Tag Archives: February 2009

Broadway Health Center, 6550 Broadway, Mesa

Multi-Million Dollar Renovation Begins on 2 Medical Office Buildings in Mesa

 

Renovations have begun on Baywood Health Center and Broadway Health Center, two, 2-story medical office buildings in Mesa across the street from Banner Baywood Hospital.

Archway Holdings Corp. of Beverly Hills, Calif., which purchased the properties in February 2012, is implementing significant exterior and interior upgrades. Improvements to the properties include a complete redesign of their exterior façades, renovations to the interior lobbies and common areas, new garden and monument signage and water saving landscaping features.

Construction started in December 2012, with completion in March 2013. LGE Design Build is the general contractor; Cawley Architects will handle the design work.

Kelley Ahrens of CBRE’s Phoenix office will handle the leasing assignment for the property owner.

“In addition to repositioning the buildings into class A assets, Archway is providing tenants with generous improvement dollars to perform renovations to their individual office suites in order to keep up with the improvements to the buildings,” Ahrens said.

The assets are located directly across the street from Banner Baywood Medical Center, a 342-bed hospital providing complete acute care services to the East Valley communities of Mesa, Gilbert, Apache Junction, Queen Creek, Fountain Hills and areas of northeastern Pinal County. The assets are also close to Leisure World, the largest retirement community in Metro Phoenix.

Baywood Health Center, a 36,127 SF medical office building is at 6553 E. Baywood Ave. Broadway Health Center, a 25,277 SF medical office building is at 6550 E. Broadway Rd. The properties are 83% and 19% leased, respectively.

“The renovations will not only add value to these properties, they will add significant value to the surrounding community too,” Ahrens said. “The new look and upgrades will attract additional healthcare professionals to the area, which, in turn, provide more medical services and create more jobs.”

 

world currency

Companies Need To Start Thinking About Converting To International Financial Reporting Standards

More than 100 countries have already adopted or base their own accounting standards on International Financial Reporting Standards (IFRS). Last August, the Securities and Exchange Commission approved for public comment its long-awaited proposed roadmap for the eventual use of IFRS by U.S. companies.

The proposal foresees that early adoption of IFRS could happen as soon as this year for very large companies. For others, mandatory reporting under IFRS could begin in 2014, 2015 or 2016, depending on the size of the company.

Why think about it now?
With the global financial crisis, business owners may backburner IFRS in favor of more immediate issues. That’s understandable, but it may not be the right approach. If you are contemplating new finance systems or software purchases, for example, the systems you implement today will likely require modifications to ensure that the accounting, tax planning and compliance processes continue to operate effectively and efficiently under IFRS.

While CPAs regularly adjust to evolving accounting rules and standards, my experience with some of the largest companies in Arizona has shown that focusing on longer-term issues such as the implementation of IFRS can have a positive impact on the bottom line. Learning to “speak IFRS” may be challenging, but it will lead to increased transparency and investor confidence, and when that happens, everyone wins.

As a general rule, IFRS standards are broader than those of U.S. Generally Accepted Accounting Principles (US GAAP), and there are fewer bright lines and less interpretive guidance. In addition, IFRS has far-reaching effects beyond the accounting differences, and will involve every area of the company, beginning with the way data is gathered and processed to how debt covenants are written to the metrics against which executives and employees are measured. Conversion will take focus, planning, time and resources. Getting comfortable with IFRS now will make the transition easier for the entire company.

Timely training will be one key to a successful transition — and not just for staff. Investors and analysts will need to be educated about the effect IFRS will have on financial statements. Audit committee members will need to become familiar with IFRS to function effectively in their oversight roles and to understand management’s strategies. These activities should not wait until the new reporting standards are actually in use.

IFRS 101
The first step in any conversion is a gap analysis, or diagnostic, that compares reporting under US GAAP to reporting under IFRS. In addition to the reporting differences, the diagnostic will identify the main business effects of conversion, any tax ramifications and hurdles to conversion that may occur in the present finance structure, and will discover if the company has the resources to carry out the conversion in-house.

The diagnostic will also provide a timeline on who should be trained, when they should be trained and in what they should be trained. In designing a training program, your primary question should be, “What do we need to do to be ready on time?” As with all decisions, it’s important to be strategic. Educating the accounting and finance organizations is a given, as well as the information technology team. But it’s also important to involve other departments affected by the conversion early on in the process (e.g., investor relations, HR, sales and marketing) to make sure conversion is embedded in your business.

Human resources will need to understand how key performance criteria for incentive compensation may be affected by the conversion. In addition, accounting for stock-based compensation is significantly different under IFRS than under US GAAP. Tax professionals will require training on the conversion methodology, as well as on new IFRS accounting principles, to ensure appropriate tax planning and reporting of the tax provision, balance sheet accounts and tax return information. The legal team will need to examine debt, equity and lease financing arrangements; long-term customer contracts and long-term sourcing agreements, among others. The internal auditor’s enterprise-wide purview positions it well toprovide consistency, oversight and control to all areas throughout the conversion process.

IFRS conversion most likely will be the largest, single change of accounting policies and procedures ever undertaken by U.S. companies. It is also an interesting challenge for businesses and provides a once-in-a-generation opportunity to review and synchronize the processes and procedures that touch the entire organization. Ultimately, the business “owns” the conversion, and the more fluently it “speaks IFRS,” the better off it will be.

executive education

During Hard Economic Times, Executive Education Helps Workers Keep Marketable Edge

It may be hard to believe, but in tumultuous economic times, executive education is somewhat recession proof — at least as far as employees are concerned. People who have lost their jobs have more time to go back to school, while those who are still employed may feel the need to enhance their skills.

University administrators and instructors see no less interest in educational opportunities as the economy spins downward. Even businesses that have downsized continue to pay a portion of tuition costs for those employees who remain. But at companies where training and development programs are among the first to be eliminated, experts suggest such moves are shortsighted.

