Jan Norman on Small Business

O.C. businessman to lead global entrepreneurs group

Jan Norman, small-business columnist — Fri, 03 Jul 2009 19:00:24 +0000

Orange County businessman Matthew K. Stewart has been named global leader of The Entrepreneurs Organization,

Matthew Stewart

one of the premier nonprofit membership organizations for successful entrepreneurs worldwide.

Stewart, lives in Laguna Niguel and is co-founder and co-CEO of National Services Group in Irvine which operates College Works Painting, SMJJ investments and Empire Community Painting.

He will serve for two years as chairman of the global board of directors of the 7,000-member organization. He is a member and former president of the Orange County EO chapter.

“Entrepreneurs face both interesting opportunities and tough challenges today. Now more than ever, EO provides entrepreneurs with the resources they need to understand and capitalize on the ever-changing field of play,” Stewart said. “As 7,000 business owners across 39 countries, we unite to achieve significance on personal, business and global stages. We do this by focusing on relevant and valuable opportunities available through EO’s worldwide network of peers.”

Stewart has twice been a finalist for the Ernst & Young Entrepreneur of The Year Award, and in 2002 received the Excellence in Entrepreneurship Award from the Orange County Business Journal. He currently sits on the Board of Trustees of Share Our Selves, the largest assistance-based charity in Orange County.

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More new O.C. businesses filed in June

Jan Norman, small-business columnist — Fri, 03 Jul 2009 13:00:05 +0000

If you’re looking for a glimmer of growth amid continuing negative economic news, here’s a pin light: The number of new fictitious business name filings increased in June, both from May and from a year earlier.

Source: O.C. Clerk Recorder

Business owners must file a fictitious name statement with the County Clerk Recorder’s Office if they are doing business under some name other than their own. They have to refile if the business moves or changes ownership. But the vast majority of filings are for new businesses.

Not only did June show growth, the second quarter’s 9,971 filings were higher than the 1st quarter of ‘09 and the 2nd quarter of ‘08.

The numbers ticked up in April, then fell back in May, so we might have some see saw activity in this data point for a while, but it’s better than the down escalator we’ve been on.

Still, if we look at the monthly average for the past 12 months — a way to get around any seasonal variations — we’re still at the lowest point in the past five years.

Source: O.C. Clerk Recorder

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O.C. minority-owned firms nominated for excellence

Jan Norman, small-business columnist — Thu, 02 Jul 2009 23:00:02 +0000

Nine Orange County companies are among the nominees for outstanding minority-owned business enterprises that the Southern California Minority Business Development Council will awarded July 9.

The 47 nominees have a total of 12,500 employees and gross annual sales of $214 billion. They were nominated for outstanding performance of their contracts with members of the Minority Business Development Council.

One winner will be awarded in four size categories based on annual revenues.

The Orange County nominees are:

AD-PRO, Huntington Beach
APR Consulting Inc., Tustin and Diamond Bar
Coast Aerospace Manufacturing Inc., Huntington Beach
Diverse Staffing Solutions, Brea
G & F Concrete Cutting Inc., Santa Ana
Pacific Rim Capital Inc., Aliso Viejo
Torrez Trucking, Placentia
VR & Associates, Huntington Beach
Vizio Inc., Irvine

The 25th Annual Supplier of the Year Awards luncheon will be at 11 a.m. July 9 at the Omni Los Angeles Hotel, 251 S. Olive St., Los Angeles.

Under the program, minority business enterprises are judged on their demonstrated growth, development and ability to create jobs; utilization of other minority business enterprises; business performance in their contracts, including providing quality products and services, cost savings and innovative solutions; overcoming major obstacles and adversities, and community involvement.

