Tag Archives: September 2008

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Credit Unions Face The Future & Ride Out The Current Economic Storm

Beginning in November, credit unions across the nation will launch a celebration marking 100 years of their not-for-profit, cooperatively owned financial institutions operating in the United States.

Arizona Business Magazine, September 2008What may be surprising for some about that 100-year mark is a realization that credit unions have just lately — maybe within the past 20 years or so — become more visible within their communities. That’s largely because of the growth they have experienced, with more and more consumers becoming convinced that credit unions offer a superior, straight deal for themselves and their families.

With more than 90-million members nationwide, and about $825 billion in assets, credit unions have become much more prevalent within the working population of the nation as a source of loans, a safe harbor for their savings, and an innovative financial institution that meets the needs of their member/owners.

But, make no mistake — much has changed in 100 years, particularly in terms of how products and services are delivered, as well as expectations by consumers of services from their credit unions. ATMs, debit cards, online banking, credit cards — all are items credit union members of 100 years ago could scarcely have imagined.

Today, nearly all credit unions offer at least some of these services to better assist their members and to meet their high expectations.

What hasn’t changed at credit unions, however, is their philosophy and structure — a key difference between credit unions and other types of financial institutions, particularly banks.

For one thing, banks are owned by investors, either privately or as stock-held organizations. Credit unions are entirely owned by their members, cooperatively.

Secondly, banks exist to maximize profits for their investor/owners. Credit unions exist solely to maximize financial services to their members.

To put that difference into context, consider the subprime mortgage crisis that has ravaged our economy, locally and nationwide. By their very nature, credit unions largely avoided the crisis. Credit unions, which largely hold on to their mortgage loans rather than sell them off (70 percent of credit unions nationwide do exactly that), made loans to members that they could pay back — especially taking into consideration a member’s ability to pay back the loan.

It is no secret that in the current economic downturn, many individuals have found themselves backed into a corner from the subprime mortgage crisis and a wide variety of other unfriendly designer loan products. Fortunately, credit unions have honestly established their presence for serving their members. Remaining removed from other lending institutions has only worked for the best interest of their members.

This isn’t to say that credit unions across the country have not faced some “collateral damage” from the subprime crisis. Members are having trouble making payments on credit union loans because of an expensive subprime mortgage obtained from other lenders, or because some members are losing their jobs in today’s weak economy. But credit unions went into this with very strong balance sheets, and will still be in very strong shape when it’s all over.

Further, consumers can be assured that their money is safe when it is saved in a credit union. Just as the Federal Deposit Insurance Corp. (FDIC) does for banks, the National Credit Union Administration (NCUA), an agency of the federal government) insures a person’s savings to at least $100,000, with higher total insurance coverage available if the member has a combination of individual, joint, trust, payable-on-death and other types of accounts. In addition, there is separate insurance coverage of up to $250,000 for individual retirement accounts.

Today, credit unions offer a wide range of financial services, either because their members expressed an interest in having those services or because the credit union identified services that would best serve their memberships.

Yet, there are limits on what a credit union can do. In fact, credit unions are among the most highly regulated of all financial institutions.

But the changing realities of their members’ lives require credit unions to be as flexible as possible in the services they offer. Credit unions don’t yet have the complete flexibility they need, but are working with the Congress and state legislatures to allow them to be more limber in providing services to members.

One area in particular is business lending. Even though a number of credit unions came into being in the early 20th century, specifically to provide business loans to their members (fishermen, farmers, cab drivers and others), credit unions today are tightly regulated in this area.

Nevertheless, business lending is becoming for some credit unions an important part of their lending portfolio.

Much of the business lending at credit unions is driven by the members themselves. They know and appreciate the solid programs credit unions have offered on auto and home loans. Further, before the present economic slowdown, small businesses were already having trouble finding credit from traditional sources.

A 2004 research study by the Small Business Administration found that credit access for small business had been significantly reduced from traditional sources, and that non-bank sources of funding are becoming increasingly important, especially in areas dominated by banking institutions that have “consolidated,” that is, large banks merging with or buying up smaller banks.

What further attracts members interested in business lending and consumer financial services is that credit unions have a mission of serving “people from all walks of life.” In fact, today just about anybody is eligible to join a credit union somewhere (but not everyone can join just any credit union — you must fall within its “field of membership”). That’s important for credit unions, because, as cooperatives, they need members from all income segments: Those who have funds to save in order to bring deposits into the credit union, and those with a need to borrow funds to finance their needs in life.