Andy Atzert, assistant dean of the Arizona State University W. P. Carey School of Business and director of the school’s Business Center for Executive and Professional Development, does see a diminished demand from companies for customized executive education programs.

“The reason is that they are very visible expenses, a big line item that a company can slash when desperate,” Atzert says. “They’re shifting back to open enrollment. They’re not necessarily cutting back on education funding for individuals. The money is distributed through departments and it’s a less visible expenditure.”

Employers benefit from executive education programs in today’s economy because the skills of employees who remain expand. For example, an engineer who is promoted to fill a vacancy might need to acquire knowledge about marketing.

Strange as it may seem after layoffs, another benefit is employee retention.

“When a company lays off people, it worries about the effect on people who remain,” Atzert says.“You’ve pared down, and you don’t want to lose more employees. That’s one of the reasons for not cutting the education budget.”

Atzert describes education, and that includes executive education programs, as being “a counter-cyclical business.”

“What commonly happens in an economic downturn is that when there is not full employment and not a lot of jobs out there, people seek opportunities to retrain,” he says. “People who are employed polish up their resume a bit, just in case. Insecurity causes a person to make oneself more competitive.”

Mike Seiden, outgoing president of Western International University, agrees that historically, education is recession proof.

“We don’t see any abatement coming to us for degree programs,” Seiden says. “When people are losing their jobs, they recognize that a degree is important, and when times are good, companies support their employees by providing educational opportunities. I don’t see any change in that, but I say that with a little bit of caution. This economic climate is a lot different from anything we have experienced in the last 40 to 60 years.”

While Arizona’s three state universities are facing budget cuts, and some smaller niche colleges are encountering economy-related problems, Western International, a forprofi t private institution that is part of the Apollo Group Inc., is not feeling a negative impact, Seiden says. Employer subsidies seem to be holding steady.

“But if unemployment increases substantially,” Seiden says, “and companies become more hard-pressed, who knows what will happen?”

Both ASU and Western International University have executive education partnerships with the Salt River Project. At ASU, the Small Business Leadership Academy provides CEOs of small and diverse businesses with a 10-week program designed to help take their businesses to the next level.

The first class, which consisted of 11 SRP suppliers and five SRP business customers, completed the program last November. A second group will start taking classes next August. Offered one evening a week at the ASU School of Business Tempe campus, the classes focused on such topics as business strategy, negotiations regarding terms of contracts, employee retention and corporate procurement.

“They learn what we look for as a procurement organization, so when they get my requests for proposals they know what to be prepared for,” says Art Oros, SRP manager of procurement services. “They have already shown tangible savings. The improvements helped them to maintain the edge they need in these times.”

The companies that participated are small businesses, many of which are minority owned.

“We had good diversity — all ethnicities and cultures,” Oros says.

At Western International, SRP helps to subsidize its own employees’ education as they pursue degrees.

“A company’s ability to help provide an education for its employees is paramount in today’s world,” Seiden says. “It not only helps ensure that the company will retain its employees, but it will improve productivity.”

Paul Palley, who teaches economics and statistics at the University of Phoenix, says his classes naturally turn to discussions of current events.

“The subject of bailouts is something that is brought up a lot,” says Palley, a city of Phoenix economist. “Students don’t really understand what’s going on. Bailout is not the best word. In many cases, it represents an investment — government purchasing equity. Sometimes students feel not enough is being done, and sometimes they feel too much is being done. It changes from student to student and from day to day.”

Kevin Gazzara, who recently retired from Intel, where he was program manager of management and leadership, is senior partner of Magna Leadership Solutions and University Research Chair for Organizational Behavior at the University of Phoenix. He has developed a statistical tool that enables employers to link training and development programs with business results.

“One of the first things to go in difficult economic times is training and development,” Gazzara says. “From our perspective, it should be one of the last things to go. Many organizations utilize training, but don’t know if they are getting a return on their investment. In tough economic times, I tell organizations to restrain from the urge to cut training to save some relatively small dollars.

“As managers are being asked to do more with fewer resources,” Gazzara adds, “raising their levels of skills so organizations can compete becomes essential, and the only way to do that is having the right training.”

Fogo de Chao Tableside Gauchos

Fogo de Chão Brings The Taste Of Southern Brazil To Scottsdale

Let’s get one thing straight at the outset: If you don’t eat meat for whatever reason, Fogo de Chão, Scottsdale’s newest eatery, is simply not for you. Sure it has a nice salad bar (more on that later), but Fogo de Chão is a steakhouse — end of story.

Well not quite. Fogo de Chão is a Brazilian steakhouse, so it prepares and serves up its meats in a manner quite different from that found in our own American steakhouses. In fact, showmanship is as much a part of the Fogo de Chão eating experience as the food itself.

But now I’m getting ahead of myself. First an explanation of what Fogo de Chão is; it is a churrascaria, or barbecue, in which the meats are prepared the way cowboys, or gauchos, in Southern Brazil have cooked them for centuries. The meats are prepared over an open grill, mimicking the gauchos’ fogo de chão, Portuguese for “fire on the ground” or “campfire.”

Fogo de Chão has a prix fixe, all-you-can-eat, menu that allows guests to eat as little or as much as they want. And there is a lot to eat. The meal starts off with a gourmet salad bar that bears little resemblance to what you’d find at an average chain restaurant. There’s little by way of fixings for a traditional American-style salad. Instead, the “salad bar” operates more like an antipasto bar with meats, cheeses and breads sitting side-by-side with the vegetables. You’ll find smoked salmon and prosciutto; fresh, whole mozzarella and Manchego cheeses; and artichoke bottoms, olives, hearts of palms, sun dried tomatoes and more. If it’s your first trip to Fogo de Chão, you might load up at the salad bar because you simply don’t know any better. Here’s a word of advice: don’t, because you’ll miss out on the main event.

