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Lenders are eager to lend,
but how can businesses qualify?
NOVEMBER 2011 • INBUSINESSMAG.COM
Where’s the Money?
MONEY • BUSINESS LeNDING GUIDe
IN bUSINeSS mAGAZINe
Get Financing with the Business Lending Guide 2012
By the Numbers Diverse lending sources in Arizona aim to put Business Calendar money to work to help build the economy, yet This Issue businesses often find it a challenge to qualify for loans. Leaders in the industry discuss with RaeAnne Marsh different challenges and solutions among the network of financial organizations that strive to answer the needs of businesses of all sizes. Business Lending Guide 2012
9 Guest Editor
Candace D. Wiest, president and CEO of West Valley National Bank, introduces the “Money” issue. Features
18 Costly Convenience: Merchant
Services Fees Impact Bottom Line
Merchant services fees make the credit card trade a $30 billion industry. Lila Nordstrom explores how the charges are assessed against merchants and the impact of recent changes in regulation.
28 Competing on Service
Beat your competition by “hugging” your customers. Learn from examples Edward D. Hess shares of the good and the bad.
Noted business leaders Orin Anderson, Robert Blaney and Sarah A. Strunk respond to IBM’s burning business question of the month.
“Business Leaders Down on Economy but Up on Own Companies,” “Signs of Life in Pockets of Valley Housing Market,” “Drop in Foreclosures Slows Phoenix Real Estate Sales,” “‘Local’ a Trend on Grocers’ Shelves,” “Phoenix Advocacy Office for Redevelopment Projects Sells the City” and “Auto Market is Telling of Economic Times”
16 By the Numbers
34 Breathe Life into Your Brand
Marketing and communications coach Kathy Heasley explores the why and how of putting magic in your brand’s message in this third of her six-part series.
Small Business Administration loans fuel significant business expansion. Plus: Key economic indicators provide a sense of the health of the local economy.
20 Trickle Up
View from the top looks at how B2B CFO founder Jerry Mills created a full-scale solution with part-time CFOs for businesses.
36 Compelled to Sell: It’s a Process 29 Books Selling underlies a lot of our daily communication, and in this second of his six-part series, sales coach Mike Toney shows how to apply that awareness to your sales approach.
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New releases provide customer service tips and strategies for stronger business.
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November’s calendar of business events presented by our partners Special Section
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passionate about your profitability At Holmes Murphy, we think providing you with innovative answers to the ever-increasing challenge of rising health care costs is one of the most important things we can do to affect your company. That’s why we take the time to get to know your company’s
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Contributing Writers Kathy Heasley Edward D. Hess Mike Hunter Lila Nordstrom Alison Stanton Mike Toney
challenges and consult with you to provide the highest-quality, lowest-cost solutions — tailored especially for your business. If you are looking for an advisor who understands the complexities of Employee Benefits and a partner who helps you develop the right financial solutions, call Holmes Murphy — the nation’s 22ndlargest* broker.
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Vol. 2, No.10 . In Business Magazine is published 11 times per year by InMedia Company. POSTMASTER: Send address changes to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251. To subscribe to In Business Magazine, please send check or money order for one-year subscription of $24.95 to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251 or visit inbusinessmag.com. We appreciate your editorial submissions, news and photos for review by our editorial staff. You may send to firstname.lastname@example.org or mail to the address above. All letters sent to In Business Magazine will be treated as unconditionally assigned for publication, copyright purposes and use in any publication, website or brochure. InMedia accepts no responsibility for unsolicited manuscripts, photographs or other artwork. Submissions will not be returned unless accompanied by a self-addressed, stamped envelope. InMedia Company, LLC reserves the right to refuse certain advertising and is not liable for advertisers’ claims and/or errors. The opinions expressed herein are exclusively those of the writers and do not necessarily reflect the position of InMedia. InMedia Company considers its sources reliable and verifies as much data as possible, although reporting inaccuracies can occur; consequently, readers using this information do so at their own risk. Each business opportunity and/or investment inherently contains certain risks, and it is suggested that the prospective investors consult their attorney and/or financial professional. © 2011 InMedia Company, LLC. All rights reserved. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission by the publisher.
Candace D. Wiest, West Valley National Bank
Money Makes the World Go ‘Round
Candace D. Wiest was the first woman ever elected a Class A Director of the Federal Reserve Bank of San Francisco, serving a three-year term beginning in 2003. She was re-elected for a second term in 2006. Wiest served on the FRBSF Audit Committee from 2003 to 2006, and has also served on the Fed’s Bank Performance Committee and chaired the Public Information Committee.
Ever feel like the world’s economy continues to drag to the point the Earth has started revolving slower? There is no doubt the issues that caused this extraordinary recession have affected business. And it begins with the industry that businesses have relied upon since the Great Depression: my industry, community banking. Let me start out by saying I’m proud to be a community banker. Notice I said “community,” not “Wall Street.” There is a distinction there. It was the Wall Street banks that thought they could syndicate anything and reduce risk. The problem is they were so prolific at it with none of the regulatory oversight of banks like mine that they almost caused the world as we know it to stop turning. It has consistently been the community banks that provide capital for local businesses, leadership for community organizations, and financial support for charities that make Arizona a better place to live. Not only were we chartered to lend money, we need to lend money to reward our shareholders. The current regulatory environment and economic climate affects the banks and businesses throughout the country, but especially in Arizona. Because many businesses have been touched by the lack and perceived lack of capital, In Business Magazine editor RaeAnne Marsh has written a cover story that explains where the money is — and isn’t — and how banks and other lenders are working with business. Banks are lending and businesses are looking for money. The disconnect between the needs on both sides seem to come from a lack of confidence due to a questionable economic future. Ms. Marsh’s story explores the different sources of funding and, by working with the people behind the banks, gives businesspeople insight as to who to see about what amount of funding. As part of this financial issue of In Business Magazine, the publisher has included the first Valley-wide guide to financial institutions. The Business Lending Guide is a listing of major banks, community banks, credit unions and other lending institutions. The guide includes the contacts and types of loans that each entity provides. It is a quick reference that will connect business owners to local sources. Lila Nordstrom has taken on the merchant service companies and the credit card companies to look at what it is costing business to accept “plastic.” Fees are escalating for business because of the rising cost of fraud and the rewards and other perks associated with the use of credit cards and debit cards. However, these high fees may cause us to think about the cost of that convenience. The business educational series by both Kathy Heasley of Heasley & Partners and Mike Toney of Conquest Training have continued to gain great attention by readers. Heasley’s work on Heart & Mind Branding is energizing businesses that are looking to better understand what makes them tick. Toney’s series on building revenue and managing salespeople is resonating as readers are working hard to wrangle their sales teams and improve the bottom line. I have been a longtime fan of In Business Magazine since it began exactly one year ago. It is giving business owners and executives a powerful connection to our business community and continues to engage and inform readers on important business practices and issues as we move to improve our economic picture. Sincerely,
Candace D. Wiest • President & CEO • West Valley National Bank
Optimism among Those Who Know In creating this issue, we spoke with many bankers, financial firms, loan officers and businesspeople about the prospects of borrowing money in this economy. It was surprisingly refreshing to hear about the opportunities for business in this “new” climate. In fact, it is this “new” climate that has sparked a level of opportunity in the financial world that is beginning to have an effect on business in the Valley and nationally. Borrowing for your business is back.
I have known Candace Wiest for years and asked her to be our guest editor for this issue because of her incredible experience as a banker. She was a member of the Federal Reserve Board and currently sits on the Arizona Commerce Authority board as its only banker. Her expertise and knowledge of funding for business has helped us to shape this “Money” issue and we want to thank her for her support of In Business Magazine. I know that business owners will be excited to read this issue. —Rick McCartney, Publisher
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In B u s i n e s s M a g a z i n e
Valley Leaders Sound Off
Where do you see the biggest challenges to business growth in Arizona — small business specifically or business in general — in the current economy?
Director, Business Development AirSprint Private Aviation Sector: Business Aviation
District Director U.S. Small Business Administration, Arizona District Sector: Government
The economic downturn of the past few years imposed punitive lessons on even the most sophisticated and prudent small business lenders and investors. As a result, small-business owners find it very difficult to secure lending sources for working capital or lines of credit for inventory, equipment or expansion. While the heightened scrutiny and assessment of risk have been viewed as a positive and responsible development, most small-business lending sources became paralyzed by widespread economic uncertainty. We have recently begun to see government-supported lending sources emerge. In just the past few months, the Federal Treasury Department provided local Arizona lenders with funds to stimulate small-business lending in Arizona as part of the Small Business Jobs Act of 2010. And the Arizona Commerce Authority announced an award of more than $18 million as part of Treasury’s State Small Business Credit Initiative and will begin lending in the first quarter of 2012. The ACA has also assembled a “Dream Team” of Arizona business leaders to execute a bold strategic economic vision for Arizona.
The biggest challenge to small business growth in Arizona is the current economy. However, properly managing the business operations can help small businesses weather these tough times and ultimately grow and succeed. While many small-business owners are skilled in one area or particular discipline, which is perhaps the reason they started their business, they often need assistance in managing the “business aspects” of their business. It may be that they need help in how to diversify their market, hire the best employees, or train or help current staff develop new skills or increase sales. Every business pursues that next sale or new customer, but when the focus is on selling, who is managing the business and planning strategies for growth? Facing tough questions in tough times doesn’t have to be as difficult as it seems. Some of the most common issues that we, working with the Arizona Small Business Development Center Network or the SCORE Association, have helped businesses with are examining business models and re-evaluating business plans to help ensure better success.
AirSprint Private Aviation airsprint.com
U.S. Small Business Administration sba.gov
Orin Anderson is director of business development for AirSprint US, a private aviation company based in Calgary, Alberta, Canada. The company recently received FAA certification to operate in the United States. Anderson is focused on the expansion of AirSprint’s Fractional Ownership Program in the U.S. Anderson is active on the Phoenix Board of Directors of the American Cancer Society and that organization's CEOs Against Cancer project.
Robert Blaney has served as the district director of the U.S. Small Business Administration for the State of Arizona since 1998. His varied experience includes work as a federal agent, police officer, vice-president of an insurance brokerage and administrative assistant to the late Congressman Jack Kemp. He is a native of western New York and a graduate of the State University College of New York at Buffalo.
Sarah A. Strunk Director Fennemore Craig, P.C. Sector: Law The biggest challenge for growth for Arizona businesses will continue to be the negative perception in our economy. Let’s face it, perception has become reality. The private sector is the engine that keeps our economy moving forward. Jobs are created by private industry or businesses, not government. Jobs are created when private investors ascertain an opportunity, plan a course of action and take a risk. If no one is willing to risk capital, jobs are not created, taxes
N o v e m b e r 2011
are not paid and people do not spend money — halting the cycle of job creation that depends on the positive perception of our future business climate. Businesses must forecast or plan. If they cannot because of a changing regulatory environment and costs, businesses will not risk capital. We have had a surge in the federal regulatory environment and there is already sufficient uncertainty regarding costs imposed on businesses for healthcare, energy and taxes. We need the private sector to perceive that the regulatory system is reasonable and fair. Fennemore Craig, P.C. fclaw.com
Sarah Strunk is a shareholder at Fennemore Craig, P.C. in Phoenix. She practices in the areas of business and finance law, securities, compliance, public-private partnerships, venture capital, business workouts and restructurings, mergers and acquisitions, securities and private placements, and corporate governance, including duties and responsibilities of officers and directors. Strunk represents numerous clients in the sports and entertainment, renewable energy and natural resources industries.