It is this cooperative structure, and our mission to maximize financial services, that compels credit unions to offer a better deal on savings and loans. In fact, the Credit Union National Association’s Web site reports each day just how much of a better deal credit unions offer at www.creditunion.coop

For their first century in America, credit unions have seen a great deal of change, particularly in how consumers expect to obtain and receive their financial services.Arizona Business Magazine, September 2008

But what has not changed in the last 100 years is the cooperative structure, spirit and philosophy of credit unions — “people helping people.” We hope to keep celebrating that spirit for the next 100 years.

Steve Earl is president and CEO, and Joy Audet is political communications coordinator for the Arizona Credit Union League, which represents credit unions operating in the state. For more information, visit www.azcreditunions.org.

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New Owners Of Commercial Buildings Can Enforce Warranties Against Original Contractors

Does the new owner of a commercial property have the same rights as the former owner when pursuing a claim against the original general contractor for construction defects? The Arizona Court of Appeals phrased the question this way:

“We are asked to decide whether a subsequent purchaser of commercial property can sue for breach of the implied warranty of workmanship and habitability pursuant to an express assignment of that warranty by the original owner.”

The answer in Arizona now is yes, if the new owner obtained an assignment of the construction warranties from the seller.

Winning Warranties, Arizona Business Magazine September 2008Case Study
In the case of Highland Village Partners vs. Bradbury & Stamm Construction Co. Inc., the owner hired a general contractor to build a number of separate apartment buildings and related improvements. Years after construction was complete, the owner sold the property and assigned to the new owner its basic warranty rights. The assignment included:

“All presently effective warranties or guaranties in (original owner’s) possession from any contractors, subcontractors, suppliers, servicemen or material men in connection with … any construction, renovation, repairs or alterations of the improvements or any tenant improvements (as well as) all contracts with general contractors, subcontractors and/or specialty contractors for the improvements which are in the possession and/or under the control of (original owner).”

A few months after the sale, the new owner sued the general contractor for alleged building defects, including problems with the flashing and siding.

Defining the Fine Print
The general contractor tried to have the lawsuit dismissed by arguing that the implied warranty of workmanship, which is implied in the law based on a contractual relationship between parties, belonged only to the original owner with whom it contracted, and could not be asserted by a new party such as the new owner.

This defense, often described as a “lack of privacy,” limits the claims that can be made by those who are not direct parties to a contract. In the residential home building context, an Arizona appellate decision had previously expanded this otherwise narrow scope of warranty claims by non-parties to a contract, allowing warranties to be enforced by a purchaser of a home who was not in privity of contract with the original home builder. That decision was based on public policy considerations, where the court noted that large home builders enjoy superior bargaining power and construction knowledge over individual home buyers — that builders know that homes will change hands frequently, and whether a construction defect is suffered by the original home buyer or rather a subsequent homeowner is not a meaningful distinction from a fundamental liability perspective.

But the Arizona courts had declined to expand warranty liability in the commercial field because similar public policy considerations did not apply. Commercial builders and commercial owners were presumed to have comparable sophistication levels.

In the Highland case, the new owner argued there was a key difference in its facts: It obtained an express assignment of the warranties when it bought the property. Therefore, the new owner now explicitly held the benefits of those contractual warranty rights. The general contractor responded that the distinction didn’t matter. There never was a direct contract between the general contractor and this new owner, and essentially there was nothing effective against the general contractor that could be assigned.

In the end, the court sided with the new owner. It reasoned that there was nothing unusual about allowing assignments of contractual rights, including warranty rights, unless the assignment would materially change the duties of the general contractor — or if the assignment was forbidden by statute, was against public policy or otherwise was precluded by contract.

The general contractor contended that extending liability in favor of new owners might encourage owners to take their sweet time in giving notice of a construction problem. The court disagreed, citing the Arizona statute requiring that any claims for defects must be filed no later than eight years after substantial completion of the improvements.

So the statute of limitations already in effect would preclude stale claims.

The Solution
The court pointed out that a general contractor has a straightforward way to limit its exposure by including a clause in the original construction contract that prohibits assignment of the warranties. With that limitation, only the original owner would, by contract, be able to enforce warranty claims against the general contractor. This would essentially insulate the general contractor from remote warranty claims from purchasers down the line.