That main event is made up of the 15 cuts of fire-roasted beef, pork, lamb and chicken that are served via espeto corrido, or continuous service. When you sit down at your table, you’ll notice a little coaster-like disk, with one side green and the other red. When you turn over the disk to the green side, waiters dressed like Brazilian gauchos and carrying skewers of meat, surround your table and offer to carve you a slice of meat. One skewer can hold the same cut of meat, but prepared rare, medium rare and medium well. Just tell your server which one you want.

As for the cuts of meat, almost all the choices are delectable. At our table the favorites were the picanha, the prime part of the sirloin, which is served seasoned with sea salt or garlic; the filet mignon, served with or without bacon and tender beyond belief; the alcatra, which is cut from the top sirloin; the fraldinha, which is cut from the bottom sirloin and is perfectly seasoned; the beef ancho, the prime part of the rib eye; the cordeiro, which is young leg of lamb; lamb chops; and the lombo, tender filets of pork loin encrusted with parmesan cheese. You can also get a variety of cuts of chicken, plus pork sausages.

While you’re eating all that meat, the servers are also constantly replenishing side dishes of cheese bread, mashed potatoes, fried polenta and caramelized bananas. When you’ve had enough, turn your disk over to the red side — and flip it back to green when you see something else you like. Besides the food, the best part of Fogo de Chão is the environment. It’s dinner with a floorshow. If you go, take a large group of people with you, as the communal atmosphere makes dining at Fogo de Chão that much more fun.

Michael Bidwill Arizona Cardinals

Q&A: Michael Bidwill, President, Arizona Cardinals

During these difficult economic times, how vital is an organization such as the Greater Phoenix Economic Council (GPEC) to the local economy?
GPEC is vitally important because it is the only regional organization focused exclusively on bringing new business to Greater Phoenix. Because GPEC works closely with companies considering expansion to the region, they know what companies need to make business decisions and gain insight into what steps the state can take to better compete with our Mountain West competitor states.

What can the Valley do to better position itself to succeed once the recession is over?
Diversify our economy and work with public sector leaders to create sensible, new programs that bring high-wage industries to Arizona. During the last decade of the real estate explosion, Arizona was one of the leading job-producing states. Over the last two years, we have fallen to 49th in terms of new job creation. Business as usual will not work. Now is the time to change our metrics and compete for other industries to migrate to Arizona.

Arizona and Greater Phoenix routinely lose projects to less desirable locations because of aggressive relocation programs in other states. GPEC has developed modest, fiscally responsible programs, such as the Quality Jobs Through Renewable Industries program, for the Arizona Legislature to consider. GPEC has vetted these programs with decision-makers in the renewable energy industry. Senior executives within these industries have told us this program would put Arizona in a more competitive position to win projects. GPEC also had Elliott D. Pollack and Company conduct a third-party review of our program to confirm its fiscal impact.

We need to immediately work with the state to develop and implement new programs that make our region more competitive.

What are some of the initiatives and goals you have planned this year for GPEC, and how will you go about achieving those goals?
In addition to solar and renewable energy, GPEC has three other strategies that we feel are meaningful generators of new business. We continue to work aggressively on a foreign direct investment program, as the United States is still an attractive environment to invest in for international companies. Next, in working with many of our public sector leaders, we are actively seeking to locate companies to Greater Phoenix from neighboring states with higher operating costs of doing business. Lastly, health care in Arizona is an untapped resource. In fact, Arizonans routinely seek health care outside of the state valued at hundreds of millions of dollars. We need to work with the health care industry to determine the needs not currently being met in Arizona and look to those opportunities for economic growth.

How did you first become involved in GPEC and how have your own professional experiences prepared you for your current role?
The Arizona Cardinals have long been stakeholders of GPEC, as we believed in its important work. I had no personal involvement until Glendale Mayor Elaine Scruggs asked me to serve on the GPEC board three years ago. I was honored to join and realized quickly how critical this organization is to helping our local economy grow, especially during this downturn and with the state’s budget cuts to the Arizona Department of Commerce.

You’ve seen first hand how important professional sports are to the local and regional economy. How can the Valley capitalize more on that in the future?
Sports are important to Arizona and we need to support what we have now. But, again, we need to focus on diversifying our economy. Like a personal stock portfolio, we cannot become “over-weighted” in any single sector. We have all the teams we need, but it will be important to attract events with significant economic impacts and exposure like the Super Bowl in the future. Our regional success will depend largely on creating a diverse and vibrant economy around many new industries and we can’t look to real estate or sports to take us out of this downturn.

Arizona Businesses Succeeding

Arizona Businesses That Are Succeeding Despite The Recession Offer Lessons And Hope

Economists are the uncomfortable bearers of bad news. In recent weeks, they have been unhappily explaining that these are dark days indeed for Arizona’s business community.

But don’t tell that to businesspeople who have uplifting stories to tell amid the downdraft of Arizona’s recession.

While it’s true that Arizona’s economy is out for the count, many businesses are hardly on the ropes. They are succeeding, each in their own way.

But first, a look at that pesky economy.

It’s surprising some businesses are doing well because the experts are hard pressed to find any corner of Arizona’s economy that is untouched by the recession.

“I wish I had something positive to say,” says Tim James, a professor of economics at the W.P. Carey School of Business at Arizona State University. “It’s quite difficult to see any sector doing well … What could possibly happen to make things worse than they are? I can’t think of anything.”

James does point to one exception — discount stores such as Wal-Mart, Costco and Sam’s Club that sell the necessities of daily living. They are prospering, but “nobody will be immune to any of this at the end, as even the Wal-Marts will suffer,” James says.