The other nominees are:

Nelson Davis Television Productions
Southeast C&I Electric
The Baker Group
Quality General Engineering Inc.
Sustaining Resources
Artcraft Bedspread
Banneker Industries Inc.
Best Landscaping
Caraway & Cuckler Engineering Services, Inc.
Code Precast Products, Inc.
CR&A Custom
Elixir Technologies Corp.
Icon Blue, Inc.
Industry Color Printing
Kevcomp, Inc.
Madison Paving
NK David Constructors
Osceola (Malikco)
Precision Analytical, Inc.
Project View, Inc.
Pro Tool Services, Inc.
Sensis
Sequoia Financial Services
The Label Co.
Walton Isaacson, LLC
A. M. Ortega Construction
AC Pipe & Equipment
EZ Data, Inc.
FCI Management Consultants, Inc.
Kenig Aerospace
Manderee Enterprises Corp.
Philatron International
RMI International, Inc.
T.J. Cross Engineers, Inc.
Alorica
GeoLogics, Corp.
OneSource Distributors
SHI International

“These nominees are what all business entrepreneurs should aspire to,” said Council President John W. Murray. “They are successful because they are highly capable individuals who work hard and deliver value to their clients and the community. That is always important but never more so than during these most challenging times.”

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O.C. cancer drug maker raises $51 million

Jan Norman, small-business columnist — Thu, 02 Jul 2009 18:00:51 +0000

Spectrum Pharmaceuticals Inc. in Irvine said today it has received commitments from institutional investors for $21 million in a direct stock offering.

This investment brings to $51 million the amount Spectrum has raised in the past three months.

Long-time institutional investors put in $20 million in late May and another $10 million in June, said Senior Vice President Russell Skibsted.

The biotech company, which trades on NASDAQ, has a series of cancer treatments in various stages of development including Zevalin, an FDA-approved drug for relapses of non-Hodgkin’s lymphoma, and drugs in trials for treatment of cancer of the bladder and prostate.

Spectrum may hear today whether the FDA will approve Zevalin for treating first instances of non-Hodgkin’s lymphoma, Skibsted.

“We are pleased that existing institutional investors continue to show their support for Spectrum,” said Chairman Rajesh C. Shrotriya.

In the most recent deal, which should close by July 6, Spectrum will sell 2.9 million shares and warrants for an additional 1.5 million shares. The company expects to net $20 million after paying $1 million in agents fees and other offering costs.

Click here for more details about the offering.

Click here to read Register staffer Colin Stewart’s profile of the company.

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June sales of O.C. businesses decline 49%

Jan Norman, small-business columnist — Thu, 02 Jul 2009 12:00:32 +0000

The sale of small, private Orange County businesses fell 48.9% in June, compared to a year earlier, according to BizBen, a web site that specializes in sales of California firms. It is a sign that financing is still difficult for potential buyers to get, and relatively few people are eager to be business owners as the recession enters its 18th month.

The continuing sales downturn is widespread:

Source: BizBen

For the first six months, the number of O.C. businesses that sold dropped 46% from the same period a year earlier.

The downward slide in closed transactions was nationwide, according to BizBuySell, a national businesses-for-sale web site, which doesn’t break out O.C. numbers. Business brokers nationwide reported to BizBuySell that second quarter sales dropped more than 50% compared to the same quarter in 2008. First quarter sales dropped 36%.

Based on BizBen data, O.C. sales of businesses dropped 39.4% in the second quarter and 52.9% in the first quarter.

“These numbers are not surprising as the economy continues to deter the consummation of business transactions at all levels,” said Mike Handelsman, general manager of BizBuySell.com. “There is no doubt that a large number of business transactions are not being closed simply due to the lack of available buyer capital and bank financing…Banks just aren’t willing to back business purchase transactions to the same level that they have in the past.”

The sales drop off in Orange County seems more related to the economy than to any seasonal trend. Until the recession, sales during the summer increased from April and May.

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Private equity investments hit 7-year low

Jan Norman, small-business columnist — Wed, 01 Jul 2009 19:00:08 +0000

Private equity investment activity during the first half of the year was the slowest in seven years, reports PitchBook Data Inc., a research firm that specializes in private equity.