However, any existing non-assign ability clause now would likely be the subject of a more focused analysis, because any new buyer, in assessing whether to purchase property, will view a lack of ongoing warranties more critically. Similarly, the original owner might evaluate a warranty transfer restriction advanced by a general contractor in the construction contract in terms of its affect on the future marketability of the property.

End ResultsArizona Business Magazine, September 2008
This case represents a significant extension of the potential liability of general contractors and builders of commercial property to subsequent owners, particularly given that prospective buyers will require (if they did not in the past) an express transfer of any warranty rights along with the commercial property from the original owner.

Christopher M. McNichol is a partner with the law firm of Gust Rosenfeld P.L.C. in Phoenix. His practice includes general commercial transactions and litigation, with an emphasis on real property matters. He can be reached at 602-257-7496 or mcnichol@gustlaw.com.

Energy Costs - AZ Business Magazine September 2008

Higher Energy Costs Are Forcing Valley Companies To Look For Alternatives

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.


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.”

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.

“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?”

For more information about how Valley companies are combating high energy costs, visit the following websites:

bashas.com
usairways.com

dependablesolarproducts.com

windenergy.com
azbiodiesel.com

arizonatrucking.com

Arizona Business Magazine September 2008

speculative builder tax

Speculative Builder Tax: A Hidden Tax On Property Improvements

Most Arizona cities and towns impose a tax on the privilege of doing business within city or town limits. Indeed, business privilege taxes are a primary source of revenue for most cities and towns.

Unfortunately, many developers do not realize that real estate development is subject to the municipal transaction privilege tax if a developer sells real estate he has improved. This tax is known as the “speculative builder tax.” It applies even when the developer hires a prime contractor to construct the improvements. Fortunately, a developer can reduce the speculative builder tax by the prime contractor charges. Still, the speculative builder tax can be substantial where the sales price of the improved real property greatly exceeds the cost of the improvements.

Here is how it works. If an owner of real property improves it himself or through others by building a structure, making improvements to land without a structure, such as paving or landscaping, or when water, power, and streets have been brought to the property line, the owner can be liable for the tax if he sells the property after making the improvements. If the improvements consist of custom, model or inventory homes, or improved residential or commercial lots without a structure, then the property is subject to the speculative builder tax whenever the property is sold. On the other hand, if the improvements are made on commercial property, the tax only applies if the property is sold within 24 months after the improvements are substantially completed.

The tax rate varies by jurisdiction. The tax rate in Phoenix is currently 1.8 percent of the sales price. However, the city council recently increased the tax rate to 2 percent. Glendale recently raised its tax rate from 1.8 percent to 2.2 percent. The Scottsdale tax is 1.65 percent, the Mesa tax rate is 1.75 percent, and the Tempe tax rate is 1.8 percent. Some smaller cities and towns in Arizona charge up to 4 percent.

Municipal tax auditors find taxable sales by comparing recent sales to the building permits that have been pulled to improve the property. Using this audit technique, it is remarkably easy for city auditors to find sales of improved real property where taxes have not been paid.

The speculative builder tax can also entangle those who are purchasing improved real property. Municipal ordinances allow the city or town to collect the speculative builder tax from a purchaser if the buyer fails to pay the tax. Likewise, foreclosure or a sale in lieu of foreclosure can trigger the tax. Thus, lenders, or those who acquire recently improved real property at a foreclosure auction, could be liable for the tax.

If you are a commercial developer, one way to avoid the tax entirely is to wait at least 24 months to sell improved commercial property. If you develop residential property, you can pass the tax on to another developer who completes the project if that second developer agrees to take on that liability. But if you don’t plan, you could subject the same project to multiple layers of taxation if the project is bought and sold during development. This is due to the fact that each person who makes improvements to real property and then sells it is liable for the tax.

The bottom line is that developers need to be aware of the speculative builder tax when they sell improved real property so they are not caught unaware when the local tax auditor comes calling.

For more information on the speculative builder tax visit, modelcitytaxcode.org.

AZ Business Magazine September 2008

Legal

Tips On Avoiding Legal Hurdles When Starting A Business

When an entrepreneur launches a new venture, the legal issues related to forming and operating the business are often put on the back burner. The natural focus is on hiring employees, securing customers, and generating revenue. Unfortunately, failing to do some basic legal planning can result in costly mistakes, impaired growth, and even the untimely collapse of the business.