Also apologetic is Marshall Vest, an economist at the University of Arizona’s Eller College of Management. Asked if there is any sector of the state’s business community that is well positioned and poised to take advantage of the recession, Vest responds, “The short answer is I don’t know. Most industries are feeling the effects of the recession.”

Yes, it’s tough out there. But there are success stories and those businesses offer lessons on how others can ride out this rough economy.

When Robert Meyer joined Phoenix Children’s Hospital in 2002 as president and CEO, the nonprofit medical center for acutely ill pediatric patients was juggling several urgent problems. Arizona was in a recession, a shrinking investment portfolio had eroded the hospital’s capital base, cash reserves were dangerously low and the organization was facing a $46 million loss for the year while incurring the cost of moving from its location within another Phoenix hospital to its own free-standing building at 19th Street and Thomas Road. Meyer, who had been through five prior recessions in health care, focused on two areas — internal operations and strategic planning — and took steps that got the hospital back on its feet.

The hospital had no internal billing-and-collection procedures, no budgeting system and a few outsourcing contracts that were axed because they offered little value in Meyer’s eyes.

“We developed our own patient accounting department, which yielded tremendous improvement in our ability to bill and collect money,” Meyer says. “We started a budgeting system. The hospital had done a lot of outsourcing with a lot of companies and some of them were terminated.”

Meyer wanted a short, simple strategic plan that covered 18 months to two years — as compared to hospitals’ standard five years — and looked outside the health care industry for a sound planning tool. He found it at The One Page Business Plan Company in Berkeley, Calif. Soon, each of the hospital’s major programs had a one-page plan within a relatively brief strategic plan, and progress was tracked online against milestones.

The payoff came as early as 2003, when the hospital generated $3 million in net income. With its books in the black, the hospital took steps in 2004 to cement future success by implementing several new clinical programs. Profits grew to $49 million in 2007.

In today’s recession, Phoenix Children’s Hospital’s primary business offers opportunities for new growth. Meyer says the number of children in the Valley is expected to increase from 900,000 in 2003 to between 1.5 million and 1.7 million in 2025. To meet the needs of its growing patient base, the hospital began rolling out a $588 million main campus expansion in 2008 — only six years after nearly succumbing to financial ruin.

Paragon Space Development Corporation, a small aerospace engineering and technology development firm in Tucson, is succeeding in tough times because most of its business comes from NASA.

“We’re a little bit out of the consumer economy’s ebb and flow,” says Taber MacCallum, CEO and chairman of the board. “What we are going to feel is the federal government’s response to the recession, not so much the recession itself.”

He expects his company’s work with NASA will continue. But things weren’t so rosy during the last downturn. Founded in 1993, Paragon initially booked more commercial than government work and was hit hard by the 2002 recession. It began playing out a variety of business what-ifs to help it prepare for bad times, and business has grown 30 percent to 50 percent annually the last three years.

“You’ve got to create your business model and then run good-and-bad scenarios and make sure you don’t cut so deep that you can’t respond to the recovery,” MacCallum says. “We call them down-and-out and milk-and-honey scenarios. You can do that with a small retail shop and you can do that with a large industry.”

Taber recommends taking advantage of opportunities that arise when other businesses downsize or close.

“This economy has presented a tremendous opportunity for us,” he says. “We’ve been able to pick up new employees and manufacturing equipment from other companies that have had to sell.”

There is also a beacon of hope in the rubble of Arizona’s mortgage industry. On Q Financial, a Scottsdale-based mortgage banking company, is growing as it serves buyers of condos and single-family homes and arranges residential property refinancing. In 2008, it opened new offices in Phoenix, San Diego and Seattle, and its Valley staff grew from 20 in 2007 to 50. In business since 2005, On Q zeroes in on what it can control, says John Bergman, president and owner.

“Every day, month and quarter, we focus on improving things internally that we can control,” Bergman says. “We can’t control the market.”

On Q strives to hire talented operations staff and constantly troubleshoots internal systems, processes and timelines. Business owners must have a firm grip on their financial performance, Bergman says.

“Every month, have financials reported to you in a manner you can use,” he says. “Look at them. You can always adapt and change according to what’s going on.”

On Q also pays close attention to customer service and market share. “We are really aggressive in offering great products to the consumer, and we negotiate for good pricing for our clients,” Bergman says. “No matter what the market does, there is always an opportunity to take a bigger piece of the pie.” Bergman says it’s critical to keep employees energized.

“Let them know that the tougher things get, the better things are when they turn around,” he says. “So you want to focus on the positives in your industry.”

Reeling financial markets commonly create a phenomenon known as the flight to quality — money moves from the stock market to the safety of bank accounts and certificates of deposit. Such is the case with the current recession, and Northern Trust Bank has seen a resulting increase in deposits and new banking relationships, which in turn has generated increased lending.

“We have, in many respects, been in a very nice situation when there has been a flight to quality in the banking business,” says David Highmark, chairman and CEO of Northern Trust’s Arizona bank. “The flip side during this liquidity crisis is that our loan volume is two to three times our normal amounts. Our earnings will be very strong, because today we are collecting so many new relationships that will materialize into new earnings down the road.”

Highmark emphasizes the importance of successful companies staying focused on their core business, a theme also repeated by Paragon and On Q Financial. Northern Trust’s primary business is lending to and managing assets for wealthy individuals and companies.

“We have never wavered from that core business,” Highmark says. “If there is a formula to survive in bad times, in our case — and I think in general in all industries — it is sticking to your knitting. Don’t vary from your core business.”

Social media

Social Networks On Internet Pose Challenges And Opportunities For Businesses

Instinct: Nearly every decision a person makes in his or her lifetime can in some way be tied to an instinctual reaction. One of the most primal of instincts is survival and the key to our evolutionary climb has been the instinct to live in groups or the herd mentality. The instinct is simple — survival in numbers is far easier than going it alone.