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Quick and To the Point
Business Leaders Down on Economy but Up on Own Companies The most recent business confidence surveys show a significant drop in confidence among the business leaders surveyed. Of two companies that operate in the Phoenix area, Grant Thornton LLP, an audit and tax consulting firm that has been conducting its national surveys quarterly since 2002, reports the results are the worst since 2009; and Regus, an outsource staffing and workplace provider that began its global tracking in 2009, also reports the most recently completed quarterly survey shows the biggest fall in the past two years. Anecdotally, however, Ralph Nefdt, managing partner of the Grant Thornton Phoenix office, expects better results on next quarter’s survey. “The real driver of the lowered business confidence is a reflection of the uncertainty [among the business leaders],” Nefdt says, noting that the survey completed in August covered a period of particularly negative events that included Standard & Poore’s downgrading of the U.S. debt. But, while the surveyed CEOs were pessimistic about the economy generally, their attitude about their own companies’ performance was less gloomy. Forty-four percent described themselves as optimistic about their own business at the end of 2008; that number was 60 percent this past August. Grant Thornton asked the business leaders — senior executives in various industries across the country — to rank the importance of public policy initiatives in job creation, deficit reduction and reduction of corporate tax rate on their optimism about the economy. Job creation was seen as most important by more than half the respondents, but the big surprise, Nefdt says, was the distance between job creation’s 57 percent and the 32 percent who saw deficit reduction as most important. —RaeAnne Marsh Grant Thornton LLP grantthornton.com Regus regus.com
Drop in Foreclosures Slows Phoenix Real Estate Sales The residential foreclosure rate is down, and the impact of that decrease is being felt in the Phoenix-area’s housing market in a drop-off of activity. According to Professor Emeritus Jay Butler of A.S.U.’s W. P. Carey School of Business, who authored a report released in October on the housing market activity, 43 percent of the decline in number of transactions during August and September was due to a decrease of foreclosure activity. “At the same time, though, the overall housing market is not strong enough to make up the decline in activity with traditional sales,” he says. According to Butler, investors have been the dominant buyers of area homes since the start of the housing decline in 2007, not homeowners who want to “move up” to a better home. He says this issue, combined with the ongoing stream of foreclosures, the rough economy, unemployment and uncertainty in policies surrounding the housing market are limiting growth in home prices. Still, there was some improvement in the median price for single-family homes resold (not new foreclosures) in the Phoenix area in September. The September median was $125,000, up from $120,000 in August. Prices have dropped significantly since last September, when the median was $135,000. The existing-home market had 9,250 single-family-home transactions in August. In September, the number plunged to fewer than 8,000, lower even than the previous September’s 9,000 transactions. In the townhouse/condominium market, 325 foreclosures happened in September, way down from the 555 foreclosures of last September. The median price for a townhome/condo resold in September (not new foreclosures) was $76,700, up from $75,000 last September. —RaeAnne Marsh
Signs of Life in Pockets of Valley Housing Market It is no secret the Phoenix area has been pummeled by a dramatically declining housing market, but that hasn’t stopped Fulton Homes from planning three grand openings in new communities this fall in the east Valley. The Tempe-based homebuilding company is offering 3,000- to 4,000-square-foot single-level homes in the price range of $300,000 to $400,000 in two communities in Queen Creek and one community in Chandler. “We’ve always had a real strong presence in Chandler,” says Dennis Webb, vice president of operations, noting the Chandler area is a viable market because high-tech companies are bringing in more homebuyers with higher wages. Intel recently invested more than $5 billion to build a new chipmanufacturing factory in Chandler that will bring in about 1,000 high-end-technology jobs when it opens in 2013. Fulton Homes' new Chandler community is near the new Intel building. Webb says potential homebuyers with higher salaries and steady incomes are looking for something that cheaper homes on the foreclosure or re-sale markets cannot offer. Fulton Homes cannot compete with the home prices on the foreclosure market, but the company does offer potential buyers brand new houses with innovative products and more than 6,000 choices of house-hold appliances. Webb points out the importance of offering prospective buyers more choices than competitors, and says, “What we’ve tried to do is find niches where these kinds of houses don’t exist.” —Brett Maxwell Fulton Homes fultonhomes.com
W. P. Carey School of Business at Arizona State University
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Quick and To the Point
‘Local’ a Trend on Grocers’ Shelves
Auto Market is Telling of Economic Times People are holding onto their cars longer, and Bard Estabrook, franchise owner of Cottman Transmission and Total Car Care in Phoenix, sees this trend as a growth opportunity in the $200-billion-per-year independent automotive aftermarket. The Automobile Association of America has also tracked this trend. Says Michelle Donati, public affairs supervisor for AAA Arizona, “The average age of the cars we respond to [for roadside assistance] is 10½ years old.” While the AAA nationwide survey over the past two years has found motorists have begun to neglect automobile preventive maintenance, Donati observes such maintenance will be key as people keep their cars longer and recommends motorists set aside a budget for repairs. While the recession has hurt new-car sales, another reason people are keeping their cars longer is they are built better — and American cars have improved the most dramatically. In 1980, the average was 109 problems for every 100 American-made cars and 38 for every 100 Asian-made cars, according to Estabrook; in 2008, problems per 100 cars had dropped to 17 for American-made and 10 for Asian-made. But the advanced technology of today’s transmissions requires specialized expertise in electrical problems and computers, and Estabrook says he plans to concentrate on that niche, expanding Cottman’s relationships with fleets and general repair shops to handle their transmission work. —RaeAnne Marsh
stores, our products and the way we make them are right in their sweet spot,” says Chris Buskirk, co-owner and chief executive officer of the company, explaining that everything Gina’s Homemade produces is handmade, with no machines. “It’s been refreshing to see how receptive the buyers have been to us.” Whole Foods’ website bears witness to this trend; on the Chandler store’s site is a section devoted to information about locally grown foods that are sold there as well as a list of about 15 companies Whole Foods works with, which include Four Peaks Brewery in Tempe and Laughing Giraffe Organics in Phoenix. —Alison Stanton AJ’s Fine Foods ajsfinefoods.com Gina’s Homemade ginashomemade.com Morrison School of Agribusiness and Resource Management technology.asu.edu/morrison Whole Foods wholefoodsmarket.com
Phoenix Advocacy Office for Redevelopment Projects Sells the City The hottest thing in new businesses in Phoenix seems to be restaurants. “They seem to be popping up all over the place,” says Erin Andres, project manager in the Office of Customer Advocacy, one of the services and programs within Phoenix’s Planning & Development Department. The office, which reopened earlier this year after its three-year run had been ended by budget cuts last year, was originally focused on the downtown area, according to Andres, but is now working with projects randomly around the city — and she suggests the pattern is due to the fact that knowledge of the Customer Advocacy office has so far been spread mostly by word of mouth. Designed to help usher customers through the city’s land development and building permitting processes, the Office of Customer Advocacy “is a selling point for the city,” says Andres. “We focus on adaptive reuse projects,” Andres says, explaining new construction projects are assigned teams early in the development process. “On occasion, we have assisted new development projects when the customer requires an extra level of assistance.” As of early October, the office had assisted with 17 restaurants and bars; nine office buildings for professionals, nonprofits and other small business; four churches; two entertainment venues; as well as some light industrial, hotels, retail stores and schools. —RaeAnne Marsh City of Phoenix Planning & Development Department Office of
Cottman Transmission and Total Car Care cottmanofphoenix.com
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Customer Advocacy phoenix.gov/development
Photo: Gina's Homemade
When Chris and Gina Buskirk began selling some of the cheeses and biscotti produced at their Scottsdale-based company, Gina’s Homemade, to area Whole Foods stores, they became part of a movement that seems to be catching on across the Valley: grocers carrying locally made food products. Tim Richards, chair of agribusiness and resource management at the Morrison School of Agribusiness and Resource Management at ASU’s College of Technology and Innovation, recognizes the trend of businesses striving to stock more and more locally grown and produced foods. There is a growing awareness by consumers, he says, and merchants are responding to this. Transportation is one facet of the local movement. “Consumers are concerned with the environmental impact of the food they eat. Transport tends to be the major component in the carbon footprint associated with any food product we buy.” But he notes the reality does not always meet the intended goal. Regarding transportation, for instance, he points out that “many vendors describe ‘local’ as anywhere up to 800 miles or more.” With some of its products currently being sold at two local grocers, Gina’s Homemade is among those businesses benefitting from the trend and fulfilling the customer’s desire to buy food that is made close to home. The products have been on shelves at Whole Foods since early July, and they were recently picked up by AJ’s Fine Foods. “For these
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In B u s i n e s s M a g a z i n e
By the numbers
Metrics & Measurements
SBA Loans Reached Highest Mark in Key Indicators History for FY2011 Spurred in part by unprecedented loan volume in the year’s first quarter, small business loans backed by the U.S. Small Business Administration in FY2011 reached the highest mark in the agency’s history nationally, continuing the rebound begun in 2009 and returning to healthy pre-recession levels in the final three quarters of the year. Arizona also saw an increase. According to SBA’s Arizona District Director Robert Blaney, “In Arizona, SBA loan programs supported 1,306 loans valued at $540,503,100 in FY2011, which ended September 30. That is an increase of 32 percent in loan value over FY2010 when 1,271 loans valued at $368,247,300 were supported.” “SBA-backed lending continued the upward trend we saw last year,” SBA Administrator Karen Mills says. “Due to the Small Business Jobs Act and a return to pre-recession lending levels, over 61,000 small businesses had access to capital. Small businesses are the backbone of the economy and SBA has been there to help them rebound through difficult times over the past few years. First through the Recovery Act and then through the Small Business Jobs Act and new SBA lending programs, SBA has provided small businesses with the tools they need so they can grow and create jobs. As SBA lending levels continue to indicate a rebound in small business lending, we will work through new programs to fill the gaps created in the marketplace.” During the fiscal year just ended, SBA loan approvals supported $30.5 billion (61,689 loans) in lending to small businesses and start-ups through its two largest loan programs, compared to $22.6 billion (60,771 loans) in FY 2010 and $17.9 billion (50,830 loans) in FY2009. The unprecedented quarter was prompted by the enhancements provided under the Small Business Jobs Act, which were in effect. The loan enhancements allowed SBA to raise the guarantee on its 7(a) loans to 90 percent and waive fees on both its 7(a) and 504 loans. —Mike Hunter Small Business Administration
Arizona Small Business Administration Loans Below are the top 20 SBA Arizona District loans by institution, ranked by both loan amount and by number of loans for fiscal year 2011 (Oct. 2010 to Sept. 2011). #
Wells Fargo Bank
JPMorgan Chase Bank
BBVA Compass Bank
National Bank of Arizona
Metro Phoenix Bank
Southwestern Bus Fin Corp.
Western Alliance Bank AZ
JPMorgan Chase Bank
Wells Fargo Bank
BBVA Compass Bank
CDC Small Bus Fin Corp
Superior Fin. Grp. LLC
Number of Loans (Dollar Amount, in millions)
(Number of Loans)
Key indicators for the Metro Phoenix economy are provided in each issue to identify those key numbers that give readers a sense of the health of our local economy. Economic Indicators (Metro Phoenix)
YOY % Change
Unemployment (Sept. 2011)
Job Growth (Sept. 2011) in thousands
No. of Housing Permits (Sept. 2011)
Consumer Confidence (Q3 2011)
Consumer Price Index* (US) (Sept. 2011)
Eller Business Research
Retail Sales (Metro Phoenix) Retail Sales (in thousands)
YOY % Change
Restaurants & Bars
Eller Business Research
Real Estate Commercial: Office** Vacancy Rate
Net Absorption (in SF)
Rental Rates (Class A)
Commercial: Indust.** Vacancy Rate Net Absorption (in SF) Rental Rates (General Industrial)
Southwestern Bus Fin Corp.
Republic Bank Arizona
Business Devel. Fin Corp.
CDC Small Bus Fin Corp
Total Sales Volume
Western Alliance Bank AZ
Business Devel. Fin Corp.
Total Median Sale Price
Seacoast Commerce Bank
BNC National Bank
New Build Sales Volume
BNC National Bank
Capital Source Bank
Republic Bank Arizona
National Bank of Arizona
New Median Sale Price
Seacoast Commerce Bank
Metro Phoenix Bank
Celtic Banks Corp.
Borrego Springs Bank
Borrego Springs Bank
Capital Source Bank
Square 1 Bank
Bank of America
Sunrise Bank of AZ
Resale Sales Volume Resale Median Sale Price
* Consumer Price Index refers to the increase or decrease of certain consumer goods priced month over month. ** Cassidy Turley/BRE *** ( ) Indicates negative net absorption for that quarter Latest data at time of press.