Here are practical tips that every new business owner should consider:

Create a company

Unless you want to put your personal assets at risk, create a company through which to operate your business. There are a number of options, including C corporations, S corporations, limited liability companies and partnerships. The right choice will turn on the nature of the business, the ownership and management structure, the desired tax treatment (including the elimination of “double taxation”), any applicable regulatory requirements and the exit strategy.

Maintain good corporate records

Understand the legal requirements and best practices associated with maintaining corporate records for your company. Once a checklist has been developed to guide you, the process is fairly painless. Poor record keeping, however, can lead to a host of problems and create significant liability for the company and its owners and managers.

Put someone in charge

Two individuals start a business and decide that each will be a 50 percent owner. That sounds good in theory, but rarely works in practice. No matter how cooperative the partners pledge to be, legitimate disagreements will inevitably arise. And when they do, a 50-50 ownership structure will guarantee deadlock. Encourage each owner to participate in the decision-making process, but invest someone with the power (through stock ownership, board control and/or contractual rights) to make the final call.

Raise money legally

Every new company requires some infusion of capital. If the company’s founders cannot personally finance those capital requirements, they may turn to third-party investors. In doing so, the company must conduct a private offering in compliance with federal and state securities laws. It is important to understand that these laws are triggered when even one share of stock is offered or sold to just one person. The laws dictate the manner in which prospective investors can be solicited, the contents of the documentation that must be provided, and any required regulatory filings. Securities law violations can jeopardize not only the offering, but also create civil and criminal liability for the company and its principals. Hire an experienced lawyer to help you navigate the process.

Protect your brand

As a company matures, its brand can become one of its most valuable assets. Think of Coca-Cola, Microsoft and Disney. Federal trademarks are the best way to protect and enforce your brand. Before launching your company or its new product, have an intellectual property attorney determine whether the names and logos being considered are available for use and, if so, what level of protection might be available. It is difficult enough to acquire brand recognition in the marketplace, so don’t risk being unable to use or protect the brand once that hard-earned recognition is attained.

Protect your other intellectual property

Apart from its brand, every company will have a certain amount of additional intellectual property. It might be a unique product, a novel way of doing business, a secret formula or a proprietary customer list. Make sure that your company both owns and protects its intellectual property. First, have both employees and consultants execute agreements that assign to the company all of the intellectual property they create. Without an agreement, your company’s latest and greatest idea may literally walk out the door without you being able to stop it. Second, consult a lawyer to determine how best to protect your intellectual property, whether through the use of patents, copyrights, trademarks, confidentiality and non-competition agreements, or otherwise.

Understand those contracts you are signing

How many times a week do you enter into contracts without reading the fine print — the ticket to the parking garage, the medical waiver, the cell phone agreement? Unfortunately, business owners are no different, often entering into critical company contracts without fully understanding their terms. They confirm that the basic deal points have been included, but then gloss over things such as representations and warranties, indemnities, and governing law and dispute resolution provisions. At best, those provisions may prevent the company from receiving the intended benefits of the contract. At worst, they may expose the company to significant and unexpected liability. Read and fully understand each and every contract before you sign it. Your company’s success (and survival) may depend on it.

Don’t hand out stock options like candy

To conserve cash while motivating employees to go the extra mile, some business owners are tempted to hand out numerous stock options. Whilethe dot-com era popularized this approach, you are encouraged to resist the urge. Employee turnover is inevitable. It is one thing to have a disgruntled former employee. It is another thing to have a disgruntled former employee who now owns a piece of your business.

Hire a good lawyer

Starting and growing a company is an incredibly difficult challenge. Hire a lawyer who understands and is willing to partner with your business. When you have an issue or problem, the best lawyer is one who has the expertise to understand the legal options, as well as the business sense to help you select the best one.

For more information visit, business-law.freeadvice.com

AZ Business Magazine September 2008

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.”

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Real Estate Relationships: Importance Of Representation In Tough Marketplace

By Tom Ellis

Businesses thinking of leasing space in Phoenix should have no problem finding a real estate broker to help them select the best site, and negotiate with the landlord on their behalf. But there is one thing the tenant must bring to the table — patience. Brokers who specialize in commercial tenant representation make it clear that site selection and lease negotiation are complex processes that can take several years to bring to fruition.