The herd is now electronic and in the form of social networking on the Internet. No matter what your interests, you can find a social networking site that will allow you to communicate with like-minded individuals anywhere in the world, at any time. Technology, specifically the Internet, has removed traditional boundaries (distance, time zones, etc.) that previously limited “global gathering,” and this medium has literally exploded. Now more than any other time in our history people are gathering together. While virtual through the Internet, individuals continue to benefit from the comfort, safety and strength that are found in the herd.

Industries and businesses have increasingly been trying to figure out how to leverage the massive amount of information and consumers that are available on these social networking sites. Perhaps the two most prominent and recognizable social networking sites are Facebook and MySpace. Each has a demographic that is very appealing to businesses of all types. However, the primary obstacle to further leveraging these sites’ business appeal to date is resistance from the users to advertising or any other type of interference in their “personal space.”

For many social networking site users, the site represents a place of control and solitude from their everyday lives. Social networking site participants literally go there to get away and spend time in an environment that is entirely in their control. Now business is trying to integrate into a domain that many view as private.

While there may be a belief that these individual pages in MySpace, Facebook, Twitter, etc., are personal and private, the reality is they are not. Multibillion-dollar entities such as Microsoft and News Corp. would not have taken positions in them if they did not see the potential for a substantial return on their investments. The question is not if business is going to try to leverage these sites — the question is how. Advertising has always been the most obvious and first application of business on social networking sites, but how to advertise has been a trial-and-error process. Pushing advertising on users has proved problematic for both MySpace and Facebook.

The next avenue that business pursued was market research. In November 2007, Facebook encountered outrage from its users after it published users’ purchases for friends to see. While there was an “opt out” option, most users did not see it until after the fact. This tactic represented a huge PR issue for Facebook. However, this marketing tactic is another, and perhaps the most viable, business option for organizations to leverage through the social networking sites. The amount of data that the sites capture can be gold. But the site owners have to be extremely careful with how and what information they are sharing outside of the site. First there are privacy concerns, but second, a site that does not listen to the concerns and needs of its user base is destined for failure. With the rate at which new sites are popping up, the landscape to attract users is dramatically more competitive than it was even two years ago.

So the question still remains — will social networking sites become a tool for business to increaseproductivity, start small businesses, and develop larger organizations through market research? Maybe, but probably not.

To quote Tom Davenport, who holds the President’s Chair in Information Technology and Management at Babson College in Massachusetts, and formerly lectured at Harvard University: “I see no evidence that students andyoung adults — the audience for which these tools were originally intended — want to use the tools to do their business.”

The fact that many users go to these sites for relaxation and enjoyment leads me and others to believe that the use of social networking sites for business, other than advertising and marketing, is severely limited and not likely to take off anytime soon.

Lisa Nisleit of Color Repro Consulting

Color Repro Consulting

Lisa Nisleit
Color Repro Consulting
Title: President
Est.: 2001 | www.colorrepro.com

Lisa Nisleit was working for a large format printing company in 2001, when a client suggested she branch out on her own. She liked what she was doing and her accounts were satisfied with her performance, but Nisleit was frustrated that all the services she wanted to offer her clients weren’t available.

That’s when she decided to take the leap and launch her own business.

“The first thing I did was go out and visit as many accounts as I could. I wanted them to know that I would be the one-stop contact,” Nisleit says.

Color Repro Consulting’s primary services include printing for large format projects, trade shows, pamphlets and any other printing needs. Instead of customers dealing with a variety of vendors, Color Repro is responsible for every aspect of the project, from recognizing the types of services needed to completing the job and locating the suppliers and products, to printing and finishing the job on time.

“It’s project management, not just printing,” Nisleit says.

Her determination and focus on vendor-client relationships has helped transform her idea into a successful business.

“We depend on (vendors) to assist us with taking care of our clients. They depend on us to bring them work. Our clients depend on us to complete their project on time and on budget. Everyone is happy,” Nisleit says.

After holding a variety of jobs, including positions in retail and even in the semiconductor industry, running her own business was not something Nisleit expected to do.

“I’m still amazed that I’m still here after all this time. At the beginning, it was a week-to-week thing, but I’m still here,” she says.

The early hurdles of running a business, such as cash flow problems, were something Nisleit encountered but overcame. Now, Color Repro has developed a reputation as a dependable printing company that will work hard to meet its customers’ needs.

“We find ourselves always being the go-to people. So many projects are last minute. One of the biggest industries we deal with is construction and architecture. These companies put together their proposal projects to submit, and then we’ve only got a couple hours to print it,” Nisleit says.

Delivering on her promise to get the job done on time and on budget is a key ingredient to the success of Color Repro.

“It is our job to know who is in this town who can turn things quickly on a budget,” Nisleit says.

Through hard work and determination, Nisleit was able to lead her company to success. Her future plans for the business include moving to a new, larger location and hiring more employees.

For all the potential entrepreneurs out there, Nisleit has these simple words of wisdom: “Take the risk. If it’s something that you really want to do and it’s something that you love, you’re going to be successful at it.”

wood beam

As Commercial Real Estate Sector Prepares To Be Hit By Recession, Leaders Should Become Proactive

The headlines today have focused on the bailout of the banking industry and the housing market’s severe contraction. Not a lot of attention has been paid to the commercial real estate sector. As with all business cycles, there is a flow-through to the various sectors. The fact that we have lost more than 1 million jobs this year, and have had a severe reduction in housing values and record foreclosures, can only bode ill for retail and other commercial areas.

Since retail traditionally follows housing, how can it not be negatively impacted when fewer homes are being built and more and more people can barely afford their current homes? In recent months Mervyn’s, Linen ’n’ Things, The Shoe Pavilion and Circuit City have all announced either closing of some or all of their stores. The larger tenants oftentimes are the anchors of some of the smaller centers. There is usually a cascading effect on other tenants who feed off the traffic generated by the anchors. We have many clients who talk about tenants leaving in the middle of the night.