Arizona District Office, U.S. Small Business Administration
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The Buck Stops with You
Costly Convenience: Merchant Service Fees Impact Bottom Line by Lila Nordstrom
More people are paying with cash than ever before, according to Georgeanne Bryant, owner of Frances Vintage and Smeeks, a clothing store and novelty candy shop both located in Phoenix. Her observation is confusing at first, considering the meteoric rise of plastic payment in the last few decades, but, after pausing for a moment, she clarifies. “Where it was once 80 percent, probably only 75 percent [of my customers] are paying with credit cards.” The underlying message this conveys, that we may be beyond the point of the card takeover and well into an era of plastic dominance as the norm, is right on the mark. Cards are no longer the future; they are the major form of payment for many retailers. A growing number of merchants, however, have determined the cost of processing plastic is unacceptable. Etch Salon in Kierland Commons clearly posts a notice to patrons that check or cash is preferred. Some merchants have taken the Draconian step of asking the customer to pay an extra fee if payment is made by credit card. The reason is the merchant services fees — extracted from the merchants — that make the credit card trade a $30 billion industry.
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The High Cost of Discount Fees According to Bob Baldwin, president of Heartland Payment Systems in Phoenix, credit card rates vary by industry and type of card, so they are difficult to generalize. For Visa, one of the most common card logos, restaurants pay the highest rates on in-person credit card transactions, with their costs ranging from 1.54 percent of the transaction plus a $.10 transaction fee for a bare-bones card to 2.30% + $.10 for a high-end rewards card (basic rewards cards are charged at 1.95% + $.10). These same cards would cost a regular retail merchant between 1.51% + $.10 and 1.65% + $.10 and a supermarket 1.22% + $.10 and 1.65% + $.10 respectively. Online transactions are generally more expensive, and other card companies have different rates for the industries listed above. American Express is widely considered the most expensive of the major card brands, with MasterCard rates generally hovering in the same basic area as Visa. There are other variables that impact these interchange fees as well. For one, there is a discrepancy between the cost of accepting debit cards and credit cards. Debit card transactions
are generally cheaper, costing merchants closer to 0.5-1 percent of the amount charged versus the 2-3 percent required to accept a credit card. According to Baldwin, this is because debit cards involve less risk for card companies. “If you look in the last few years, the credit card issuers have lost billions of dollars by overextending credit. They are unquestionably taking risks that they wouldn’t take in the debit card world.” Additionally, rewards cards, which offer perks to attract consumers, often have higher fees associated with them to cover the costs of these incentives. Unfortunately, there isn’t much merchants can do about the variances in cost between different types of cards, and, generally, companies keep their rate schedules confidential since they vary so widely between industries. Of course, merchants don’t negotiate directly with the card companies, anyway. They work out a way to accept as many cards as possible with their merchant service providers. While it is possible to, say, reject American Express cards outright for their higher fees, it is generally not possible to opt out of accepting
a rewards card from Visa while continuing to accept a bare-bones card from the same company. Once a merchant takes Visa cards, he takes all Visa cards, from expensive cashback ones to rewards-free varieties. Merchants’ actual choices are limited to generalities like debit versus credit and Visa versus Discover, and are more impacted by which merchant service provider they choose to go with and what type of contract they sign. A recent settlement seems to offer an exception to this contractual obligation, allowing merchants to reject high-end rewards cards because they carry greater fees. It is almost impossible to do in practice, however, because doing so relies on a store clerk being able to identify the card and the customer having another form of payment available. There is no way to reject high-cost transactions systemically, so, while it is legal to differentiate between cheaper and more expensive cards, it is not common. The Battle over Who’s to Pay As the largest component of any merchants fee package, interchange fees have been the subject of the most political controversy, especially recently. Starting this month, new federal legislation — the Durbin amendment to the Dodd-Frank Act — limits interchange fees on the debit card side to a flat fee of 22 cents per transaction plus a penny for fraud protection and .05 percent of the purchase. This is compared to a past average fee of roughly 44 cents per transaction. This change applies to both PIN- and signature-based debit transactions, meaning merchants will pay this new, lower rate on all debit card swipes — even those on which the customer signs for them. (Signature-based transactions used to be much more expensive than PIN transactions because they go over a credit card system, but, since the law does not specify between the two, the new limits are applied uniformly. The change does not, however, impact interchange fees.) The Durbin amendment applies to banks with more than $10 billion in assets — among which is the vast majority of debit card issuers — but debit rates for banks with assets of $10 billion or less remain unregulated. The change does not impact interchange fees on the credit card side at all. Trish Wexler of the Electronic Payments Coalition, a lobbying group that represents card companies like Visa and MasterCard, is
worried about the impact of this new policy. “The industry, overall, is looking at losing around $6 billion in revenue. In order to keep offering the products they do, they are going to have to find ways to make up that revenue.” Consumers, she says, will be left to pick up the slack. “What we have started to see play out is that a lot of banks have announced they are going to start charging a fee if you want to use an ATM card as a debit card.” As for the impact on banks, she says, “I’ve heard some express concern that, if the bank or credit union issuing the card can no longer afford to cover themselves for the fraud limit, the real question is, ‘Are they going to put it back on the merchants?’ Are they going to say, ‘We are not going to provide you with a guaranteed payment’?” Bart Naylor of Public Citizens, a consumer advocacy group, sees this differently. He says interchange fees have become exorbitant. “Dodd-Frank Wall Street Reform Act decided that it was essentially a charge that was excessive and had no reflection on the actual cost of servicing the debit card.”
Know What’s Negotiable Knowing where the potential card costs lie in a merchant service contract and understanding the needs of their business are the major things that merchants can do to be prepared when negotiating a contract. Being ready with information like average dollar amount of the sales; average volume of sales; how this sales volume varies; and whether the business relies on online payments, inperson payments or both can be tremendously helpful when building a package and mean big savings in the long run. If they aren’t prepared, merchants can find that something as seemingly positive as having an unexpected spike in business over Christmas will end up costing a lot of money in fees. Electronic Payments Coalition electronicpaymentscoalition.org Frances Vintage francesvintage.com Heartland Payment Systems heartlandpaymentsystems.com Public Citizens citizen.org Smeeks smeeks.com
A Quick Guide to Merchant Services Fees Understanding the fee system is complicated in that the fee does not cover the same things for every card. The following provides a general guide to the fees contained in merchant services contracts:
■■ Early Termination Fee ■■ A variety of fine-print processing fees and one-time charges — among these, which vary by company and are often difficult to find in the contract, are: • Authorization Fee — a processing fee charged even if the transaction is denied • Monthly Minimum Fee — a minimum amount per month that must be paid by merchant, regardless of the amount of business • Statement Fee — a charge for the generation of a monthly list of charges • Replacement of damaged “free” equipment
■■ Discount Fee (percent paid for use of card)
• I nterchange Fee — a fee paid to the card-issuing bank, which includes the cost of processing the card as well as fraud protection (which, under the new rules, is only one cent per transaction). This is the fee that spikes drastically — up to 5 percent per transaction — if the card offers a lot of rewards. • Assessment Fee — for use of the card logo, depending on the type of card. This does not apply to American Express, which has its own bank, but does apply to Visa and MasterCard, which issue cards through participating banks. • Processing Fee — a fee paid to the merchant’s bank
In B u s i n e s s M a g a z i n e
A View from the Top
Jerry Mills: Breakthrough CFO Model by Alison Stanton
Banking on Change
■■ In March of this year, B2B CFO was named ■■
Undaunted, Mills decided to launch his own company based on his theories and research. “I thought it was a great idea, so I did it solely on my own,” he says. But before he officially opened for business in 1987, Mills realized he needed to get some experience working in the field he was going to promote. “I thought if I was going to sell CFO services, I should be a CFO, so for two years I did what I could to learn the industry,” he relates. “After two years, I turned my employer into my first client.” Getting that job wasn’t hard — he’d been a manager at Arthur Anderson and in those days such a person was in high demand. He found the job more complicated than the public accounting he’d done formerly. “As CFO, you make the company more efficient as a process of doing your job — policies, procedures, streamlining, training people,” he explains. It was a reality that confirmed the concept which underlies B2B CFO. So after a couple of years, he says he “went to the owner and said, ‘I’ve got this thing streamlined. I don’t think you need me full time. I think you need me, but maybe just a couple days a week.’” Mills’ proposal was to become an independent contractor with that company, telling the owner, “I’ll continue to supervise the controller. I’ll be here when you want to
Photos: B2B CFO
one of the 25 Free Enterprise Honorees by the U.S. Chamber of Commerce as part of the 2011 Blue Ribbon Small Business Award competition. In August of this year, Jerry Mills was named among the Top 100 Small Business Influencers in North America in an inaugural awards program created jointly by online publication Small Business Trends and media company Small Business Technology. In September this year, as it also did in 2010, the company received an Arizona Corporate Excellence Award as one of the 25 most successful and fastest-growing private companies in Arizona. Mills is the author of two books: The Danger Zone — Lost in the Growth Transition and Avoiding the Danger Zone — Business Illusions (pictured).
The company’s upcoming 25th anniversary and a recent string of awards are solid validation of the pioneering concept on which Jerry Mills, founder and chief executive officer of Phoenix-based B2B CFO, founded his company. Back in the mid-1980s, while he was a manager with Arthur Andersen & Company, Mills came up with the idea of creating a company that would provide CFO services to small and mid-market companies, offering business owners solutions that would help improve any cash flow issues as well as the overall organization of the company. To support his theories, Mills developed a model of micro- and macro-economics that looked at the concept of “typical consulting” as it related to the point of diminishing marginal returns. His idea was to help alleviate the stress levels of business owners while simultaneously improving their sales and profits through the services of a part-time CFO. But when he pitched the concept of CFO services to his co-workers, he recalls, they weren’t as excited about it as he was. “It just wasn’t what they did at Arthur Andersen,” Mills says. “They concentrated mainly on audits and tax returns, and so this just didn’t fit in with the type of work that they did.”
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meet with the banks, your attorneys, CPAs, pension administrator. Whenever you want to chat about anything, just call me. I’ll come over.” He recalls the owner had a few questions, but took only about half an hour to make the decision to accept. Mills concedes it was a difficult industry to learn. In fact, it wasn’t until he had been in business for about 14 years that he really thought he had it down. “I believe in what I call the ‘10,000-hour rule,’ which means that to learn a skill and be at a genius level you must put in this amount of work. I figure that between 1987 and 2001, I put in my 10,000 hours.” Although he intended to be a sole proprietor in his business, by the late 1990s Mills started adding other executives to join his company. By December 2001, he had just over 200 people in his firm. Mills’ concept answered a need among the CFO professionals. As he’d discovered, a CFO performing his job makes a company more efficient to the point where it no longer needs his full-time services. “They average three years or less in a job, and a year and a half in-between jobs,” he says, noting job insecurity is tremendous — even more so for those above age 50, although, says Mills, the age discrimination is covertly couched in such phrases as “not fitting in with the company.” So he was able to tap into an available talent pool, bringing on board CFO professionals with at least 20 years’ experience. In March of 2012, B2B CFO will celebrate 25 years in business and its success as the leading provider of financial and strategic solutions to small and mid-market companies. Although the model has not changed since he first launched his company, what has changed is the way the company now builds its visibility. “My company’s success has definitely exceeded my expectations,” Mills says. “I was a pioneer in that I created an idea and I perfected it. But I could also not be where I am today if I hadn’t made the decision in 2002 to learn to use technology, search engines and, now, social media.” Currently, the 200 B2B partners serve more than 750 clients with combined annual sales of around $5 billion. Companies all around the country have used B2B CFO to solve their problems with cash flow and increase their profitability. The company is the nation’s largest CFO firm.
