Laurie Wartik Joins Berkshire Hathaway California Home Services



By Gary Wartik
January 5, 2017

Berkshire Hathaway California Home Services (“BH”) recently announced that Realtor ® Laurie Wartik of Camarillo joined its Ventura, CA office in November, 2016 after having an association with another broker since 2014. The BH Ventura office, a corporate office rather than a franchisee, serves a wide area that includes Ventura and Santa Barbara counties, Malibu, the Conejo Valley and the San Fernando Valley. Operating from a corporate office, Laurie said, “….offers my clients a higher and more complete line of realty services. During 2016, the Ventura BH office matched more buyers and sellers of residential properties in Ventura County and the Conejo Valley than any other area brokerage.

Laurie and her husband are long-time residents of Ventura County, and also reside part-time in Palm Desert. Laurie is also a member of the Desert Cities Association of Realtors. “Having the opportunity to join Berkshire Hathaway Ventura is a special opportunity, especially at a time when the local housing market, while in short supply compared to needs, remains strong,” she added.

“This is a great time to become a first time home buyer, as well as for current homeowners to move up to a larger home to meet growing family needs,” Laurie pointed out. “I look forward to continuing to help families and individuals in the Central Coast area and Coachella Valley areas find that special property that will fit both their budget and their lifestyle,” she concluded.

Laurie Wartik may be contacted directly by calling 805-437-9521, emailing her at lwartik4re@gmail.com ; or by visiting her website at www.realestateagentlaurie.com

Lower Fuel Costs – What’s Good and What’s in Doubt?



By Gary Wartik
January 29, 2015

Since November 2014 there has been significant discussion about the short and long-term effects of dramatically lower vehicle fuel prices on the American economy, and even on the world economy. From this vantage point, it looks positive in the shorter term, but with some caveats.

Under current pricing, a hypothetical California family that drive vehicles that get 25 miles per gallon, and purchase an average of 75 gallons monthly at $2.35 per gallon, will save about $100 a month, when compared with the average price of $3.70 per gallon in place just last fall in Southern California. That annualized savings of $1200 is important to many families and certainly to the local economy. Some families will have the discipline to put the funds into savings, or into reducing debt, while others will intentionally or otherwise spend the savings in the local economy. Those actions are all a good thing.

From the standpoint of businesses, a reduction in fuel costs will have many levels of benefits, most apparent of which is the reduction in all costs associated with the delivery and shipping of everything from raw materials to finished products. With fuel costs held in check for the time being, companies may find greater profits for shareholders, and even spread some of the savings in the form of improved employee wages and benefits. United Parcel Service, FedEx and moving companies, for example will save thousands of dollars daily that can either be passed along to customers, or that will serve to hold delivery rates in check. Major companies such as commercial airlines will benefit from the savings that will flow right down to the bottom line. In effect, lower fuel costs will help hold future inflation in check. These are good things too.

In another other realm of good news, the 50 percent drop in international oil prices during the last few months has begun to hurt some neighborhoods that are less than friendly to America. Think Russia, Iran and Venezuela. These three states mainly fund their national budgets with oil money. There are likely few tears being shed around the Western world for the economic challenges now faced by these autocratic regimes.

What is helpful to understand, however is that there is no “free ride” for many. Lower oil prices also affect our own economy, as well as some of our important allies. Canada, Mexico, the United Kingdom, Norway and some West African oil exporters are also going to suffer budget impacts. Fortunately for most of them, these countries have more diverse economies that are less dependent on oil exports.

Here in the United States, we have a number of states that are major oil producers. Texas, North Dakota, California, Alaska and Oklahoma are the top producers, in that order. Each looks to strong oil revenues to maintain a healthy economy. In the area of “be careful what you wish for,” there are already news reports of thousands of job layoffs in the American oil industry itself, along with those that service that industry. We are already seeing layoffs in Texas, North Dakota and in the Bakersfield, CA area. There are more to come. The job layoffs are not good news, although if one compares the value of wages lost versus the overall gains of fuel savings in the economy, lower oil prices clearly win out. The challenge is that if you are one of those losing a job, that puts one in a crisis mode. That is not good.