Real Estate Relationships, Arizona Business Magazine September 2008Retail
For Judi Butterworth, a principal at De Rito Partners and a Phoenix broker specializing in retail tenant representation, it all starts with becoming thoroughly knowledgeable about the client’s business. Then she looks at local geography, the freeway system, traffic patterns and changes in demographics. There are many questions her client must answer: What are the client’s goals? Will the client share space with other retailers, who are the ultimate co-tenants? If the client has existing stores here, will some of them relocate?

Retail leasing is more complicated than office and industrial, considering multiple locations and an out-of-state headquarters often are involved, Butterworth says. Client representatives come to town to look around, including the president.

“Part of what you do as a broker is really a process of elimination,” Butterworth says. “You’re given the criteria and you research all of the available space and decide which ones meet the criteria. That way, when you drive around with the client, you know what the alternatives are.”

Once a location is selected, Butterworth negotiates a letter of intent with the landlord. The letter delineates whether her client accepts the space as is or will make improvements; the money the landlord will allot for construction; the number of days allowed for construction; when the lease starts; and when rent payments commence. The final letter typically is approved by a client committee. Then attorneys for the landlord and Butterworth’s client draw up a lease that can be 60 to 80 pages long. After the lease is signed, Butterworth’s job is done.

Retail, office and industrial clients all must determine how much square footage they need, but that’s where the similarities end, according to Butterworth. Brokers representing industrial clients must consider railroad service, dockside service, ceiling height and freeway access. For office tenants, there are questions about the kind of floor plan that will accommodate all employees, where employees and vendors travel from to get to the building, parking requirements and area amenities.

Office

CB Richard Ellis in Phoenix specializes in office tenant representation. Chuck Nixon, a senior vice president there, says he first helps his client select an architect because changes to the existing space usually are needed. Then he rolls out a six-step process that’s the same for small, medium and large tenants — client needs assessment, market evaluation, landlord solicitation, negotiation, implementation and post-project documentation.

The client’s general criteria are gathered during the needs assessment, and a list of potential buildings is narrowed during the market evaluation as the client’s needs are further refined, Nixon says. Once a short list of buildings is drafted, Nixon sends a request for proposal to each landlord. Nixon and the client evaluate the economics of each Request for Proposal (RFP), and the architect evaluates whether the landlord’s proposal is a good fit.

The client accepts one of the RFPs and Nixon negotiates a letter of intent and then a lease. Nixon and the landlord may negotiate through several lease offers as an array of topics are addressed, including tenant rights to expand and reduce the space, tenant improvements as specified by the architect’s design and rights to terminate and renew the lease.

“Typically, the client is involved (in negotiations) as much as they want to be,” Nixon says.“Some want to be involved in just key decisions. Some want to be involved in all points of discussion.”

Implementation includes construction and final lease documentation that covers such areas as lease term, rent, additional costs (i.e. property taxes and/or maintenance), security deposit, subleasing and dispute resolution. In post-project documentation, Nixon makes sure the client’s move into the space is coordinated and that the client is happy.

Market OpportunitiesArizona Business Magazine, September 2008
Current market conditions offer more opportunities than challenges for tenants, Butterworth and Nixon say. The main challenge is selecting the right building. Butterworth and Nixon make sure they work the opportunities into lease negotiations.

The construction frenzy over the past few years has resulted in an ample supply of retail and office space, and Butterworth and Nixon say vacancy rates have climbed. Consequently, landlords are aggressively pursuing tenants, and brokers can negotiate lower rents or no rent for specific periods of time. Landlords are offering more concessions and are flexible on tenant improvements and parking requirements.

“Clearly, it is a tenant-friendly environment and will be so for the foreseeable future,” Nixon says. “Which is good. One thing you don’t want as a tenant is limited options.”

www.cbre.com/phoenix
www.derito.com

Workflow

Work Flow Software Can Maximize Your Company’s Efficiency

About a year ago, Kevin Hinderleider, IT director for the city of Avondale, needed to solve a particular problem. He had more than 20 projects going on at any one time and was looking for a portfolio-management solution to ensure none fell through the cracks.

His research led him to Daptiv, a Seattle-based company that provides on-demand collaborative business software solutions. Hinderleider decided Daptiv was not only the most comprehensive program for his needs, but also was easy to use and reasonably priced. After signing up for the hosted software, he discovered an unexpected bonus.

