and Glendale Arena essentially created a focal point for that area. “It gave the media something to focus on,” Pollack says. “The area would have grown anyway, but now with a much better image than before.”

Julie Frisoni, marketing and communication director for the city of Glendale, agrees. “Growth is driving the West Valley expansion,” she says. “Much of the East Valley is built up and developed. In the next 15 to 20 years, 40 percent of all growth will be west of the 101 (Agua Fria Freeway).”
People moving to the West Valley expect good housing, quality jobs, entertainment and sporting options, restaurants and shopping opportunities, Frisoni says. “Glendale always has been a bedroom community, a place where people lived and went somewhere else to work and for entertainment. Growth demands the amenities you’re seeing spring up.”

With growth comes soaring land prices. When the deal for the Glendale Arena was struck in 2001, agricultural land there was selling for $2 a square foot. Today, commercial land at the Westgate City Center in Glendale carries a price tag of as much as $25 a square foot. In seven to 10 years, Westgate will have 6 million square feet of retail and restaurants.

Jack Lunsford, president and CEO of WESTMARC, a West Valley economic development organization, says the sports explosion is having a huge dual impact—direct and indirect—on the West Valley economy. The direct impact is fairly easy to calculate. For example, Lunsford says, each of the two NASCAR races are worth $200 million to $250 million to the local economy, and the 2008 NFL Super Bowl, $250 million to $300 million. Add to the mix the Fiesta Bowl and the NCAA Bowl Championship games, plus the hundreds of events, concerts and meetings to be held in the Arizona Cardinals stadium and Glendale Arena and the economic impact is huge, he says.

Spring training is yet another economic engine. The Kansas City Royals and Texas Rangers train in Surprise, the Milwaukee Brewers are in the Maryvale area of Phoenix and the San Diego Padres and Seattle Mariners share a stadium in Peoria. Glendale and Goodyear are on the hunt for Major League teams and appear serious about building their own stadiums. “In two years we could end up with eight teams in the West Valley,” Lunsford says.

Frisoni says Glendale has entered into an exclusive agreement with teams to discuss a potential spring training site. She won’t say how many or which teams the city is targeting or where a stadium site would be. “We are continuing to move forward,” Frisoni says. “We expect a resolution very soon.”
Meanwhile, the Goodyear City Council in March approved a site for a new spring training complex and gave the City Manager’s Office authority to seek Major League teams. Goodyear Mayor Jim Cavanaugh says the complex would be located on the Woods’ Family property east of Estrella Parkway near Yuma Road. The ballpark complex would include commercial, office, hospitality and residential uses.

AZ Business MagazineLunsford notes the indirect impact of the West Valley’s sports explosion is the retail and service development that those kinds of activities spawn.
Economist Pollack sees a change overtaking the West Valley, particularly in the Westgate City Center complex. “There was a lot of economic development going on during construction of the stadium and arena, bringing in retail and more revenues,” he says. “Hopefully the concept will be that people will go there, eat, shop, go to a game or a concert and then go home. Now, they go to a Coyotes game, get out of their car, see the game, get back in their car, and go home. There are not a lot of places to eat on the west side, and that will change.

“It’s not that the arenas created the growth, they created a focal point for growth. It’s going to be a sports and retail mecca that people from other parts of the Valley will go to see games and concerts.”

www.westmarc.org

 

 

Arizona Business Magazine Aug/Sept 2006

 

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