At this time, most of the bankers we have talked to have stated that they have few commercial projects on their radar, but most admit this is the next big area to hit them and the economy in general. Are they prepared and how can the lenders minimize the fallout from this?

We would like to outline some of the steps that lenders and others can take to be proactive in the process. Some lenders we have talked to take the position that they will sell the returning assets “as is,” so they do not incur anymore costs on a bad loan. This shortsighted approach will end up costing these lenders and their shareholders money.

We advise lenders to do a thorough analysis of the project in such areas as:

  • What is the current situation with the permits, utilities and other entitlements? This may unfortunately turn up information that the bank should have known about before it made the loan or kept funding it. There is a good case to not have the same people who approved the loans involved in this process. Some of these items may involve minor fixes that could make the project more marketable. For example, assume the contractor had not ordered some of the utilities, which usually involves a long lead time. By the bank being proactive (after they take the project back) and ordering some of the utilities, the project would have more appeal for a potential tenant versus sitting on the asset and waiting for things to happen. A new potential owner may have a tenant, but he needs to get him into the space within a set period of time. If the bank has done nothing but sit on the asset, the buyer may go to a project where he can get his tenant in immediately.
  • What is the status of payments to the contractors versus how much work has actually been performed? Is the project really 50 percent complete but you have paid out 60 percent, for example? Where are materials stored if ordered and paid for?
  • Another problem is when banks have the same people or departments evaluate the project. They are the ones who may have missed some of these issues to begin with. You want a fresh look at what you have. It is difficult to want to spend more money on an asset that will be a loss — but if you can do a proper evaluation of what you have, you may recoup quite a bit of additional money.

Why do Realtors for homes recommend cosmetic fixes to make them more saleable? Because they work. But the real estate owned (REO) departments of many banks do not want to incur additional costs in these areas. We like to assist the lenders by also giving some ideas on how to reposition the property. When clients come to us for an initial project, we frequently work with them on site plans. Even on a project that is partly or fully built, you can analyze how it can be revitalized and repositioned. It may have been poorly designed to begin with. Smart buyers are going to be looking at these ideas before they make an offer. If the lender hires someone to give them some of these ideas it can be very helpful information real estate brokers can use in marketing the asset.

We know of certain retailers developing new concepts to fit into smaller spaces to take advantage of a good location. If you have prepared some estimates of what would be involved to reconfigure the space, that makes it easier on the potential new owner and his tenant.

In summary, retail should be the next area to seriously impact the balance sheets of lenders. Most lenders have not had departments devoted to this problem because the market has been good for so many years. It is important to hire experts who can give an unbiased view of the asset and what can or cannot be done with the project. When a lender uses the same people or moves some of its people over they may not have the expertise to properly analyze the project to obtain the best possible value from it upon a sale.

Earth and climate change

Arizona Businesses Brace For Greenhouse Gas Regulations Under Western Climate Initiative

As the Arizona Legislature convenes, a Democratic governor heads to Washington, and a Republican governor takes the reins, state businesses find themselves deeply concerned about what will happen to Arizona’s environmental policy and the consequences associated with these unprecedented and troubled economic times.

Many legislators want Secretary of State Jan Brewer, who soon will take over the governor’s office, to rescind executive orders entered by outgoing Gov. Janet Napolitano. Rumors also abound about efforts to eliminate the Department of Environmental Quality (ADEQ). Meanwhile, the regulated community is left wondering what will be next for such large-scale regulatory efforts as the Western Climate Initiative (WCI), which was largely championed by Napolitano and ADEQ Director Steve Owens.

The WCI is a collaboration among seven U.S. governors and four Canadian premiers that Napolitano and others created to reduce greenhouse gases in the region using a market-based, cap-and-trade system. The member jurisdictions include: Arizona, California, New Mexico, Montana, Oregon, Utah, and Washington, as well as the Canadian provinces of British Columbia, Manitoba, Ontario and Quebec. Together, these seven states and four provinces represent more than 20 percent of the U.S. economy and 70 percent of Canada’s. Thirteen other U.S. and Mexican states and Canadian provinces have joined as observers.

Arizona entered the WCI in February 2007, following reports indicating that Arizona’s greenhouse gas (GHG) emissions were increasing. There were also predictions that by 2020, the state’s GHG emissions would increase by nearly 150 percent over the 1990 levels if Arizona neglected to reduce them. Arizona has played a vital role in the WCI since its beginning, with Owens serving as co-chair during the time the initial policy was developed. The first major accomplishment occurred with Owens at the helm, when the WCI released its design recommendations for the Regional Cap-and-Trade Program in late September.

Political changes and the design itself indicate that the WCI likely will affect Arizona regardless of whether the state stays in or exits the WCI. For example, as applied to electricity, the regulations will apply to the first jurisdictional deliverer (FJD). For sources within WCI jurisdictions, the FJD is the generator. For power generated outside the WCI jurisdictions (including federal and tribal lands) for consumption within a WCI partner jurisdiction, the FJD is the first entity that delivers that electricity, over which the consuming WCI partner jurisdiction has regulatory authority. Thus, if Arizona remains in the WCI, regulations will apply to generators of electricity; if Arizona leaves the WCI, any business or entity that seeks to deliver electricity to any jurisdiction that is a member will be subject to the regulations. In addition to electricity generators and suppliers, the WCI will regulate other sources of emissions such as industrial, residential and commercial sources, as well as industrial fuel combustion at facilities and transportation fuel combustion.

Details still must be developed, but the initial emission threshold triggering regulatory compliance is estimated to be 25,000 metric tons of carbon dioxide equivalents annually. The design was tailored to specifically allow the scope of the cap-and-trade program to expand over time to add new sources to the system, raise or lower the cap as necessary, and to integrate it into other programs.