Recent press reports reflect that even with low fuel prices only in place for a few months, some Americans are already thinking that fuel efficiency and conservation are now less important. The increase in the purchase of larger, less fuel efficient vehicles in the US has already been reported, as has a decrease in consumer interest in fuel efficient vehicles. This sends the wrong message to our fellow citizens and to the world. This is not a good thing.

There is one more aspect to the oil price issue that warrants addressing. That relates to OPEC, Saudi Arabia in particular. The press has been replete with reports that the Saudis are looking to maintain market share at almost any price. Their $750 billion in dollar reserves confirm that they can afford it. Some Saudi officials have been candid enough to admit that they oppose America’s move towards energy self-sufficiency. This is not good for OPEC, and if the Saudis drive the oil price down further, it may be a challenge for America as well.

It is no secret that the advent of American shale oil extraction, where previously uneconomical to recover, is now a significant threat to OPEC. If the goal of the Saudis in particular is to drive oil prices down low enough to make the more expensive process of fracking for shale oil uneconomical, then over a period of time, less oil will be available on the world market. Oil prices will then begin to rise again. As well, the faster the economies of Germany, India, Japan, and China recover from their respective reduced economic growth, the faster additional consumption may drive up international oil prices.

From the macro point of view, $46 oil is likely not sustainable long term. Prices may dip some more, but the sense here is that prices will begin to firm as the economies of the industrialized nations begin to recover from their present malaise, perhaps later in 2015. That too would be a good thing, even if that drives oil prices somewhat higher.

We won’t know for awhile how much the oil markets have changed. Markets will remain subject to political shocks, especially in the Middle East, but new American oil coming on line, whatever the international shocks may be, should lessen the impact on world oil prices than they have previously. That should be a good thing too.

Baby Boomers Looking at Retirement – Business Succession Plans Crucial



By Cristian R. Arrieta, Esq.
Edited by Gary Wartik
January 15, 2015

Our monthly newsletter continues to offer articles of interest provided by professional colleagues that offer sound advice to our clients and associates. This month we are offered some timely and compelling direction by Cristian Arrieta of the Lawthorp, Richards law firm in Oxnard, CA, a firm that offers a substantial business law practice. He specializes in trusts and estates planning.

As Mr. Arrieta notes, it has been commented that working for oneself is great because you get to work half-days. You even get to choose which half – the first 12 hours or the second. Funny as that may seem, Baby Boomer generation business owners smile knowingly, and the thought of retirement is alluring. Logistically, however, said Boomers might find themselves in a pickle when it comes to business succession, unless they focus now on some forward-thinking.

Born between 1946 and 1964, the US Boomer generation of small business owners has been, and continues to be, a major driver of our economy (by some estimates 66 percent of all businesses with employees are Boomer owned). Sometimes referred to as the “Me Generation,” Boomers sunk their teeth deep in the American Dream, and they have become the wealthiest generation on the planet. They are also the most numerous – approximating 80 million, and they are currently celebrating their 65th birthday at the rate of about 10,000 a day!

On the heels of the Boomer generation is Generation X, numbering about 50 million, currently aged forty-something, by and large, and entering their professional peek years. Proportionately, there’s about half as many Gen Xers as there are Boomers with any comparable business acumen. With that in mind, if every Boomer-aged business owner today sought to hand the torch off to a Gen Xer, there would be a major demographic bottleneck.

As a trusts and estates attorney, without betraying any confidences, I can disclose that very few of my small business-owning clients have devoted much thought to their business succession plan prior meeting with me (only about 30% of people have done any estate planning at all). Business succession needs to be carefully crafted, preferably at least five years in advance of retirement, and there are a number of moving parts. Moreover, considering the demographics, it should be clear that failing to plan now will likely dampen future opportunity (and therefore value) translating to a less-than-optimal crossroads for retirement age business owners: sell my business for a song or continue to work 12 hours a day.