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In B u s i n e s s M a g a z i n e
Where’s the Money? Diverse lending sources aim to put money to work, but businesses struggle to qualify by RaeAnne Marsh n the past four years, more than a dozen banks in Arizona shuttered their business and few new ones launched, thanks to the severe stock losses that banks have taken. Paul Hickman, president of Arizona Bankers Association, anticipates reorganization in the industry. “You’re going to see a lot of consolidation in the near term,” he says. “This may result in fewer community banks, and this is not a good thing because we want a diverse banking sector. We want a lot of different types of banks that are involved in niches.” His prediction for the industry in general notwithstanding, Hickman says, “The banks here now are solid.” He notes, “Banks are capitalized fine now. The difficulty of 2008 and 2009 has been overcome.” Indeed, all banks and credit unions contacted for this article report they have money to lend and they are lending. “They are all chasing the deals,” Hickman says, pointing out, “They don’t make money if they don’t lend.” Dean Rennell, Wells Fargo regional president of Arizona business banking, says, “Access to capital is not businesses’ biggest concern. Their biggest concern is growing their revenue and growing their business.” A recent Gallup survey found that many small-business owners have cash and are parking it in deposits rather than investing in their business. Regarding business borrowing, Robert Blaney, state director of the Arizona District of the U.S. Small Business Administration, observes that businesses may not need as much money because they’re not spending as much in the slower economy — and many hesitate to move forward because “they don’t know what the future will be.”
N o v e m b e r 2011
In B u s i n e s s M a g a z i n e
However, while individual businesses may need less, borrowing is up in the aggregate. “Nationally, we did the most business [providing loans] in the agency’s history in the last fiscal year [Oct. 1-Sept. 30], supporting over $30 billion in lending,” Blaney reports about the SBA loan guarantee program. Credit for the surge of activity is attributed to the enhancements provided under the Small Business Jobs Act of 2010; the previous high was 2007’s $28.5 billion. In Arizona in FY2011, SBA supported 1,306 loans for $540 million — a 3 percent gain in the number of loans over the previous year and an increase of 32 percent in actual dollar value.
Banks Are the Lender of First Resort “We have a ton of capital we need to lend out,” says Destin Simmons, chief credit officer of West Valley National Bank. He notes it is tough for small businesses to meet the underwriting guidelines for conventional loans through the banks, and that’s where SBA loans make such a difference. “The [Small Business Jobs Act of 2010] eliminated fees on SBA loans and raised the [government] guarantee from 75 percent to 90 percent to the banks,” he relates. “It’s a tremendous value to customers to exclude those fees, and raising the guarantee gave banks more comfort to be able to lend.” These loans require a little more paperwork than conventional loans, he says, but not nearly what they used to require. Unfortunately, the bad reputation seems to linger on. “We get customers who aren’t interested in SBA programs. It amazes me because the terms and rates are so much better than what banks can offer conventionally.” Among the SBA programs is the 504 loan (for real estate). Simmons notes that, with real estate values down, business owners who purchase property the business will occupy, such as an office condo, could save $55,000-$65,000 per year in their lease payment. One of the advantages of working through the SBA program for the loan is it requires the buyer put only 10 percent down rather than the standard 25-30 percent. West Valley National Bank is under no restrictions for its lending, says Simmons, noting, “There are still a lot of banks under orders from regulators as far as their ability to lend.” The bank offers revolving lines of credit for short-term working capital, term loans for longterm working capital, loans for owner-occupied office buildings, loans to investors for non-owner-occupied buildings such as an industrial building or office complex, and construction loans. The bank makes its money off interest income on loans, fee income on loans, interest income on securities and fee income from checking accounts. Observing, “I think some of the bigger banks are trying to get more fee income,” Simmons says, “Our fees and rates have remained flat.” Bank of America added 29 small-business bankers to its Arizona work force in September, 23 of them for Metro Phoenix (out of 1,000 nationwide), to serve what it recognizes as a significant market; small businesses with fewer than 100 employees account for 95 percent of all businesses in Arizona and 32 percent of the state’s work force. According to Jeremy Grogan, senior vice president and small business banking manager for Bank of America Arizona, the goal is to provide small businesses with experienced bankers who understand the local market and can be their single point of contact to help them with obtaining credit and in looking at their cash management, cash flow and deposit needs. “The bank recognizes that small business is the catalyst to sustain growth, not only for the bank but economically for the state,” Grogan says. In the loan process, cash flow is most important, but Bank of America considers other factors that
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include collateral, accounts receivable and the management team. In the first half of 2011, Bank of America extended $118.4 million in new loans in Arizona, and Grogan says the bank has no cap on the funds it has available to lend nor on the size of a loan to an individual business. But he admits, “Small businesses are struggling to qualify.” Bank of America offers other programs and services to benefit small businesses: credit cards with cash-back incentives, an online banking suite that includes payroll processing and merchant services, and a small-business charge card. With the new charge card, Grogan explains, “businesses pay the balance off on a monthly basis. It keeps them on top of their cash flow, managing their cash flow and not increasing the company debt.” Wells Fargo’s loan production is up this year 14 percent over 2010, says Rennell, noting this is just in new loans and does not include renewals or turning over of existing loans. “We do have money to lend, and we have been lending throughout the financial crisis.” In fact, he adds, since a lot of the bank’s funding comes from customers’ deposits and more customers are depositing their money with Wells Fargo, “We have more money to lend today.” According to Rennell, Wells Fargo’s loan underwriting criteria remain unchanged — looking first at cash flow as the primary source of repayment, and then at a secondary source, of which collateral would be one part. The documentation, or due diligence, however, has changed. Whereas previously the bank would look at a business’s past performance — which, today, would probably show some losses and financial issues — the bank now looks at how the business is likely to do in the next several years, including what changes the business has made in response to the financial crisis.
“Lending is one of Wells Fargo’s priorities,” says Rennell. Direct lending ranges from a credit-card-like product that small businesses may find best serves their needs to SBA loans to custom commercial loans. Wells Fargo also offers business owners educational advice and information on aspects of business such as cash management. “Cash management is important because if small-business owners can maximize the money they have in the business — collect receivables faster, control disbursements and know exactly how much money they have on hand — that assists them,” Rennell explains. For those small businesses that have money they are waiting to use, he adds, Wells Fargo offers investment services.
Credit Union Lending Sustains the Local Economy Unlike banks, credit unions are nonprofit institutions. “The value proposition is supporting a local Arizona business that’s going to return what it makes to the community,” says Paul Stull, senior vice president of strategy and brand with Arizona State Credit Union. Additionally, notes Kevin Lewis, division executive of Desert Schools Federal Credit Union’s Business & Commercial Services, because credit unions have members rather than shareholders to whom dividends must be paid, “our profitability returns on lower pricing.” Explains Lewis, “Desert Schools makes money by lending on our balance sheet, making investments through our lending products.” Founded in 1939, the credit union has tailored its lending products until recently toward individuals. But Lewis says lending to the business owner has become a “significant emphasis in the last two
years. … We need to be able to offer a platform to business to compete with our banking counterparts.” Among its products is a term loan that businesses could use to purchase equipment or a building, for instance, but while it is structured for regular payments over a period of time, there is no pre-payment penalty. “We take a fresh approach,” says Lewis. “We’ll sit at the table with a business relationship manager to help businesspeople look at their business in a way they haven’t before.” And Desert Schools offers the business owner perks he or she can make available to employees, which include insurance products and a 401(k) plan. “Even if an employer can’t match funds at this time, it’s a vehicle for employees to save,” Lewis explains. The market Desert Schools has targeted is operating companies of $10-15 million in different segments of an industry — the manufacturer, wholesaler and distributor — as well as healthcare and service companies. “We have a lot of supply on our balance sheet to offer credit products to business,” says Lewis, noting the credit union’s “sweet spot” is $100,000 to $2 million, although it can go above that. Arizona State Credit Union generally deals with people who have been in business several years, says Stull, noting, “If you’re in an entrepreneurial situation, it’s more difficult to find capital.” Many of the credit union’s customers are in service or real-estate-related businesses, with 10-50 employees, looking to finance inventory, purchase real estate to open a new location, or purchase new equipment or a vehicle for deliveries. “We hear from businesses not able to secure the credit they need because many of the larger banks are not lending — they’ve experienced negative results on loan losses and regulators have clamped down,” Stull says. Arizona State Credit Union is capped at 12.5 percent
Funding Growth through Investment Capital Business owners may seek investment capital to fund their business. Finding suitable investors often takes four to nine months, and Bill Miller, managing director of mergers and acquisitions with Scottsdale-based investment banking firm Clear Growth Capital, suggests business owners begin the process early to explore the steps to take. “People often put it off until they need it,” he observes, adding they then find themselves with no thought-out business plan and their financials in disarray. “As the extent of capital sought increases, so does the extent of requirement for a candidate company to have its information prepared correctly to assure creditability.” Having an “interesting board or management team” may also be a factor, notes Kevin Loud, Clear Growth Capital’s managing director of capital. Miller and Loud also advise business owners to be “totally real about their business” and understand that their company’s worth may have dropped in the current economy. Earlier stage companies often seek growth capital from angel or venture investors or through private placement memoranda for high-net-worth individuals. Other strategies exist for more mature investment. Miller succinctly describes the investor types by capital levels: Founder Capital — Stage I businesses are typically funded by the founder, often from self savings. Friends and Family — The second stage of investment, this usually comes to help the young company begin to grow.
Angel Investors (individuals or presented through organized groups) — Once some revenues are accomplished, angel investors may consider a small company for a small investment, perhaps $10,000-$500,000. Venture Capital — Still considered early-stage investment, this is for Stage II companies seeking $500,000-$2,000,000 in capital. Strategic Investors (customer, supplier or competitor) — For Stage III companies, this is usually capital of more than $1 million; these investors are, often, interested in an equity position and may wish to have a “controlled sale” whereby they gradually buy more of the company. Commercial Banks — Banks generally want to have any debt loan collateralized with tangible assets worth more than the note. Institutional Funds — For stage IV companies, these funds are the most sophisticated and generally may offer capital as a minority equity position of minimum of $3 million. Institutional funds include private equity groups, family funds, strategic investors and retirement funds. For them to take a minority equity position, any companies they consider would have to have a valuation of $10 million, and Miller says, “We find to qualify to be considered, companies must have over $5 million in past revenues.” —RaeAnne Marsh Clear Growth Capital, Inc. cleargrowthcapital.com
In B u s i n e s s M a g a z i n e
of its assets in business lending, but Stull says legislation is pending that would raise the limit. General guidelines require a business plan, three to five years experience in the industry of which the business is part, and positive cash flow. Notes Stull, “We have not changed our underwriting standards, but what has changed is the ability of businesses to meet those standards.”
MultiBank Extends the Reach of Retail Banks Different types of banks serve different niches, observes Arizona Bankers Association President Hickman. But lenders face the same bottom line as any other business: No money, no business. “All lenders do is determine the probability of repayment. Some have more tolerance for the risk related to that determination than others,” explains Andrew Gordon, president of Arizona MultiBank, one of a national network of community development financial institutions (CDFIs) certified by the U.S. Department of Treasury. While retail banks tend to be the most conservative, businesses have options beyond the commonly recognized bank and credit union institutions. Gordon observes that small-business owners may not be asking for loans because they are pessimistic about qualifying. But it’s specifically to assist the businesses that have trouble qualifying for traditional SBA and conventional loans that a consortium of the state’s lending institutions created and support Arizona MultiBank. Wells Fargo, at $3.6 million, and Bank of America, following closely at $3 million, are two of its largest funders. “The MultiBank spreads the risk,” Gordon explains. Although some of the funds may come from the very bank that turns down an individual business for a loan, it’s the communal pot that feels the ripple rather than one bank being hit by the whole wave. “We mitigate our risk by spending a lot more time with the customer.” By taking more time to understand the business, Arizona MultiBank can get a better picture of the factors that impact the business’s receivables — a time investment that banks can’t provide on the small loans, Gordon points out. (He also observes, significantly, that lenders have preferences as to the businesses they work with, due to their knowledge of certain markets.) But even the nonprofit multibank must consider: “If we take too high a risk and lose our ability to earn, we won’t be able to continue to serve the community and our
investors.” Among the factors weighed are whether the businessperson has done the particular type of business previously, whether the enterprise was successful, and what secondary sources there are of repayment. Multibanks are not regulated like a bank, Gordon explains. They’ll take a higher loan to value on appraisals on collateral, but appraisals are not required as they are by banks (although, in practice, Arizona MultiBank usually takes that step). Also, the MultiBank’s rates are higher, so the customer is motivated to move out of the CDFI. “When [the customers] become bankable, we get prepaid and they move into a commercial banking area,” says Gordon. “Our goal is to make them bankable.” Whereas investor banks and other institutions are looking to build relationships, multibanks assist in project financing to help banks extend their reach. Arizona MultiBank’s loans range from $500 to $750,000, according to Gordon, who says the bank’s “sweet spot” is $150,000 to $250,000. Gordon and his staff will also refer customers to small business development centers, such as SCORE, for counseling in creating a business plan, managing expenses, collecting receivables and other facets of business. Says Gordon, “If the business is more efficient, it can be more profitable even with less sales.” Arizona MultiBank also works with community partners such as development authorities, Arizona Commerce Authority and microlenders to expand its reach into underserved markets.