This may be critical sooner rather than later, as many expect a federal program from President Barack Obama’s administration. Certainly with 20 percent of the U.S. economy regulated under WCI, in a region with critical energy supplies and high levels of emissions, the WCI is poised to become amodel. Additionally, calling this the Western Climate Initiative is a misnomer since Manitoba, Ontario and Quebec are included, extending the WCI boundaries to the Atlantic. In fact, the WCI covers the largest geographical area of any regional initiative. Moreover, with Napolitano in the Obama cabinet, Owens is predicted to land a federal regulatory role, and the WCI publicly states that it plans to promote and influence federal GHG emission reduction programs consistent with its design principles.

For now, Brewer is taking a cautious approach, noting that she currently plans to remain involved to get information and see what can be done in Arizona, but that given the economy, she is not yet ready to take a position on the planned cap-and-trade program. If Arizona remains in the WCI, mandatory reporting will begin with measurement and monitoring this time next year. The start date for cap-and-trade is Jan. 1, 2012. Regardless of whether Arizona is in or out of the WCI, a new regulatory regime now appears imminent and the only real questions moving forward seem to be how to influence outstanding issues and prepare for compliance and increased costs.

Financial Institutions Receive Bailout

Financial Institutions In Arizona Are Expected To Receive Bailout Money

While most of Arizona’s state-chartered banks were mulling over their options for federal assistance late last year, Uncle Sam was injecting billions of dollars of new capital into national banking companies with Arizona subsidiaries. The question is whether any of that money from the Department of the Treasury’s $700 billion Troubled Asset Relief Program (TARP) will find its way here.

Although there were a couple of exceptions, nationally chartered banks with Arizona operations didn’t know whether portions of their capital infusions would be earmarked for deployment in Arizona, and they may not know until sometime during the first quarter. The capital comes in the form of federal purchases of senior preferred shares. The Treasury set aside $250 billion for the program.

The Treasury purchased $200 million of shares in Seattle-based Washington Federal Inc., the parent company of Washington Federal Savings. John Pirtle, senior vice president and Phoenix division manager for Washington Federal, estimates the thrift’s Arizona operations will receive about $20 million and use it for mortgage lending.

Western Alliance Bancorporation in Las Vegas, owner of Alliance Bank of Arizona, received $140 million from the Treasury. James Lundy, chief executive officer of the Arizona bank, expects his parent company to share the new capital.

“I would expect we’ll get somewhere between $8 million and $12 million,” Lundy says. “That would be a good estimate. We are well capitalized now, but we do have plans to continue our growth trajectory, which has been pretty strong.”

Alliance Bank would use the capital to “support a bigger balance sheet, so we can gather more deposits to make more loans,” Lundy says. “Banks like ours are the ones making loans to small and mid-size businesses. Despite the economic issues Arizona is facing, we have strong loan demand from borrowers we think are very creditworthy.”

Ten million dollars in new capital can be leveraged to generate $100 million in new loans, Lundy says.

The Treasury purchased $1.715 billion of stock in Milwaukee-based Marshall & Illsley Corporation.

“All the funds are going to be used throughout the franchise,” says Dennis Jones, chairman and president of M&I’s Arizona region. “It’s not a matter of allocating a certain amount of it for Arizona.”

Chicago-based Northern Trust Corporation, parent company of Northern Trust Bank, received a $1.576 billion capital infusion. David Highmark, chairman and chief executive officer of the Arizona subsidiary, says he expects enough of the capital will flow to his bank to allow it to keep growing. Northern Trust Bank’s loan volume is two to three times its normal level.

“If our loan volume continues to grow as it has, we will get a portion of that money allocated to us,” Highmark says.

The parent company is classified as well capitalized, “but we knew, based on our growth, that we would ultimately need more capital. This was a timely opportunity for us,” Highmark notes.

Zions Bancorporation in Salt Lake City, owner of National Bank of Arizona, received $1.4 billion from the Treasury. Keith Maio, president and chief executive officer of the Arizona bank, says he expects his bank will receive some of the capital, but the amount has not been determined. Maio says the funds will be used to bolster the bank’s capital ratios to keep it actively lending, targeting small to medium-size businesses.

Other Treasury stock purchases of nationally chartered banks with Arizona subsidiaries break down as follows:
JPMorgan Chase & Co., New York — $25 billion.
Bank of America, Charlotte, N.C. — $25 billion.
Wells Fargo & Company, San Francisco — $25 billion.
U.S. Bancorp, Minneapolis, owner of U.S. Bank — $6.599 billion.
Comerica Incorporated, Dallas, owner of Comerica Bank — $2.25 billion.
Mutual of Omaha in Omaha, Neb., which acquired First National Bank of Arizona, did not apply for TARP funding.

The Treasury gave publicly traded banks the first opportunity to receive capital infusions, with a Nov. 14 deadline to apply for stock purchases. It issued capital-infusion guidelines later for privately held banks, which had until Dec. 8 to apply. According to the Arizona Bankers Association, most of Arizona’s 33 state-chartered banks are privately held and had not applied to the Treasury while they weighed their options as their deadline neared. Jack Hudock with the Arizona Department of Financial Institutions said eight state-chartered banks or bank holding companies had applied, but he could not identify them and did not know the status of their applications.

Meridian Bank of Arizona, a privately held, nationally chartered bank owned by Marquette Financial Companies in Minneapolis, applied for a federal stock purchase and was awaiting a decision from the Treasury concerning how much capital it might receive. Doug Hile, president and CEO of Meridian, is not happy that publicly traded banks had first shot at a capital infusion. He does not mince his words in his displeasure over how the government treated privately held banks.