Take, for example, the business owner who has built a firm over thirty-five years of dedicated, hard work. Now that the business is profitable and rewarding for the owner, he finds that he or she wants to live a little. So he hires a young go-getter who is aggressive and ambitious, with good people skills, and a knack for generating new accounts. In time, the owner is able to play some golf and travel with their spouse, while the identified key employee is content managing the firm.

With retirement in sight, the owner crafts a business succession plan. He provides bonuses for key employees, say 10 shares of common stock, keeping 90 shares for himself. In conjunction with this, he offers his key employee the opportunity to buy his shares at the rate of 10 shares each year. In the fifth year, the owner will take a secured promissory note for the balance of the purchase, payable to him over five years and bearing an annual interest rate of 10%.

Such an arrangement would nicely supplement the owner’s income in retirement and defer income taxes. A structured buy-out will tend to maximize the long term value of the firm, which could otherwise dissipate in the absence of a plan. However, it will work only if it is implemented from a position of strength, early on, instead of waiting until the options become few.

Building a successful business takes guts and years of hard work. Business succession requires careful planning and foresight as well. Boomer generation business owners ought to consider the demographic challenges ahead, and implement a plan now, so they can secure their accustomed standard of living in retirement.

Vision Economics continues to work with small and medium-sized businesses that have need for outside professional services, including those dealing with succession planning issues. Mr. Arrieta is available to provide legal advice and appropriate legal documentation of succession plans as needed. Mr. Arrieta may be contacted through Vision Economics at 805-987-7322, or by calling him directly at 805-981-8555.

Decline in Business Bankruptcy Filings Offer Good News



By Gary Wartik
January 27, 2015

In a continuing trend, bankruptcy filings for both individuals and for businesses declined during 2014 for the fourth year in a row, according to data available through the office of the United States Trustee in Los Angeles. The report noted that total filings decreased by more than one-half percent when compared with those filed during 2010, the high point of filings during the Great Recession.

Filings of Chapter 7 petitions, those that wipe out the debt of an individual or a business, decreased almost 24 percent when compared with 2010 filings, although in Ventura County, just over 2,000 Chapter 7 petitions were still filed during 2014. As well, only one-half of corporate reorganizations under Chapter 11 of the Bankruptcy Code were filed during 2014 when compared with a high point in 2007, although a total of 19 Chapter 11 filings still occurred in Ventura County. The decrease in Ventura County bankruptcy filings was mirrored in most other jurisdictions around the nation.

The formal bankruptcy process has a time-honored place in American law and American history, dating to the time of the Constitution. So too does the out-of-court settlement or “arrangement” with creditors that avoids the lingering bankruptcy stigma for many individuals and some business people. Even in good economic times, businesses and individuals have issues related to managing their debt.

Vision Economics is one of the firms that work nationally to offer “informal” arrangements by which we, the client and the client’s creditors work to resolve debt issues. With the greater availability of credit in the marketplace following the Recession, settlement of debt has become easier for businesses and individuals without the use of the formal bankruptcy process.

Chapter 11 Bankruptcy proceedings are a costly and time consuming process. It is not unusual for even smaller companies to spend two years and between $100,000 and $200,000 in professional fees and expenses to go through the Chapter 11 process, even if the process ultimately proves unsuccessful. In many cases there is a viable alternative, working with creditors through the “Informal Arrangement,” “Out of Court Arrangement, or “Out of Court Settlement,” as mentioned above.

Non-bankruptcy matters may be resolved much more quickly than the average Chapter 11 process, and at greatly reduced costs. With no court hearings to prepare for and attend, management is left with more time to focus on rehabilitating their business. As well, the savings in professional fees and costs leaves more funds available with which to help the business recover from its operational losses and to resolve its debt.