Micro-Lenders Step Up for the Little Guy Acción and Préstamos CDFI are two of the micro-lenders that serve small businesses in Arizona. Préstamos is a subsidiary of Chicanos Por La Causa. “CPLC started making small-business loans in 1980, and micro-loans with SBA funds in 1992,” says Teresa Miranda, business development officer, noting the loans are not just for Latino- or minority-owned businesses. Préstamos works with start-ups as well as existing businesses, particularly businesses two years old or newer. Micro-loans have a $50,000 limit; other loans can go up to $250,000. The larger amounts are not SBA loans, says Miranda, but the underwriting guidelines are the same. “We make the decision internally on how to fund, based on their application,” she says. Applications are evaluated on five points: a written business plan (“Especially for start-ups,” says Miranda), credit, equity (“We won’t do 100 percent of the project; they have to have some skin in the game”) cash flow (which includes personal income and business projections) and collateral. That final requirement, Miranda notes, can be challenging in today’s economy. “They probably don’t have equity in their home [to put that up as collateral] and they may want to start a business because they haven’t been able to find employment.” And their credit may have been damaged by foreclosure or short sale. On the credit issue, “we may be able to consider a loan if we look at their credit before all this happened, and if they’re able to demonstrate on the business plan that they have the skills to become business owners.” Says Miranda, “The reason we exist is to give these people the opportunity,” but she notes many people
“The financial mess, in large part, is due to irresponsible underwriting by, largely, nonbank actors,” says Paul Hickman. Regarding lending now, the issue is less “where’s the money?” than “can you qualify?”
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come unprepared for the process and Préstamos does not have the personnel resources to help them prepare. People need to come in with the necessary documentation, historic information and licensing, an understanding of what other start-up costs they face, and a realization that there will be a credit check. Some people are so unprepared, Miranda relates, “they ask what business to go into.” ACCIÓN, another micro-lender active in Arizona, was founded in New Mexico in 1994 and began serving Arizona (and Colorado) in 2008 when its executives recognized a demand it could fill for small-business loans and training. “Capital in the hands of small-business owners has a multiplier effect on the community — goods and services are created and delivered, income and revenue are generated and employment is created,” says spokesperson Marisa Barrera. But she adds, “New and young businesses don’t have the financial track record that banks would look for.” The nonprofit organization assists entrepreneurs starting a business as well as owners of existing businesses. Loans range from as small as $200 to a maximum of $300,000, with most between $25,000 and $50,000, commonly needed for working capital, fixed equipment purchases and marketing. ACCIÓN also offers one-on-one technical assistance and consultation, as well as partnering with other organizations than can help businesspeople with business planning, marketing and financial planning ACCIÓN is capitalized in part by loans and lines of credit from banks and such entities as the U.S. Department of the Treasury’s community development financial institutions “specifically to get funds into the hands of entrepreneurs and small business owners,” says Barrera. Its portfolio is also capitalized by its own net assets — which varies with the size of its borrowing and investments and size of active loan portfolio — and a donor base of foundations, corporations and individuals. Loans this year from January through August, across all three of the states it serves, totaled $2,413,000 for 365 loans, which is an increase of 47 percent in number of loans issued and 64 percent in dollar amount over the same period last year. Guidelines are kept very basic in order to offer an open door to entrepreneurs, Barrera explains. An applicant must be at least 18 years old, must live and operate the business in the state where he or she resides, and must have or intend to start a business. “A home-based business that’s largely computer-based, needing $3,000 to $5,000, may not need a business plan,” says Barrera. A more capital-intensive loan will require a business plan, but Barrera says ACCIÓN’s staff can help put that together.
Business Administration’s State Trade and Export Promotion that ACA plans to use to bolster export services and address some of the needs of small businesses in that arena. Earlier this year, ACA launched its Arizona Innovation Challenge to support early-stage innovation and technology ventures in targeted industries. The eight winners were awarded grants that ranged from $100,000 to $250,000, for a total of $1.5 million. ACA is committing the same amount to next year’s Challenge, and expects to announce the specifics in January to participate in the program. Non-capital assistance that will, however, benefit businesses’ bottom line is available at the ACA’s newly opened Center for Innovation and Entrepreneurship. Plans for an Arizona Bank are again being championed by Representative John Fillmore (Dist. 21 – R). A partnership bank owned, controlled and operated by the state, its purpose, Rep. Fillmore explains, is “to enable small community banks to borrow from it so they can lend better out in the private sector.” All state monies will be deposited in it, and all income earned by it will become part of its income and revenue. Deposits will be guaranteed by the State of Arizona and will be exempt from state, county and municipal taxes. The Arizona Bank Bill, introduced in the previous legislative session as HB2221, did not make it out of the Banking Committee. Rep. Fillmore is taking it this time to the Employment and Regulatory Affairs Committee “so I can talk about creating the regulations to get it started.” Noting, “Large banks are restricting credit,” Rep. Fillmore says, “America is built on the little guy who, historically, has been able to go out and borrow on the equity on his home.” He observes that, with the collapse of the housing market, many people can’t get credit to get a business loan. But enabling small business, he notes, “is what will get us jobs.” “The financial mess, in large part, is due to irresponsible underwriting by, largely, non-bank actors,” says Hickman. Regarding lending now, the issue is less “where’s the money?” than “can you qualify?” “Business owners with good business plans are in a position to shop around,” says Hickman, “but good business plans are in short supply.” The economic downturn has negatively impacted businesses in terms of other criteria lenders use to determine eligibility for a loan, although they maintain their underwriting guidelines, themselves, have not changed. For concrete suggestions business owners can follow to best position themselves for a successful loan application, please see the Lending Guide that begins on page 39.
Non-Banks and New Ideas Add to the Funding Landscape
ACCIÓN accion.org Arizona Commerce Authority azcommerce.com Arizona MultiBank multibank.org Arizona State Credit Union azstcu.org
Arizona Commerce Authority’s efforts to build business in Arizona include creating funding opportunities for small business. The $18.2 million recently awarded by the U.S. Department of Treasury’s State Small Business Credit Initiative will be directed to businesses of fewer than 500 employees in amounts from $50,000 to $2 million, which they can use for working capital, inventory, equipment purchases and property improvements. Guidelines are currently being developed, and implementation is anticipated in first quarter 2012. The same timeline holds for the $656,000 in grant money received from the U.S. Small
Arizona State Legislature azleg.gov Arizona Bankers Association azbankers.org Bank of America bankofamerica.com Desert Schools Federal Credit Union desertschools.org Préstamos CDFI prestamosloanfund.org Small Business Administration sba.gov Wells Fargo wellsfargo.com West Valley National Bank wvnb.net
In B u s i n e s s M a g a z i n e
Decisions that Matter
Competing on Service Beat the competition by 'hugging' your customers by Edward D. Hess The small businesses that have managed to survive and even thrive during these tough times have recognized one important factor: You can’t always compete on price, but you can compete on service. And the best thing about great customer service is that providing it doesn’t cost you an extra penny. Cutting costs will not save your business. Remember, customers are concerned about their own financial security. When they walk into a business, they need to feel cherished and special. They need to be “hugged” by great customer service. Customers don’t expect to get bottom-of-the-barrel prices everywhere they go, but they do expect to be treated with respect. Great customer service starts with employees who have been trained in the science of service. Treat employees in a respectful, caring manner, and that will be transferred to customers. The business research done at Harvard, Stanford, Michigan, and my research at Darden Business School all find that happy employees make for happy customers. Valuable lessons can be learned from both the good and the bad sides of customer service. The Bad: The Local Coffee Shop Studies have shown that it costs much more to attract a new customer than it does to keep an existing one. So it is important you do everything you can to keep your current customers happy. I recently went into a local coffee shop for a latte. When the employee gave it to me, she said she was sorry but they had run out of skim milk and as a result the cup was less than two-thirds full. Then she turned and went on to the next customer. I stood there thinking, “But I paid for a full cup!” Needless to say, I have not been back to that coffee shop. Learning from the “Bad”: Remember, disgruntled customers won’t complain; they just won’t come back. If you don’t give your customers the courtesy of taking the time to provide them with excellent service, they are not going to
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take the time to tell you how to improve your business — and they will likely tell others about their bad experience. The ripple effect of just one bad customer service experience can be very damaging. Provide special training for frontline employees. The employees who interact directly with customers are essential for your business. Their attitudes, communication skills and style of service are what your customers are going to associate with your business. Make sure your employees are trained to handle the potentially stressful task of working with customers. Make sure a customer is happy before moving on to the next customer. At many small businesses, customers value quick service just as much as they value quality service. But you can’t sacrifice one for the other. Remember, you’re not done serving the customer when you think you’re done. You’re done serving the customer when the customer is completely satisfied. Compensate for mistakes. Never, ever, shortchange your customers. If a mistake was made or some other circumstance is preventing you from providing the best level of customer service, find a way to make it up to your customer. Provide solutions. Never make your business’s problem or an employee’s problem your customer’s problem. Allow your employees the latitude to provide your customers with solutions when they can’t satisfy a need. For example, the coffee shop employee could have offered a coupon for a free drink or a pastry, or told me about the problem before making my order and asked if there was a beverage I would like to substitute. The Good: Zappos.com When I ordered some shoes from Zappos that ended up not fitting, I sent them back using the provided prepaid shipping form. I immediately got an e-mail acknowledging that my shoes were being shipped back to Zappos and I could follow their progress on the Internet. When they were received at Zappos, I got another e-mail telling me my refund was
Books being processed and thanking me for shopping at Zappos. I sent them a response thanking them for the great service. Quickly thereafter, I got a personal e-mail from a customer service rep thanking me and telling me that Zappos loves its customers. She upgraded me to the Zappos VIP site. Wow! I felt cared about and appreciated — and I went online and ordered a different pair of shoes. Learning from the “Good”: Happy employees = happy customers. Zappos understands that employee satisfaction translates to great customer service. The customer service rep who upgraded me to the VIP site cared enough to provide me with high-level service, which makes me think that she also cares about the company where she works. Creating that feeling in your employees will pay you back exponentially. Always respond quickly. Your customers have big concerns of their own. They don’t deserve to be left wondering what kind of service they are going to receive or when they are going to receive it. Even if it’s just a message to say, “I am looking into this for you,” customers will appreciate being told where they are in the process. Make it easy to do business with you. Never make your customers jump through hoops to do business with you. Have a return policy that is easy to understand and that puts the interests of the customer first. Provide refunds quickly and efficiently. Keep customers informed of what’s happening. When customers know what’s happening with their order, it reduces their anxiety. And when they’re less anxious, they enjoy doing business with you. Zappos has a great system for keeping customers informed online, but it’s also easy to do in face-to-face customer service. For example, if you’re handling a return and typing information into a computer, you might explain to the customer, “I’m just entering the date of purchase and the product number so we can make sure we give you the maximum refund possible.” Use technology to provide quick, efficient customer service. It’s the twenty-first century, and e-mail, message boards and online stores provide us with the means to provide service more quickly than ever before. As long as you make sure your messaging is detailed and easy to understand, your customers will appreciate the quick service these technologies provide. Make your customers feel valued. Understand that each and every one of your customers is special. As the late business guru Peter Drucker said, “The sole purpose of business is to serve customers.” Make sure your employees understand this, and that above all else they must focus on making your customers feel valued and appreciated. Your business is not about “me”; it’s about “them”: your employees and customers. Making cuts to employee perks or customer service perks is not a long-term plan for survival. In today’s economy, you have to do everything you can to hang onto your customers and encourage them to keep coming back to your business. There’s no better way to do that than through consistently great customer service. Growing an Entrepreneurial Business: Concepts & Cases edhltd.com
Edward D. Hess is a professor of business administration and Batten Executivein-Residence at Darden School of Business, University of Virginia. He has authored eight books in addition to Growing an Entrepreneurial Business: Concepts & Cases, plus numerous articles that have appeared in more than 200 media outlets around the world.