“From a public policy perspective, it’s not fair to small banks that have opted not to go public with their stock,” Hile says. “We are up in arms about it. This is harming Main Street banking by not allowing them to participate on an equal basis.”

Philip Francis Chairman and CEO, Petsmart

First Job: Philip Francis

Philip L. Francis
Chairman and CEO, Petsmart

Describe your very first job and what lessons you learned from it.
I’m going to give you two. I grew up on a farm, so the first thing I remember is cleaning up barns and building fences and bailing hay, and I worked for room and board. What I learned is to get a good job and get a good education. And straight out of college, I was an assistant nature director at a 4-H camp. I controlled the 10-year-olds and smart 12-year-olds who knew more about nature than I did.

Describe your first job in your industry and what you learned from it.
In terms of a real job, I was a trainee out of college in a grocery store, and what I learned is it’s all about the customer.

What were your salaries at both of these jobs?
Assistant nature director was room, board and $200 a month. And my first full-time job (in 1971), was $13,500 a year, and I thought I was rich.

Who is your biggest mentor and what role did he or she play?
The guy’s name was Winslow Smith, now deceased. He was president of the small grocery business that I had gone into. And, he let me go as fast as I could, as long as I performed. I am (now) willing to put young people in at or over their heads … if they’re good performers, they can go.

What advice would you give to a person just entering your industry?
Get a varied, rather than a narrow set of experiences early, and if you’re in a business where there are operations, make sure you include operations early in your career. If you can be in a good finance job early, but never learn the operations of the business, you’re going to top-out quicker than somebody who understands what really goes on in the business. That’s why I said get a varied set of experiences.

If you weren’t doing this, what would you be doing instead?
Well, I like what I’m doing. I think at my age and stage I would be doing something in the give-back mode. So, I’d probably be working for a social service agency or group of some sort helping other people, old or young, who can benefit from help.

Healing Powers

New Product By Valley Company Offers Innovative Way To Treat Wounds

Bandages have changed very little over the years, but a new wound-care treatment called Prosit, developed here in the Valley, is shifting that paradigm.

Prosit is a single-layer polyester fabric dressing that covers a wound like a bandage. But when moistened, it generates a micro-electric current that kills microbes — bacteria, viruses, fungus, mold, yeast — and stops them from penetrating skin. It also diminishes pain, speeds healing and can be cut to fit any size wound. Prosit was approved by the U.S. Food and Drug Administration in 2006 as an antimicrobial barrier to infection. Last year, the FDA cleared Prosit for use in the care of all types of wounds, the number of days it can be used and for over-the-counter sales. Consumers can expect to see Prosit on store shelves later this year.

Jeff Skiba, product inventor and chief executive officer of Vomaris Innovations (formerly Silverleaf Medical Products) in Chandler, says local doctors and hospitals have been using Prosit for more than a year to effectively treat chronic wounds, surgical wounds, diabetic ulcers, cuts, burns and pain from laser resurfacing and shingles. Shingles patients reported feeling no pain after covering the rash with the antimicrobial dressing, and after a week the shingles were gone.

Skiba himself had laser skin resurfacing to understand the pain level after the procedure and test Prosit on facial burns. Pain afterwards was an eight out of 10, he says, so he used the antimicrobial dressing to cover the wounds on his face. Prosit eliminated the pain and helped heal the skin in four days instead of a few weeks, Skiba says.

“The pain from this procedure was excruciating, so without Prosit I would have needed to take a narcotic to kill the pain,” he says. “Most doctors prescribe Percocet to calm it down.”

Sun Lakes resident Ed Foster, 66, met Skiba by chance one day when the inventor stopped in at Tolivers Carpet One in Tempe to buy flooring for his office. Foster says Skiba noticed the wound on the stump where he had a finger removed 20 years ago, and he said he had a product that might help it. Foster had surgery on the stump a few years ago to remove a piece of metal. Due to the way it was bandaged, bone pushed out the end of the finger and wouldn’t heal.

“I went to see the top hand surgeon in the Valley right before I met Jeff, and he recommended getting my digit removed down to my hand, which I didn’t want to do,” Foster says. “So I gave Jeff a call and started using Prosit. New skin grew over the bone that was sticking out, so now you really can’t tell what it is, and the wound closed completely. Prosit was simple to use and now I’m completely healed. I couldn’t be happier.”

Major military hospitals around the country are also seeing promising results from the wound-care treatment. Walter Reed Hospital in Washington, D.C., is treating seriously injured soldiers from Iraq. One particular soldier was scheduled for an amputation, but was able to cancel it after Prosit was applied to the open wound on his leg. The bioelectric dressing stimulated the skin around the wound and prompted skin tissue to start growing back and cover the bone and tendons. After two weeks, the entire wound was healed.

“We’ve tested Prosit on the worst of the worst wounds and we’re seeing remarkable results,” Skiba says. “The only thing it does not work on is cancer wounds. The cancer has to be removed first, and then it can be applied to heal the surgical wound.”

Tucson dermatologist and oncologist, Dr. Scott Sheftel, was so impressed with the results of Prosit after testing it on patients, that he got involved conducting research for Vomaris Innovations.

“No one across the board has ever addressed wound care like this,” Sheftel says. “Prosit is an amazing wound treatment that will one day show up on drugstore shelves as an option next to band-aids.”

Skiba raised $3.5 million in angel financing to pay for FDA approvals and product testing. Skiba is a graduate of Arizona State University and has degrees in both bioengineering and business.

Vomaris Innovations manufactures Prosit at its plant in Tucson. The company has 10 employees and plans to add 15 more this year between its Chandler office and the Tucson manufacturing facility.

“We already have a few big box retail chains that are interested in carrying Prosit,” Skiba says. “We’ll put it on store shelves so it’s available for simple things like bug bites, scraped knees and cuts. But we will continue focusing on chronic wound patients who have had nothing, until now, to help them.”