“What we got out of it was an enhanced kind of workflow that we weren’t really anticipating,” Hinderleider says. “We’ve come to find out that it has the ability for routing of approvals for documents, routing of approvals for projects so someone can initiate a project request and it gets approved based upon the level of complexity of tracking the project, the resources available, staff, money — all that kind of standard stuff.

“We didn’t have a specific need for workflow upfront. What I did have upfront was the necessity to be able to make sure we kept the documents and all the tasks about a project together. What was a benefit in the end was it had that workflow.”

Workflow management is exactly what the term suggests. It’s a process by which work flows through an organization. It’s also something that has caught the attention of major software companies such as IBM, Xerox and Microsoft, as well as a plethora of smaller firms that offer everything from Web-based solutions to industry-specific programs.

Workflow has become an essential part of business software suites, along with document management, project management and other key applications.

Matthew Bather is the Synergy product marketing manager for Exact Software North America, which is headquartered in Andover, Mass., and counts several Arizona companies among its clients. They include Boon Inc. in Chandler, American Beverage Systems in Phoenix and Regenesis Biomedical Inc. in Scottsdale. Bather uses the example of an expense claim to demonstrate how an automated workflow tool simplifies a basic process.

In the past, an employee might have to fill out an expense form, package it with receipts, send it to the accounting department and wait for reimbursement.

“Now the delivery of that mechanism is entirely possible through the application, such as Synergy, where that business process of an expense claim has a certain workflow behind it,” Bather says. “You submit that expense claim and you can see where it is down the stream as it flows through the business process.”

One common misconception is that the more micro-based workflow management and business process management, or BPM, are one and the same.

“Business process management is more holistic in nature,” Bather says. “It strives to improve the performance and efficiency of the organization as it relates to the entire process. … But there is a lot of gray area. Some organizations say workflow when they mean BPM and vice versa.”

Both capabilities are typically included in business suites, as is the case with the Web-based Synergy program.

Dirk Karsten Beth, president of Mission3 in Phoenix, has a life sciences industry-specific suite that helps companies manage their entire product development process. Although workflow is part of Mission3, Beth warns that it can be problematic.

“I’ve implemented all the major workflow systems out there in the past and that was one area where I found that there were a lot of areas for failure if it wasn’t implemented right,” he says. “Which means it’s great for really rigid processes, but once there’s a diversion from that rigid process it can fall apart.

“So if you try to add workflow to every area of your business, it’s going to be really challenging. But if you use it judiciously, especially in areas where it’s required and you have to document everything you’re doing, then it works really well and can add real significant value.”

He’s a proponent of service-based online software solutions because they allow users to work with it, grow with it or transition out of it if it doesn’t meet a company’s needs.

With so many options available, deciding what will work best for your situation can be overwhelming. Pat Sullivan, CEO of Flypaper Studio Inc. in Phoenix, has an impressive track record in business software, starting as the driving force behind such programs as ACT! and SalesLogix. Today, he sits on the boards of three emerging software companies. He offers sound advice for anyone considering a software purchase.

“It’s generally fairly easy to find unbiased reviews from customers who are actually using the product,” he says. “On various forums, on even the vendor’s Web site or related Web sites, you generally are able to read what real people have really said. That is what I look for.”

He also suggests getting demonstrations and visiting businesses that are using the product in question to seek feedback from those actually working with the software. “That’s probably better information than you’re ever going to get from the (software) company’s Web site or the company’s salespeople,” Sullivan says.

For more information about Workflow software visit, exactamerica.com, mission3.com, daptiv.com, or flypaper.com.

AZ Business Magazine September 2008

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

Recycle.box.2

Eco-Workers: Sustainability Starts At The Office

Sustainability starts at the office

Many firms are changing their operations to have considerably less impact on the environment. But most changes don’t have to begin at the top. They typically occur because concerned individuals got together, came up with an action plan and sold it to top management.

Eco Workers, Arizona Business Magazine September 2008As Alexis de Tocqueville observed in the 1830s in his “Democracy in America,” a defining characteristic of Americans is that they don’t wait for someone in authority to tell them what to do; they just voluntarily organize a group and go do it. If your company doesn’t use hybrids or support employees’ public transit use, get everyone on board to do this. If you’re going to move to a new building, insist on a LEED-registered (and certified) project.