There are, of course cogent reasons for using the formal bankruptcy process, especially when the goodwill of creditors has been exhausted and collection lawsuits against the business are piling up, where foreclosure on property is imminent, bank accounts are about to be seized, or tax liens are about to be filed. In those cases, Vision Economics may be of assistance in resolving issues and making an introduction to a highly qualified Attorney specializing in bankruptcy matters. For further information, we may be reached at 805-987-7322, or email us at gw@visioneconomics.net.

Watch Those Lease Costs – Some Advice for Office, Commercial and Industrial Tenants



By Gary Wartik
December 31, 2014

Lease terms can be challenging to understand, especially for someone new to business or one operating a small business who is involved in negotiating a new lease. When questioned about lease terms, Brokers often say that the questioned terms “are just standard language” or “boilerplate.” While that may be the case, this does not mean that tenants should accept lease terms without understanding all of the obligations thereunder.

Most leases of course provide for a base rent. In addition, so-called Common Area Chargers (CAMs) are added as lease costs and add significantly to monthly lease costs. CAMs include costs for water, property taxes, landscape and parking lot maintenance, and even building repairs. One of the recommendations made by tenant representatives such as Mazirow Commercial, Inc. in Westlake Village, is to ensure that leases include provisions for auditing CAM charges. This should ensure that a tenant limits its liability for CAMs to those actually due at month’s end or at year’s end. Audit provisions are not normally included in standard leases, so tenants need to ask that audit provisions be included. In most cases, landlords will agree to audit of CAM charges since it also serves to protect their interests as well.

Audit provisions should include language that deals with any over-charges in the form of either reimbursement of the overcharges or credits against future lease payments. In the event that CAM charges have been under-charged, of course audits would disclose that too and would leave the tenant liable to the landlord for the difference in costs. It is noted, however that CAM overcharges are more common than undercharges. Audits cost money, so who conducts the audits and who pays for the audit needs to be included in the lease terms.

For additional information or assistance in lease negotiations, please call Vision Economics at 805-987-7322, or Sheryl Mazirow at Mazirow Commercial, Inc. at 805-449-1945.

The Economy is Looking Better as State Jobless Rate Continues Decline



By Gary Wartik
December 31, 2014

Economists have differing interpretations about changes in the economy. Some paint an optimistic picture of the post-recession economy and what to anticipate in 2015. Others are more pessimistic about the figures related to GDP/GNP, unemployment figures, the retail economy and housing starts. The economy likely is somewhere in-between the two schools of thought.

Looking at the economy from an optimistic point of view, we close out 2014 with a recovering economy. The stock market has hit new highs based upon, in part upon improved corporate sales and earnings. Employment levels have continued to increase. Employment remains a key economic indicator. As the 2008 recession gained a head of steam, unemployment rates at the state and national levels increased by more than 50 percent. During the last three years we have witnessed a significant recovery in the job market as employers enjoyed increased sales and recognized the need to fill open positions and create new ones. The California unemployment level in June 2008 stood at 7 percent and grew to 12.4 percent by February 2010, one of the highest in the nation at the time.

Data from the California EDD reflects that the state added 90,100 jobs during November 2014, accounting for 28.1 percent of all jobs added nationally. Over a year’s time, California payrolls have increased by 2.2 percent, comparing favorably with the U.S. rate at 2.0 percent. With continued net increases in employment, California’s jobless rate has decreased to 7.2 percent.

Leaders in California’s November employment figures included the hospitality and leisure sectors which led job increases with some 15,600 new positions. Retailers added 14,500 new jobs. Construction also added a healthy 12,900 jobs during the period. Unfortunately, during the same period, manufacturing actually shed 10,500 jobs, and the movie and sound recording studios lost 3,000 jobs despite a newly enhanced state tax credit program designed to keeping movie and TV production from leaving California to film elsewhere.