Delivering Knock Your Socks Off Service With so many choices available, today’s customers are smarter and more demanding than ever before, putting repeat business at risk. This fifth edition is completely updated with all new techniques that will help you successfully work with even the most difficult customers. Topics include meeting customers’ expectations and satisfying their needs, becoming easier to do business with, determining the right times to bend or break the rules, becoming fantastic fixers and powerful problemsolvers, and coping effectively with “customers from hell.” Performance Research Associates $18.95 • AMACOM • On shelves and online
Be Our Guest: Perfecting the Art of Customer Service (10th Anniversary Updated Edition) Exceeding expectations rather than simply satisfying them is the cornerstone of the Disney approach to customer service. In honor of the tenth anniversary of the original Be Our Guest, Disney Institute, which specializes in helping professionals see new possibilities through concepts not found in the typical workplace, is revealing even more of the business behind the magic of quality service. Theodore Kinni $24.95 • Disney Press • November 2011
The B2B Executive Playbook: The Ultimate Weapon for Achieving Sustainable, Predictable and Profitable Growth The first book completely focused on successfully running B2B, which is very different from B2C. The fate of a B2B lies in the hands of a few individuals, so what ultimately determines if a company thrives, or even survives, is how these key relationships are targeted, structured and managed. The leading B2B companies dramatically build their top and bottom lines when leaders realize that success, undeniably and unquestionably, resides with how they engage with their customers and how that will drive their internal alignment and operations. Sean Geehan $24.95 • Clerist Press • November 2011
The Welcomer Edge: Unlocking the Secrets to Repeat Business This book unlocks the secrets to repeat sales. Its principles are appropriate for all sales and service environments. It’s about four distinct categories of service professionals — the people who will make any customer-service function or department a success. The author provides real-life examples and anecdotes to help transform this concept into action. Identifying and recruiting welcomers is the key to a healthy consumer base. The book provides practical recommendations and strategies so that any company — regardless of industry or size — can maximize the quality of its customer service and the quantity of its loyal consumers. Richard R. Shapiro, with foreword by Robert Spector $17.95 • Vantage Press, Inc. • February 2012
In B u s i n e s s M a g a z i n e
Investing in Community by Alison Stanton
Special Olympics Arizona: Competitions Build Courage and Happiness According to Nadine Armstrong, director of operations for Special Olympics Arizona (SOAZ), the goal of the nonprofit is to “empower the over 180,000 Arizonans with intellectual disabilities to be healthy, productive and respected members of society through SOAZ’s year-round sports training, competitions and support programs.” These experiences help give both children and adults who are involved with the nonprofit organization the opportunity to develop physical fitness, demonstrate courage, feel joy and participate in the sharing of skills, friendship and gifts with not only their families but also other Special Olympics athletes as well as the community. To achieve this goal, SOAZ relies on a variety of sources of funding, the number one of which is the Law Enforcement Torch Run fundraiser. More than 80 law enforcement agencies participate in the LETR fundraiser each year. Private and corporate grants, general and private donations and fundraising events held throughout the year also help bring money to SOAZ. The projected budget for 2011 is $5.6 million. “Over 90 percent of our funds are distributed to our programs statewide to fund sports training, competitions, gear and travel for all of our athletes,” Armstrong says. “We also reduce cost by being housed in the Swift Transportation offices rent- and utility-free.” Special Olympics Arizona specialolympicsarizona.org
■■ EVENT: Be a Fan — An Inaugural Evening to Support Special ■■ ■■
Olympics Arizona, Sat., Dec. 3, at a local private home. For information, please call Lori Ramsey at 602-476-0837. SOAZ has a total of 22 part-time and full-time paid staff members. Almost 11,000 volunteers help at SOAZ, including board members, coaches and those who help at fundraising events and competitions.
■■ SAVE THE DATE: Teaming Up For Kids Luncheon, March 1, 2012, at the Arizona Biltmore in Phoenix. ■■ Independent Living & Life Skills and other collaborative programs ■■
help serve a greater number of girls and young women and extend the mission of Florence Crittenton further into the community. Since 1961, a resale shop has helped fund programs and services offered by Florence Crittenton. Originally called the Crittenton Thrift Shop, Flo’s on 7th is located at 4116 N. 7th Avenue in Phoenix.
Since it opened more than a century ago, Florence Crittenton has striven to provide safety, hope and opportunity to every girl whose life the nonprofit organization touches. Florence Crittenton offers a comprehensive program designed to help atrisk girls from 10 to 21 overcome issues of abuse, neglect, teen pregnancy and parenting challenges, and behavioral and/or mental health problems. Currently, 118 paid staff members and approximately 650 volunteers help keep the organization running smoothly. According to interim chief executive officer Herb Paine, Florence Crittenton has a budget for fiscal year 2012 of approximately $9.5 million. “The main sources of funding are government grants, corporation/ foundation grants and individual donations,” he says. “Of the fiscal year 2012 budget, 60 percent is program revenue and 40 percent is community support.” While 76 percent of expenditures goes to staff salaries and benefits, Paine notes that “it is this staff that delivers the therapeutic and transitional services. Thus, 74 percent of our expenses are dedicated to these critical programs.” The nonprofit also runs the Girls Leadership Academy of Arizona, the first public, all-girl high school in the state. The charter school serves grades 9-12. Florence Crittenton flocrit.org
In business to do good for the community, nonprofits enrich the lives of those who contribute as well as those who receive. In Business Magazine showcases two nonprofits in each issue, focusing on their business organization and spotlighting an upcoming fundraising event.
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Photos: Special Olympics Arizona (top), Florence Crittenton (bottom)
Florence Crittenton: Providing Help and Hope to At-Risk Young Women
O n t h e Ag e n D a
A listing of Greater Phoenix business organizations and their events. Visit www.inbusinessmag.com for an expanded monthly calendar of educational, networking and special business events.
City of Phoenix and APS
GoGreen ’11 Phoenix Tues., Nov. 15 — 7:30a – 5:00p GoGreen ’11 is coming to the Phoenix Convention Center Nov. 15 and will feature 50 business leaders, who have had success going green, sharing techniques on how to make a business more sustainable. A networking session for attendees will take place after the conference. Due to drought conditions and an increasing demand for water in the Phoenix area, water efficiency and conservation will be the key topic at the conference. Al Halvorsen, senior director of sustainability at Frito-Lay North America, will reveal how he has aggressively pursued efficient water management for his business during his keynote address. Halvorsen measures his business’ water efficiency with report cards and has challenged Frito-Lay’s North American production line to meet lofty waterconservation expectations. Halvorsen says reducing water consumption 45 percent since 1999 has yielded positive results for Frito-Lay. The company has significantly decreased the amount it spends to bring water in and out of its systems and plants and is also “saving that water for future generations,” he says. He states that water consumption is profitable and contributes daily to the bottom line. Registration is $125 for one full-day pass. The price drops to $100 when two or more full-day passes are purchased at the same time. Special rates are available to nonprofits, community partners and students. —Brett Maxwell GoGreen ’11 Phoenix phoenix.gogreenconference.net
Scottsdale Area Chamber of Commerce
Tues., Nov. 29 — 11:30a – 1:30p The Scottsdale Area Chamber of Commerce will honor its members who have achieved business excellence during the 26th annual Sterling Awards Luncheon at the Chaparral Suites Resort Scottsdale. The Chamber, which will be celebrating its 65th anniversary during the luncheon, has selected three finalists for each of the four different categories that it will be honoring during the ceremony: Micro Business, Small Business, Big Business and Non-Profit. “The Scottsdale Area Chamber of Commerce Sterling Awards is the Valley’s premier business awards luncheon,” says Rick Kidder, president and CEO of the Chamber. “Honorees in four categories vie for the Sterling Award, representing excellence in business and community stewardship. For 26 years, the Chamber has recognized excellence.” The 12 finalists survived a rigorous application, judging and selection process. Four teams, each with six judges, reviewed all applications and narrowed the field down to three finalists for each of the categories. The judging teams visited each of the finalists to conduct personal interviews and get an inside view of how the businesses operate. Each judge then granted points based on how well the business fit the award criteria. The results have been kept secret — even from the finalists — and the Chamber will announce the winners during the awards ceremony. The Chamber will honor all 12 finalists during the luncheon, but only the top one in each category will win the coveted Sterling Award. —Brett Maxwell Scottsdale Area Chamber of Commerce scottsdalechamber.com
Notable Dates This Month Fri., Nov. 11 Veterans Day Thurs., Nov. 24 Thanksgiving Agenda events are submitted by the organizations and are subject to change. Please check with the organization to ensure accuracy. See more events online at www.inbusinessmag.com.