Through an arrangement with a plumbing fixture manufacturer, one building engineering firm with about 100 employees in Portland, Ore., now offers a program to subsidize the installation of dual-flush toilets in employees’ homes, each saving about 6,000 gallons of water per year. The same firm has bought four Honda Civic hybrids for travel to client meetings and job sites, and subsidizes 60 percent of the cost of public transportation for employees, which has led to 80 percent participation. It’s also testing very low-flush urinals in the two washrooms, saving 85 percent of the water use of a typical 1-gallon-per-flush fixture.

Workers at a larger corporation might be surprised at how many incentives may be offered in the coming years for you to “go green.” For example, early in 2007, Bank of America offered a $3,000 cash rebate to any of its 185,000 employees who bought a hybrid car. Why couldn’t your company do the same? Many companies are offering transit subsidies, participation in local “car sharing” programs, showers and bicycle lockers for bicycle commuters, and similar measures to keep them from driving to work in conventionally powered, conventionally fueled, single-occupant automobiles.

Here are my top tips for affordable sustainability initiatives for any employer:

  • Make a personal commitment to change the way you do things. Lead by example.
  • Engage the creativity of staff by creating an in-house “green team” that has specific goals, responsibilities, timetables and budgets. If you’re large enough, consider hiring a sustainability director to oversee a comprehensive group of initiatives.
  • Tell the rest of the company in creative ways what your commitment is. For example, one company president sends his quarterly newsletter to more than 200 employees on recycled paper with wildflower seeds embedded in it. Instead of tossing it, employees are encouraged to soak the newsletter for a day, and then plant it in their garden.
  • Use less paper. Have the IT department set the default printing style to duplex, so everything is double sided unless it has to be printed only on one side.
  • Get rid of printers altogether; give everyone scanners for any paper that has to be saved, and encourage people not to
    print anything.
  • Measure everything that comes into the office or factory, and use less of it.
  • Get rid of wastebaskets under the desk and put recycling boxes. Any other trash can be disposed of down the hall.
  • Subsidize transit passes and offer guaranteed rides home for employees.
  • Make every company car a hybrid, biodiesel or flex-fuel vehicle. Look for a chance to buy the coming plug-in hybrids.
  • Buy only Energy Star appliances and equipment for the office. Get rid of any remaining incandescent lamps. Use only compact fluorescent bulbs or LED lights.
  • Buy green power from sun or wind power plants to meet all your electric power needs.
  • Buy carbon offsets for all your company travel, especially
    air travel.
  • Change your purchasing policies to buy only “Environmentally Preferable Products” from the U.S. Environmental Protection Agency’s list.
  • Cut water use by installing waterless (or ultra-low flush) urinals and dual-flush toilets in all restrooms.

If you work at a government agency or school district, you have a chance to affect all of the organization’s design, construction, remodeling and purchasing policies. There’s nothing an elected official, planning commission member or senior civil servant likes more right now than to look good by instituting a sustainability policy. With more than 800 mayors of American cities on board to take action to reduce their cities’ greenhouse gas emissions, they’re going to be looking to their staffs to come up with practical proposals to implement this commitment. Make sure that everything you build has long-term sustainability built into it, including getting all new or renovated buildings certified to the LEED standard. Then tackle the harder stuff, such as purchasing policies and energy use in ongoing operations. Try to get the organization to certify one building to the LEED for Existing Buildings standard in order to create a benchmark for measuring the sustainability of operations across the board.

Jerry Yudelson, PE, MBA, LEED AP, is president at Yudelson Associates, Tucson. He can be reached at jerry@greenbuildconsult.com.

92840260(2)

Local Arizona Firms Benefit From Federally Funded Chamber Program

By Don Harris

Thanks in no small part to the efforts of the Arizona Minority Business Enterprise Center, three Arizona firms are among the many that have benefited from a federally funded program.

Arizona Business Magazine, September 2008

Operated by the Arizona Hispanic Chamber of Commerce, the center is opening doors to market opportunities and much-needed capital. A nonprofit organization, the center is funded by the Minority Business Development Agency (MBDA) of the U.S. Department of Commerce. The MBDA is the only federal agency created specifically to foster the establishment and growth of minority-owned businesses in America.

Now in its second three-year grant under the operation of the Hispanic Chamber, the center focuses on minority businesses with $500,000 or more in annual revenues that generate significant employment and long-term economic growth.