Here’s the snapshot comparison for year-to-year deals and dollars invested (click on image for a larger view):

Source: PitchBook Data

Private equity investors are important sources of capital for private companies to grow or acquire other companies or public companies to go private. Although best known for the multi-billion-dollar deals, especially from 2005 to 2007, private equity has been more significant to mid-sized companies both for money and management expertise.

Although both the number of investments and amount of money invested dropped dramatically in the first half and second quarter, private equity investors are sitting on a record high $400 billion and continue to raise more money.

PitchBook attributes that unwillingness to put money into deals to investors waiting for the investment climate to improve.

Some of the highlights:

First half, January through June, 407 deals totaling $24.7 billion
Second quarter, April through June, 174 deals totaling 11.1 billion
The hardest hit industry was energy in which the six investments during the second quarter represented an 87% decline from a year ago
A third of the second quarter investments were in business products and services, but the number was still down 65% from a year earlier

Even when private equity made an investment, the median size of the deal was down 82% to $11.8 million.

In response to the current credit markets, private equity investors have been using less leverage and targeting smaller, operational improvement and distressed-company investments, PitchBook says.

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U.S. employers reportedly cut 473,000 jobs in June

Jan Norman, small-business columnist — Wed, 01 Jul 2009 13:30:02 +0000

Private employers shed another 473,000 jobs in June, according to ADP’s National Employment Report released this morning.

While that is an improvement from previous months, it still reflects a weak job market that will continue to lose jobs through the rest of 2009, said Joel Prakken, chairman of Macroeconomic Advisers LLC which prepares the monthly report based on actual payrolls of ADP customers.

The cuts hit all sizes of business and all industries, Prakken said. (Click on image for a larger view):

A separate report from the outplacement firm of Challenger Gray & Christmas Inc. indicates future job cuts will be slowing. Employers announced in June they plan to eliminate 74,393 jobs, a 15-month low, says Challenger. It is the first time since September, 2008, that the announced layoffs were below 100,000.

ADP’s reports have shown more job losses than the U.S. Bureau of Labor Statistics, whose national report will be released tomorrow. Prakken said that while both reports sample about 400,000 companies, the specific businesses aren’t the same. Also ADP uses actual payroll data while the BLS sends surveys to employers.

ADP revised its job losses for May to 485,000 from the 532,000 initially reported. The BLS reported 345,000 job cuts for May, but is likely to revise that number tomorrow.

ADP breaks down the job losses by size of business and types of industry:

Firms with fewer than 50 employees: - 177,000
Businesses with 50 to 499 employees: -205,000
Companies with 500+ employees: -91,000
Goods producing companies: -250,000
Service providers: -223,000
Manufacturers (part of goods producers): -146,000
Construction: -97,000
Financial services: -29,000

The construction industry has lost jobs for 29 consecutive months, and financial services have declined for 19 months.

Click here to read ADP’s full report.

Other jobs stories…

One out of 6 U.S. workers ‘underemployed’

O.C. ranks 5th in U.S. for job losses

O.C. builder lays off 87 more people

Bob’s Big Boy sees steady stream of job applicants

Manpower sees slight uptick in O.C. hiring

Bob’s Big Boy hiring 150 June 29

Real estate investment firm hiring up to 50

Cox hosting job fair Saturday, has 60 openings

Calif. first-time jobless claims rising again

Major O.C. layoffs near 11,000

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O.C. firms without employees tops 255,000

Jan Norman, small-business columnist — Tue, 30 Jun 2009 20:00:02 +0000

Orange County had more than 255,000 businesses with no employees in 2007, almost three times the number of companies that have employees.

The Census Bureau just released its data for “nonemployer businesses” for 2007, drawn from IRS filings. The numbers — which may include people with jobs as well as a side business — are steadily increasing every year. Here’s the five-year pattern for Orange County:

The increase tends to be greater during recessions, so when the 2009 data are available, the number will likely spike, says Chapman University economist Esmael Adibi.