In B u s i n e s s M a g a z i n e
Ag e n d a
AHWATUKEE FOOTHILLS CHAMBER OF COMMERCE Women in Business Gala Sat., Nov. 5 6:30p – 11:00p
Celebrating the Ahwatukee Chamber’s “Business Woman of the Year.” Black tie optional. $65 Lexus of Chandler 7430 W. Orchid Ln., Chandler ahwatukeechamber.com
Thurs., Nov. 10 Appointments start at 9:00a
One-on-one business counseling. Free; appointment required Ahwatukee Foothills Chamber of Commerce 3840 E. Ray Rd., Phoenix (480) 753-7676
ARIZONA CHAMBER OF COMMERCE AND INDUSTRY Thunderbird Global Business Dialogue
Thurs., Nov. 10 & Fri. Nov., 11 Both days start at 8:00a
International business leaders and NGO leaders from top organizations converge for high-level discussions around the theme of “Redefining Global Leadership.” Thunderbird Alumni: $595; nonalumni: $795 Thunderbird School of Global Management 1 Global Pl., Glendale thunderbird.edu/dialogue
ARIZONA HISPANIC CHAMBER OF COMMERCE Business Empowerment Series / Hispanic Women’s Alliance
Discover proven tactics on how to best use email to reach your audience, forge a connection, and drive action! Free West Maricopa Association of Realtors 9001 W. Union Hills Dr., Peoria asba.com/events
Social Media Marketing Made Simple Fri., Nov. 4 12:30p – 2:00p
Find out how you can use social media to quickly build buzz for your organization and expand your audience. Free West Maricopa Association of Realtors 9001 W. Union Hills Dr., Peoria asba.com/events
ASBA’s Creating Your Effective Networking Commercial Tues., Nov. 8 2:00p – 3:00p
Get customized pointers on ways you can develop an effective 30-second networking commercial in this handon workshop. Put your commercial to the test right away by staying for the Fast & Curious Speed Networking(TM) immediately following the workshop. Facilitated by Mike Leeds, Pro Sales Coaching. Members: free; non-members: $10 ASBA’s Business Education Center 4600 E. Washington St., Phoenix asba.com/events
ARIZONA TECHNOLOGY COUNCIL Council Connect: How to Use QR Codes and SMS to Increase Your Sales Wed., Nov. 2 7:30a – 9:30a
Members: $10; non-members: $20; students: $5 Arizona Biltmore 2400 E. Missouri Ave., Phoenix azhcc.com
Learn to use QR Codes and SMS messaging as well as how to implement new marketing tactics. Includes breakfast. Presented by GottyCode Members: $15; non-members: $25 ASU SkySong 1475 N. Scottsdale Rd., Scottsdale aztechcouncil.org
Minority Enterprise Development Week Awards
2011 Governor’s Celebration of Innovation: Arizona Rising
Fri., Nov. 18 12:30p – 2:00p
Fri., Nov. 18 7:30a – 10:00a
$75 Arizona Biltmore 2400 E. Missouri Ave., Phoenix azhcc.com
ARIZONA SMALL BUSINESS ASSOCIATION The Power of Email Marketing Fri., Nov. 4 10:00a – 11:30a
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Thur., Nov. 17 3:00p – 9:00p
Annual awards gala and expo that honors the state’s technology leaders and innovators; includes dinner. Members: $150; non-members: $200 Phoenix Convention Center 100 N. Third St., North Building, Phoenix aztechcouncil.org
ASSOCIATION FOR CORPORATE GROWTH
SkySong 1475 N. Scottsdale Rd., Scottsdale (602) 254-5521
Chamber Institute: Maximize Your LinkedIn Connections
Tues., Nov. 8 7:00a – 9:00a
Featuring Donald Colvin, executive vice president & CFO of ON Semiconductor. Members and sponsors: $59; nonmembers: $79 Arizona Biltmore Resort & Spa 2400 E. Missouri Ave., Phoenix acg.org/arizona
CENTRAL PHOENIX WOMEN Breakfast
Mon., Nov. 21 7:30a – 9:00a
Jackie Norton will present the leadership topic “Building Partnerships and Collaborations to Improve Education in Arizona.” $75 The Ritz-Carlton, Phoenix 2401 E Camelback Rd, Phoenix centralphoenixwomen.org
ECONOMIC CLUB OF PHOENIX Luncheon
Thurs., Nov. 10 11:30a – 1:30p
Featured: Chris Cookson, president of Sony Pictures Technologies. Members: fee varies with membership; non-members: $75; advance registration is required. Sheraton Phoenix Downtown 340 N. 3rd St., Phoenix wpcarey.asu.edu/economic-club
GREATER PHOENIX CHAMBER OF COMMERCE Professional Women’s Roundtable: Business Etiquette – Outclass the Competition Tues., Nov. 1 11:30a – 1:00p
In today’s fiercely competitive business arena, the benefits of etiquette intelligence will distinguish you from your competition. Speaker: Marla Harr, professional development consultant, Business Etiquette International. Free Greater Phoenix Chamber of Commerce 201 N. Central Ave., Phoenix (602) 495-6479
Valley Young Professionals: How to Create Your Entrepreneurial Passion Tues., Nov. 8 7:30a – 9:00a
Representing a variety of industries, panel presenters include Sean Seitz with American Solar, David Anderson with Off Madison Ave, Pam Gaber with Gabriel’s Angels and Shaun Breese with Urban Cookies. Members: free; non-members: $20
Tues., Nov. 15 11:30a – 1:00p
Join us as we host Donovan Hardenbrook, president of Leap Innovation, a consulting firm that helps companies improve their innovation using best practices. This is an interactive workshop, so please bring your laptops. WiFi will be provided. Free Greater Phoenix Chamber of Commerce 201 N. Central Ave., Phoenix (602) 495-6479
MESA CHAMBER OF COMMERCE Aviation Fascination-Wings of the East Valley Thurs., Nov. 17 4:00p – 7:00p
An evening of Aviation Fascination — Wings of the East Valley. Featuring Aircraft on static display and a wide variety of food vendors! Free Commemorative Air Force Arizona Wing Aircraft Museum 2017 N. Greenfield Rd., Mesa mesachamber.org
NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS NAWBO University Wed., Nov. 9 9:30a – 11:00a
Marketing: “To Niche or Not to Niche,” featuring Nancy Sanders, author and business owner. Members: free; non-members: $30; RSVP by Nov. 4 Phoenix Country Club 2901 N. 7th St., Phoenix nawbophx.org
NORTH SCOTTSDALE CHAMBER OF COMMERCE Business Resource Lunch Wed., Nov. 9 11:30a – 1:00p
Enjoy great food and networking in a casual business atmosphere. Guest Speaker: Brent DeRaad, Scottsdale CVB. Members: $15; guests: $25 Location TBA northscottsdalechamber.org
PEORIA CHAMBER OF COMMERCE Golf Tournament — 3rd Annual Fri., Nov. 11 7:00a: registration; shotgun start: 8:00a
Format: four person scramble. Fundraiser for the Peoria Chamber of Commerce. Single Player: $105; foursome: $345 Legend at Arrowhead 21027 N. 67th Ave., Glendale peoriachamber.com
PHOENIX BLACK CHAMBER OF COMMERCE Professional Networking Fall Expo Sat., Nov. 5 10:00a – 3:00p
Conscious Thinkers is designed to create positive dialogue to find out what we can do to bring about togetherness and promote unity within our communities. $5 Wyndham Phoenix 50 E. Adams St., Phoenix email@example.com
Black Tie Affair Student Fundraiser Sat., Nov. 12 6:00p – midnight
Maricopa Council on Black American Affairs presents the 6th annual “Black Tie Student Fundraiser” (Dinner, Dancing, Silent Auction). $65 Hyatt Regency 122 N. 2nd St., Phoenix phoenixblackchamber.com
City of Phoenix Business Certification Program Thurs., Nov. 17 4:00p – 5:00p
Learn more about the City of Phoenix business certification programs and how they can provide opportunities for small business economic growth. Free Washington Activity Center 2240 W. Citrus Way, Phoenix phoenixblackchamber.com
SCOTTSDALE AREA CHAMBER OF Commerce Airpark Forum — Connecting the Airpark to Become More Profitable Wed., Nov. 9 7:30 – 9:30 morning or night?
A variety of panelists will lead an interactive discussion on the benefits of connecting and creating a vibrant Airpark Hub. Members: $20; guests: $30; advance registration required Xona Resort 7677 E. Princess Blvd., Scottsdale (480) 355-2704
the organization by celebrating the people and companies that make our community a great place to live, work and play. $75 Chaparral Suites Resort Scottsdale 5001 N. Scottsdale Rd., Scottsdale scottsdalechamber.com
and Insight Bowl, addresses the Tempe Chamber this month. Sponsored by SRP. Members: $25; non-members: $35 Location TBD tempechamber.org
SURPRISE REGIONAL CHAMBER OF COMMERCE
Spirit of Philanthropy Luncheon
Nx Level Entrepeneurial Training Seminar
We will introduce our 2012 Philanthropy Partners. $35 SKYE Restaurant 16844 Arrowhead Fountain Center Dr., Peoria westvalleywomen.org
Tues., Nov. 1 4:00p – 7:00p
NxLeveL is an SBDC signature course designed to provide hands-on, common sense skills that help people start and grow a business. Cost?; advance registration required Surprise Regional Chamber of Commerce 16126 N. Civic Center Plaza, Surprise surpriseregionalchamber.com
Sam's Club Networking Event Thurs., Nov. 17 7:30a – 9:00a
Networking Group is sponsored by Sam's Club and supported by the Surprise Regional Chamber. Bring those door prizes and business cards. Free Sam’s Club 16573 W. Bell Rd., Surprise surpriseregionalchamber.com
TEMPE CHAMBER OF COMMERCE State of the City Thurs., Nov. 10 7:00a – 9:00a
The Tempe Chamber in conjunction with the City of Tempe is pleased to present Mayor Hugh Hallman’s State of the City Address. Members: $50; non-members: $70; advance RSVP required The Buttes, A Marriott Resort 2000 Westcourt Way, Tempe tempechamber.org
Tues., Nov. 1 11:30a – 1:00p
WOMEN OF SCOTTSDALE 13th Anniversary Luncheon Fri., Nov. 18 11:30a – 1:00p
“Spirit of Scottsdale.” $35 The Westin Kierland Resort and Spa 6902 E. Greenway Pkwy., Scottsdale womenofscottsdale.org
BUSINESS EVENTS Business Professionals Breakfast Thurs., Nov. 10 8:30a – 10:00a
Come prepared with your questions, as this will be an open format for you to get the answers pertaining to your business or industry. Starbucks coffee and a continental breakfast will be served. Free Scottsdale Microsoft Store 7014 E. Camelback Rd., Scottsdale firstname.lastname@example.org
John C. Maxwell Leadership Workshop: “Everyone Communicates, Few Connects” Mon. Nov. 14 8:00a – 10:00a
Leap Innovation Principal Donovan Hardenbrook is a certified coach, teacher and speaker with The John Maxwell Team. He will educate participants on Maxwell’s proven principles and practices of connecting. Hosted by Leap Innovation. $49; registration deadline is Nov. 11 ASU’s SkySong 1475 N. Scottsdale Rd., Scottsdale (480) 264-9009
AZ Entrepreneurship Conference — AZEC 11 Nov. 16 Registration: 7:30a; Program: 8:00a – 7:00p
Exchange ideas, share successes, and promote economic recovery the ‘old fashioned way’ through partnerships, innovation and collaboration. $150; students: $99 Desert Willow Conference Center 4340 East Cotton Center Blvd., Phoenix azentrepreneurship.com
The Technical Edge: Networking for Real Estate Professionals Mon., Nov. 28 4:00p – 5:30p
Enjoy refreshments while mixing and sharing ideas and leads with other real estate professionals. Free Scottsdale Microsoft Store 7014 E. Camelback Rd., Scottsdale email@example.com
Women in Business Breakfast Social Tues., Nov. 29 8:30a – 10:00a
Please join us for refreshments and a valuable opportunity to mingle and connect with local female business professionals. Free Scottsdale Microsoft Store 7014 E. Camelback Rd., Scottsdale firstname.lastname@example.org
Business Before Hours Tues., Nov. 15 7:30a – 8:30a
Bring brochures and business cards and be ready to give a 30-second commercial about yourself or your business. A light breakfast is provided. Members: free; non-members: $7 Lamson College 875 W. Elliot Rd., Tempe tempechamber.org
26th Annual Sterling Awards Luncheon
Hot Topics and Lunch: Doing Business with the Bowl Games
As the Chamber’s marquee event, the Sterling Awards embody the spirit of
Robert Shelton, newly appointed executive director of the Fiesta Bowl
Tues., Nov. 29 11:30a – 1:30p
WEST VALLEY WOMEN
Ag e n d a
Thurs., Nov. 17 11:30a – 1:00p
More events listed by date online.
Please confirm, as dates & times are subject to change.