“The center assists minority business enterprises in the areas of financing, planning, management, marketing and obtaining government procurement opportunities,” says Harry Garewal, president and CEO of the chamber.

The center also honors companies and entities that have made payments exceeding $1 million to minority businesses through contracts awarded. Most recent honorees were Sundt Corporation, Hunt Construction Group, Salt River Project, Turner Construction Company and the city of Phoenix Aviation Department.

The emphasis is on minority, not specifically Hispanic, businesses. To be eligible, businesses must meet certain minority standards and be members of certain groups that include, but are not limited to, African Americans, Hispanic Americans, Native Americans, Aleuts, Asian Pacific Americans, Asian Indians, Eskimos and Hasidic Jews.

Ray Gonzales, president and CEO of RBG Construction; Enamul Hoque, president and owner of Hoque & Associates; and Stuart Smith, owner of Specialized Maintenance Services, tell how they and their businesses were aided by the Arizona Minority Business Enterprise Center.

Gonzales’ RBG Construction business, based in Glendale and founded in 1996, currently has about 100 employees. However, depending on conditions, payroll ranges from 20 to 125 employees. The firm has two divisions: general contracting and its original unit — concrete. Portions of projects landed through the center’s guidance, according to Gonzales, include the University of Phoenix Stadium, concourse work at Sky Harbor International Airport, a major car rental center adjacent to the airport, the Phoenix Convention Center, Arizona State University projects and a Border Patrol station in Douglas.

“The center has been a great vehicle for our company,” Gonzales says. “Its services helped us get minority certification to bid on government contracts, and helped us with banking needs.”

There’s an added bonus — educational opportunities. The center lined up grants through the Small Business Administration to send Gonzales to the Dartmouth College Tuck School of Business in Hanover, N.H. The grant covers rooms and meals, plus a one-week course. Participants pay their own travel expenses.

“They send minorities to brush up on finance, business planning, project management, marketing and business strategy,” Gonzales says. “It’s a crash course. It’s not a party.”

Hoque is founder of Hoque & Associates, a consulting engineering firm specializing in geotechnical exploration, civil engineering, construction materials testing, environmental assessment and solid waste engineering. Launched in 1997 as little more than a one-man operation, the company now has 22 employees. Hoque credits the center for his company’s growth.

“It helped us then and it’s still helping us,” Hoque says. “We’re a small company and the center helped us find sources of work. We could not afford to have a marketing person full time. You’re able to network with others, find your own niche. They can’t give you work, but they can find it for you. They point you in the right direction.”

Through the center’s efforts, Hoque for 10 years has had a contract with the Cochise County Solid Waste Management Division. Other jobs include work on a federal prison near Tucson, and a Sprint building in South Phoenix.

His firm also does environmental work, such as restoring “a blight site” landfill where Tempe Marketplace was built.

“I was the main guy to help investors to make money off the landfill,” Hoque says. “With blight sites, if you can beautify and restore it, that’s a catalyst for future improvements. As the energy crisis goes on, building inside the town rather on the periphery makes sense.”

Smith, an African American, started Specialized Maintenance Services — a commercial janitorial maintenance firm — in 1990, and since then has added other services, including heating and air conditioning, electrical and plumbing. He’s up to 60 employees.

“The center helped in terms of putting together a financial business plan, access to capital, and a requirement by the Small Business Administration to get certified as an ‘8a’ minority firm, which makes us eligible for contracts with the federal government,” Smith says. “We could not have gotten this work without certification, and the center was helpful and instrumental. They also helped with a marketing strategy and held motivational meetings for our employees.”Arizona Business magazine September 2008

In the last four years, the center has been able to facilitate $145 million in loans and procurement assistance, leading to the creation of more than 600 new jobs, Garewal says.

The first three-year grant under the chamber’s operation ended in 2006. A second grant of $365,000-a-year for three years began in 2007. Grants are reissued annually by the federal government based on how well the center performs, and the center matches the grants on a percentage basis.
Arizona Business Magazine, September 2008
“We know a majority of small businesses that are flourishing are minority-owned businesses,” Garewal says. “For the most part, minorities are pretty entrepreneurial. They always figure out ways to make additional money. They have that entrepreneurial spirit. When you think about it, the American dream is to be entrepreneurial, to provide for their families and to be successful. Isn’t that why we go into business?”

www.rbgconstruction.com
www.hoqueandassociates.com
www.azmbec.com