“In recessions, people lose their jobs and freelance or consult, and some companies lay people off and then hire them as independent contractors,” Adibi says. ‘But there’s no question self-employment has increased over time because companies are cutting employees to avoid paying benefits.”

In 2007:

Orange County added 8,200 businesses without employees for a total of 255,255, a 3.3% increase from 2006. Their revenues totaled almost $15.6 billion
California had 2.75 million nonemployer businesses, a 4.2% increase from 2006 and tops among states.
The U.S. had 21.7 million nonemployer businesses, up 4.5%.

Over the past five years, both the U.S. and California have seen greater growth among nonemployer businesses. Adibi says that reflects Orange County’s relatively stronger economy in the past. “Now we’ve been hit harder so I would expect higher growth (in firms without employees) when the numbers eventually come out,” he says.

Orange County’s nonemployer businesses are overwhelmingly service oriented:

Professional, scientific and technical services: 49,994
Other services: 38,495
Real estate, rental and leasing: 34,949
Retail trade: 22,524
Administrative, support, waste management and remediation services: 18,715
Health care and social assistance: 18,043
Construction: 16,873

Most nonemployers are self-employed individuals - 88% are sole proprietorships, 6% are corporations and 6% are partnerships - operating very small businesses that may or may not be the owner’s principal source of income, The Census Bureau says.

Other business news:

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State business tax income down $531 million through May

Jan Norman, small-business columnist — Tue, 30 Jun 2009 12:00:50 +0000

California’s corporations paid $531 million less in state income tax July through May, compared to a year earlier. The revenue was even $84 million less than the state Department of Finance estimated in early May.

That downturn is in spite of a last-minute rush by companies to pay their taxes to avoid a new penalty.

Also, personal income taxes, which includes payments by owners of S-corporations, limited liability companies and partnerships, were $10.2 billion below last year’s actual collections and sales taxes were $2.8 billion below. The Dept. of Finance was too optimistic on these tax categories too.

Here are the comparisons from Controller John Chiang’s office (click on image for larger view):

Source: State Controller

Chiang points out that corporate tax payments in May soared 52%. But that doesn’t reflect improved financial performance by these companies.

“The Governor signed a bill in October that imposes a 20% understatement penalty on corporate tax. Companies were given the option to avoid the penalty by filing an amended return and paying their actual tax liability by May 31, 2009. As a result, miscellaneous corporate taxes…soared to over $730 million by the end of May, an increase of over 650% from last May.”

The state managed to get businesses to pay early, but not necessarily more in taxes in the long run.

The tax collections barely reflect the increase in the sales tax starting April 1 and vehicle registration fees effective May 19.

Other business news….

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More business owners willing to quit

Jan Norman, small-business columnist — Mon, 29 Jun 2009 13:00:27 +0000

A growing number of small-business owners say they would close their businesses for a higher paying job, according to the Discover Small Business Watch released today.

Some 36% of respondents said they are willing to leave their own business to earn more money working for someone else, compared to 30% a year ago.

“The economy clearly seems to be taking its toll on the independent spirit of small business owners,” said Ryan Scully, director of Discover’s business credit card. “They are spending much more time this year trying to find new business and deal with government regulations.”

Even so, small-business owners’ confidence in the economy rose slightly in June to 80.9, up from 78.1 in May.

“Cash flow problems are back to levels that are more in line with what we’ve typically seen since the Watch began nearly three years ago,” Scully said. “Cash flow concerns usually erode confidence because they represent something tangible to a business owner, more so than an expectation or perception about the economy.”