The challenge in reading unemployment figures is that it does not reflect the pay level of new jobs, nor does it measure the level of under-employment. Many of the new jobs cited are in food service, hospitality and retail, reflecting improvement in those industries, but most are offered in the range of $10.00-12.00 hourly. These jobs are important to the economy, but pay poverty wages for anyone who is the source of their own financial support. “Under-Employment,” those who are not working a full forty-hour work week, and at a pay level well under their previous employment, also reflects another gap in employment data. These two caveats are not reflected in local or national government employment data.

On the bright side of employment equation, there are tens of thousands of jobs in California and around the nation that are available at any given time. Many pay reasonable salaries and above. A visit to the growing number of on-line job sites such as Job2Careers, Career Source Network, JobQuicken,com, JobGrabber.com, CareerBuilder.com and others makes it obvious there is employment for those with applicable work experience and for those holding at least a bachelor’s degree. The listings reflect that education and experience still count.

Next month we will examine the entire employment landscape from the position of looking back at the year of 2014. Then, looking ahead at 2015 we will offer a few thoughts about the economy that continues to recover, and why.

For further thoughts on business and the economy, please contact us at Vision Economics at 805-987-7322 or by email at gw@visioneconomics.net.

Do Single Member LLCs Provide Asset Protection?



By Ted Schneider, Esq.
Edited by Gary Wartik
December 31, 2014

During the formation of a new business, the legal form of the business is important since it impacts how to protect personal assets from the creditors of the business in the event the business meets with financial challenges. Some businesses operate as sole proprietors, others incorporate under California law. Nearly twenty years ago the Limited Liability Company came into being in California.

As explained by Ted Schneider of the Oxnard law firm of Schneiders & Associates, a limited liability company is a very popular business form that combines some of the best features of a corporation and a partnership. Like a partnership, an LLC is taxed through its individual members (aka “shareholders”). Like a corporation, it provides limited liability to its members. In most situations, the personal assets of LLC members cannot be reached for the debts or liabilities of the business. Similar to a corporation, there are certain scenarios where personal assets can be reached by creditors. Most LLCs have more than one member. In recent years, a variation called the single member LLC has become widely used. As the name suggests, these LLCs have only one member. While the structure and organizational requirements of single member LLCs are essentially the same as ordinary LLCs, there has been some uncertainty as to whether these businesses afford their members the same type of limited liability.

Initially, not all states recognized single member LLCs. Now, all fifty states and Washington, D.C. recognize these business forms and have statutes governing them. Generally, single member LLCs provide personal asset protection to their members for the liabilities of the business. But, they do not always provide the reverse protection that a corporation or ordinary LLC includes. In the case of an ordinary LLC, the personal creditors of the member cannot go after that member’s share without what is referred to as a “charging order”.

A charging order is a legal device that allows the creditor to place a lien on the member’s LLC interest. The member’s interest is essentially any distributions made to them by the LLC.  Therefore, creditors can collect the members interest but not outright and not without jumping through a number of hoops.  In the case of a single member LLC, the charging order protection may not be provided.  While some states like Wyoming have specific laws making the charging order protection applicable to these types of businesses, other states, like California and New York, have made no decisions distinguishing ordinary LLCs from single member LLCs.  Therefore, in these states it is important to remember that legislation and judicial decisions have the potential to cause serious problems for business owners in the future.

When considering business formation, there are many factors that need to be considered and the advice of a seasoned business consultant or business law attorney can help.  For additional information, please contact Vision Economics at 805-987-7322, or Schneiders & Associates, L.L.P. at 805-764-6370 for a consultation.

Marketers Make a Difference – Where is Your Plan?



By Randy Strong
Introduction by Gary Wartik
December 14, 2014

Randy Strong and Neal Cutler of Associate Marketers are new to the Vision Economics Group team. We welcome the firm, based in Newbury Park, CA because they bring to us more than a generation of experience in the marketing and advertising field. This new association is offered in the effort to provide our friends and clients with the most current approaches to keeping current on your market and how best to reach that market. In this edition, Randy Strong offers an introduction to the subject.