Other survey findings:

42% have experienced temporary cash flow issues in the past 90 days, down from May’s record high of 49%
26% believe economic conditions are improving, up from 23% in May, while 57% believe conditions are getting worse, unchanged from a month ago
59% rate the economy as poor, down 1 percentage point from May, and 8% rate the economy as excellent or good
49% see economic conditions for their own businesses getting worse, up 1 percentage point from May; 25% see conditions improving, also up 1 percentage point
51% plan to decrease spending on business development over the next six months, down from 53% in May;

While independence and flexibility continue to be the main reasons why people start their own businesses, a sense of accomplishment and needing a job also gained ground as key motivators compared to a year earlier:

24% started a business to have more flexibility with their time
22% cited the ability to be their own boss
15% wanted a feeling of accomplishment
12% wanted make more money
10% needed a job, up from 7% last year
14% other reasons.

Other economy stories…

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Poll: Is your social networking your boss’ business?

Jan Norman, small-business columnist — Sun, 28 Jun 2009 19:00:18 +0000

Bosses and employees disagree about a company’s right to know how its employees portray themselves and their employer on social networking sites such as Facebook and Twitter, according to the 2009 Deloitte LLP Ethics & Workplace survey.

Six out of 10 business executives say employees’ comments about their workplace are an issue companies have a right to know about. But 53% of employees say, no way. And among the 18 to 34 crowd, that number jumps to 63%.

What do you say?

Is your social network your employer's business?

In the third edition of the annual survey, one-third of employees said they never think about what their bosses or customers might think before posting material online.

And social networking is popular:

Source: Deloitte LLC

Another survey found that 67% of businesspeople use social networks for business.

Still, most employees understand the risks: 74% said use of social networks make it easier to damage a company’s reputation.

Just 17% of executives said their companies have programs to monitor the risks of social networking to the company or to mitigate potential damage to the company reputation. Such programs might not matter. Almost half of employees said defined guidelines wouldn’t change their online behavior.

For more about O.C.’s use of social media, check out Jon Lansner’s sOCial Sunday.

Other business stories..

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Entrepreneur seeks to keep pollution out of storm drains

Jan Norman, small-business columnist — Sun, 28 Jun 2009 13:00:36 +0000

How much would you pay someone to clean out your garbage cans and keep the gunk out of the storm drains and ocean?

Carl Fernandez, an Anaheim Hills financial analyst, thinks people will pay in the neighborhood of $15.95 for one barrel, $12.95 for each additional barrel. Those are the basic prices charged for cleaning services by his company Bin Clean LLC in Anaheim Hills.

Bin Clean is a new concept in Southern California, Fernandez says, to clean, sanitize and deodorize residential waste bin containers while capturing the waste instead of washing it into the gutter and then into the storm drains.

Carl Fernandez demonstrates Bin Clean equipment

“With few alternatives, homeowners may unknowingly be contributing to our polluted urban-runoff problem by attempting to hose-out their own waste bins at the curb. This bacteria-infested runoff quickly enters our storm drains and proceeds directly into our rivers and oceans untreated,” Fernandez says.

For years Orange County water quality officials have worked on ways to keep pollution out of the storm drains. Cities and water districts limit urban runoff, and the Orange County Health Care Agency and the Orange County Sanitation District monitor bacteria levels in the near-shore ocean.

However, in this economy, lots of folks are cleaning their own carpets, pools and cars, let alone their own garbage cans. And Fernandez acknowledges, “When people are worried about their jobs, this may be a convenience and sales may build more slowly, but as the economy recovers, people will appreciate the environmental as well as personal benefits.”

The company recommends quarterly trash can cleaning but it also offers one-time service.

Bin Clean licenses its technology and turn-key business opportunity for people looking for side income or a full-time business. A license for 10 ZIP codes is $15,000 plus about $15,000 for high-pressure washing and filtration equipment to be installed in the licensee’s van.

Fernandez says he has already received licensing inquiries from as far away as Palm Springs and Glendale/Burbank.

“There are only four or five other companies doing this in the United States; it’s better known in the UK,” Fernandez says.

Other entrepreneurial stories….

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