In today’s business climate change happens at the speed of light and in no area is this truer than in marketing. A few things marketers have come to understand in the past year: that traditional media can boost results from Internet marketing, the power of targeted and well produced videos, and that content is still king no matter the media or strategy.

Marketers started the year 2014 scrambling to employ social media as part of their campaigns, only to learn that traditional media still provides a higher return on investment. A recent study of 10 brands by Nielsen Catalina Solutions found brands averaged a sales lift of more than $6 for every $1 spent on radio ads – an ROI double that of even the best results from many recent studies of digital or TV media.

At the beginning of 2014 there was still a strong focus on SEO – search engine optimization. It became the watchword and a necessary part of the overall digital strategy. Now, just twelve months later, that strategy is on life support. Today, there is a general consensus that more important than relevant words, continually infusing new content into your digital platform leads to greater recognition and better results.

As we enter 2015, now is a good time to review your overall marketing efforts, looking at the effectiveness of the message and media choices you made in the past year. No matter your marketing strategy or preferences, be sure to “test and measure.” Make changes to any part of your program that is under performing.

Like the year that just passed, we expect to see marketing rapidly evolve during 2015, so make the commitment now to evaluate your marketing efforts and freshen them as needed! For further information, Randy Strong may be contacted through Vision Economics at 805-987-7322, and by email at gw@visioneconomics.net, or directly at 805-499-6312, and by email at marketingstrong@gmail.com.

Anatomy of a Modern Successful Business



Some would say that it is not the most creative, innovative businesses that succeed.  Instead, frequently, the businesses that thrive are those run by people who are too stubborn to give up on their dream and people who go out of their way to find out what does work rather than clinging to a business model that is simply going nowhere.  

Sometimes all a business needs is a little direction, and that’s where the expertise of business consultants can come in.  Just as you would not attempt to rewire your building without proper training, economic development consultants can help you develop the know-how to "rewire" your business practices in a way that makes them work. 

Becoming a successful business means understanding when your company is up against a brick wall.  For example, Twitter began as a company called Odeo.  Odeo was intended to be a podcast subscription company, but failed after Apple launched its iTunes.  The giant Flickr, Yahoo’s photo management and hosting site, started out as an online multi-player game that ended up changing directions.  The point is, both companies refused to give up and have gone on to be wildly successful.  

At Vision Economics we find that most businesses are on the right track but simply need tools to help them gain traction, and that’s what we are here for.  Perhaps a business plan review is warranted, a financial review, a systems tune-up, review of inventory control issues, consideration of new marketing and advertising needs, staffing and human resource needs, whatever the list is of needs is, we can help you address them.   Call us today!  

The Succession of Family Owned Businesses



Family-owned businesses are normally passed down from one generation to another. The founding members of the company are those who have built the business and made it a success. As the next generation grows into adulthood and prepares to take over the business, they must learn as much about it as they can if they choose to have continued success.

By the time the business is passed on to the third or even fourth generations, most do not have the same desire as the original family members.  It may be that the family members may be able to take a business only to a certain sales and profit level before some outside help is needed to grow the business beyond its present level.  Sometimes the talent pool within the family diminishes to the point that the company may not only stop growing, but actually slide backwards into insolvency.  This dramatic falling away of in-house talent from the company vision and the company mission can have a devastating effect on the success of the business.

One of the ways to reduce the risk of loss of a family business, in fact any business is to seek out the services of business consultants that specialize in helping a family-owned business stay on track, no matter how many times they have been passed down to succeeding generations.  Business data reflects the fact that many family-owned and operated business prosper more quickly and successfully when they bring in outside talent, perhaps on a consulting basis, to look at the business with what we may call “Fresh Eyes.”

Vision Economics is a company of business and economic development consultants who can help you and your family keep the business moving forward on the same track it has followed for years, or where necessary, help the family put the train back on the tracks to success.