In B u s i n e s s M a g a z i n e
Series on Branding
Breathe Life into Your Brand Your message is the magic by Kathy Heasley Everyone has a favorite movie. Star Wars? Titanic? Schindler’s List? The Hang Over? You probably have at least one or two movies you’ll stop and watch every time they pop up on HBO. Is it the actors who make these movies winners? The special effects that draw us in? The directing that keeps us coming back? Actually, it’s none of those things; it’s something much more basic. In this third article in the branding education series, you’ll learn why some brands, just like some movies, draw you in every time. Every great movie starts with a great screenplay. Think about it — a producer or director would never dream of grabbing a few camera guys, a couple actors and some props and heading to a location to shoot without knowing what it is they are trying to portray. But every day, businesses do just that with their brands. They dive in head first and design their logos, develop their websites, create their service models and build systems — in essence, shoot their movies without ever developing, deciding and honing their own company’s “screenplay,” or message. A rich message is magic in a business, and that’s why message is the second stage in the Heart & Mind® Branding process. Unless you translate the heart of your company into words first, you’ll never be able to bring it to life through your promise or your experience — the two words that, when combined, define the movie that is your brand. Too many companies miss this vital step. Even if they get the heart right within their
company, they discount the importance of carefully selecting the words and bringing the heart alive through them. They spend the bulk of their time trying to figure out their brand in terms of images. Simply stated, your words must drive images; otherwise, there will be disconnects. A logo alone is not enough to align a company. The logo has to mean something, and that something is the heart communicated through the message. Beyond the Value Proposition: Foundational Messaging For those of you who think you have messaging covered because you have a value proposition, guess again. That’s business school circa 1985, and a value proposition isn’t anywhere near deep enough to fully connect with anyone in today’s hyper-competitive world. Value is something, but it is far from everything. Foundational Messaging replaces the value proposition because it goes far beyond communicating features and benefits. It connects to the consumer emotionally, at the basic human needs level, which is how we make buying decisions. Furthermore, because it is based on what makes your brand genuine, meaningful and different, it is very difficult for competitors to steal or surpass. How many times have you seen dull value propositions like this: At ABC company, we are dedicated to serving customer needs with superior quality and a commitment to excellence. Our passionate
Heart & Mind Branding — the Education Series The “Heart & Mind Branding” series takes business owners through the steps to consciously address improvements to their company’s success by implementing an integrated approach to branding. In Business Magazine presents the six-part series:
Intro Sept. 2011
employees are available 24/7 to answer your questions and are knowledgeable in all areas of our products and service. Our guarantee ensures safety and security. This is the majority of business websites. To the reader, this message sounds like Charlie Brown’s parents. “Mwaa mwa mwaa mwa …” No one is listening because a message like this is talking at readers, not connecting with them. It is cold and corporate; it is all mind and no heart. What if, instead, the same, admittedly dry, information was written this way? Better materials? You got it. More service? It’s yours. Access when you want it? Just call. That’s ABC company. Your partner, your friend and your personal expert. Guaranteed. Notice how even a mundane message takes on new life when empathy and understanding of the heart are infused into the delivery. Imagine what your own brand could be once real heart and real purpose are infused into your messages. Foundational Messaging breathes life into your brand, gives it a pulse and allows it to thrive. Take the Messaging Challenge Take a look at your own company and lend an ear. Ask yourself, “Are our words helping us or harming us? Are our words mind-based or heart-based? Do they simply inform or do they inspire?” Think in terms of what you write and what you say. If you’re not liking what you are seeing or hearing, it’s time to do something about it — now, before the cameras roll. Kathy Heasley is founder and principal of HEASLEY&PARTNERS, Inc., a branding company that helps organizations grow and prosper. She’s
To reference published segments, please access the archived issue on the In Business Magazine website, www.inbusinessmag.com.
N o v e m b e r 2011
the creator of Heart & Mind® Branding, a Rich Dad Advisor, author of multiple books and CDs, and international marketing and communications coach.
“We must view education as an investment, not an expense.” SHELLEY ESQUE Vice President, Intel
The education we provide for Arizona’s children will determine the kind of future we all enjoy. Arizona employers need a highly skilled, talented workforce to diversify our economy, increase job opportunities and stay competitive.That requires a stronger education system that begins at birth and continues through career. By investing time, talent and money to improve education today, we better position Arizona for long-term success. In the end, we all benefit. Education is everyone’s business. Make it your priority. Visit ExpectMoreArizona.org.
Series on Growing Revenues
Compelled to Sell: It’s a Process by Mike Toney
When you think of a salesperson, what description comes to mind? I typically hear “pushy,” “liar,” “used-car guy” and “plaid jackets” — even from people in that profession. If you have a sales team, do you ask them to prospect? If yes, do you and your team take cold calls from others? Most likely, you have gatekeepers and voicemail keeping the “pesky” salesperson at bay. Well, so do your prospects! This duplicity has always bewildered me! We have a standing rule in my business to honor all calls, even from salespeople. My rule number 1 is, “How you buy is how you sell and how you sell is how you buy.” If you don’t take cold calls because they are a waste of time, you probably don’t make cold calls for the same reason. I have learned a tremendous amount from sales cold calls I’ve taken that have been properly executed. Conversely, I have seen what it costs a company when an amateur plays the role — the damage to the brand from the judgment I make about the company calling me and wasting my time. So What Is Selling, Really? When hiring salespeople for my clients, the first question I ask is, “How do you define ‘sales’?” And the top five answers are “finding needs,” “convincing people to buy,” “building trust,” “educating” and “providing value.” This is what I call distortion. When people do not have a clear understanding of the cause and effect of creating results, they create these explanations and justifications. If we think about communication between our company and our prospective clients, it really has the same structures, tactics and methods we use when talking to our employees, spouse or children. Everyone is struggling to get someone’s attention, transfer knowledge or create action that is different or in alignment with the current state. So rule number 2 is, “Everyone is selling all the time.” If I convince my wife to see a movie I want to see, that’s a sale. If my grandson wants Oct. 2011: Sales Is Not a Bad Word!
N o v e m b e r 2011
Nov. 2011: Compelled to Sell: It's a Process
new pieces of train track for his train set, he sells me on the idea of getting them for him. Someone is buying and someone is selling in every communication. So the definition of successful sales I would like you to consider is “compelling communication that creates a new action.” If you are at the beginning of your sales process, you must “compel” your prospect to take time he wasn’t planning to spend to listen to you (sale complete, step 1). From there you need to communicate in a way that “compels” him to meet with you (sale complete, step 2). We aren’t selling a product, we are selling our sales process — and all you need to do is compel your prospect to the next step of that process. If there are 10 steps in the sales process, don’t try to push someone from step 3 to step 10 in one move, as this creates defensive reactions from people, ultimately losing the prospect. On the other hand, if you get all 10 steps completed, then the sale was made, the relationship was created and trust was built. The relationship and the trust are byproducts of the completion of the sales process. Let’s apply this to keeping clients. Everyone knows that acquiring a new client is many times more expensive than keeping an existing client. Dec. 2011: Silos and Structures of Revenue and Sales
Jan. 2012: Systems and Correct Measures of the Sales
Yet what sales process do we have for client retention or account management? Based on the above definition of sales, we need to “compel” clients to stay with us. One of the biggest mistakes people make is not developing a postselling process — a compelling communication that continues to build the relationship from year 1 to year 2, from buying two items per month to four, or from using your product 20 percent of the time to 50 percent. Your homework for this week is to start watching your communications with customers, vendors and peers to determine how people are trying to compel or sell you. Then evaluate your sales process to identify how your team is compelling prospects from one step to the next and, ultimately, the close. Conquest Training Systems, Inc. conquesttraining.com
Michael Toney, CEO of Conquest Training Systems, drew from20-plus years of education and experience in sales and sales training — including consulting with TRW, IBM, Allied Signal and other Fortune 50 corporations — to develop the dynamic program of leadership and consultative and strategic sales techniques.
Feb. 2012: Building Your Sales Team Correctly
Mar. 2012: Strengthening the Bench
We Value What We Own by Mike Hunter
Land Rover Evoque: Rugged Luxury Network Scanners: Downsized Paper Is So Passé In a time when downsizing is common practice, the Indianowned, British-built car company now offers an option. The new Land Rover Evoque is a smaller, more fuel-efficient SUV for those who are looking for luxury, want to impress those clients and save . . . With a base price between $44,000 and $54,000, the Evoque boasts an estimated 18 mpg city / 28 mpg highway. Notably smaller than the Range Rover or Range Rover Sport, this new model is available in both a coupe and 4-door version. Refined design is what you can expect, but a sense of simplicity has emerged with this model. The dashboard is simpler and includes a 5-inch, color LCD screen mounted behind the steering wheel providing drive information. An 8-inch screen is located center-dash, providing a GPS information system, a high-end sound system with hard-disk jukebox, AM/FM/HD/Sirius tuner, single CD player, dual-device Bluetooth audio streaming and iPod connection via USB. Under the hood is an efficient and powerful 2.0-liter, inline, four-cylinder engine with twin turbochargers and direct-gas injection — giving it impressive power. Six-speed automatic transmission and a full-time four-wheel drive system make for notably reliable traction and an impressive ride. The “Dynamic” edition includes many upgrades that improve suspension and performance above all. According to Range Rover, the Evoque will do 0-60 mph in 7.1 seconds and has a top speed of 135 mph. This compact crossover SUV is small but will “fit well.” Interior styling is sporty, with attractive dual-stitched leather seats and “acceptable” legroom for most adults (both front and back). Amenities are smart, and gauges and upgrades will give the driver and passengers the feeling of being in a luxury vehicle. A certain added benefit if a smaller SUV seems to not be for you is the standard panoramic-view rooftop, which provides a light, airy feeling in the cabin.
Photos: Land Rover USA (left); Fujitsu, Canon, Xerox (right, top to bottom)
2012 Land Rover Evoque
City MPG . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Hwy MPG. . . . . . . . . . . . . . . . . . . . . . . . . . 28 0-60 MPH. . . . . . . . . . . . . . . . . . . . 7.1 sec Transmission. . . . . . . 6-speed manual MSRP. . . . . . . . . . . $43,995 – $52,895
Land Rover landrover.com
No, “scanners” does not refer to the 1981 horror film. Scanners are a useful and ecofriendly tool for any office. Nowadays, if you are using a fax, you are passé. Network scanners work with multiple users to securely scan documents and manage them for each user with one machine. E-mail scanned documents with ease or sign and return that important document. Here are some top picks. ScanSnap N1800 by Fujitsu With functionality to improve productivity and scanning at 20-plus pages per minute, this scanner has multifunction capability that includes scan to folder/ftp, e-mail, network fax or printer. A large 8.4inch touch-screen display makes using this machine as easy as following the instructions. MSRP: $1,566.65 imageFORMULA ScanFront 220eP This scanner is powered by eCopy ShareScan, a program that integrates scanned documents into business applications that support automated workflows. Functions match those of the Fujitsu above, but this scanner from Canon can manage more pages per minute (24), although at a lower resolution. MSRP: $1,847.99 Xerox DocuMate 3920 Data entry is easy and fast with Xerox’s network scanner. Users can scan both sides of a document to e-mail, a network folder, fax recipient, FTP location or printer through the large 7-inch, color LCD touch screen that clearly displays all operation modes. MSRP: $1,495 Fujitsu fujitsu.com Canon canon.com Xerox xerox.com
In B u s i n e s s M a g a z i n e
Meals that Matter
Season’s Private Dining It is that time of year when offices go out to dine together, clients are invited for a thank-you or friends cheer a year of successes — it is time to take advantage of that private dining room. Here are some favorites.
Olive & Ivy — Scottsdale
One of Sam Fox’s original hot spots, Olive & Ivy is Italian fare that promises to impress both in flavors and style. The open-air dining space off the main dining room and adjacent to the terrace is all windows overlooking the Scottsdale Waterfront and has room for 12. 7135 E. Camelback Road (480) 751-2200 foxrc.com
Coup des Tartes: Get Taken Away by Mike Hunter
A lunch that will take you to a place as far away as Paris is Coup des Tartes. Nestled in what was originally a home, this “boutique” hot spot near Camelback Road and 16th Street should be a regular on your list. The lunch menu is light, if you want it to be; or rich and heavy, if that is more your fare. The Brie & Ham baguette is French, as you may know it on the streets of Paris. Complete with Dijon mustard, this is a delight. Try the French Dip with pommes frites for an authentic treat. Salads are a midday must and Coup des Tartes is your headquarters. The Fresh Salmon Nicoise Salad is made with oven-roasted salmon atop mixed greens with roasted potatoes, asparagus, tomatoes and a hard-cooked egg dressed in a Dijon vinaigrette. The Taleggio salad is a refreshing mix of organic greens, raspberries, apples, red onions, sugared pecans and a prickly-pear vinaigrette. The ambience is eclectic, a bistro-style that enhances the “take me away” quality of this famed eatery. Hardwood floors, well-lit rooms and a unique “old Phoenix” feel mean this Central Phoenix landmark should not be missed. Restaurant innovator Ron Pacione has created a lunchtime experience that is perfect for that special client, prospect or colleague. “Businesspeople love lunch here because it is upscale dining in a relaxed, private atmosphere,” says Pacioni.
A Washington, D.C., classic with two locations in the area make The Capital Grille your private dining pick. Club elegance and impeccable service with the regal charm and meats to impress staff, clients or close associates will make your event a success. Rich mahogany walls, brass appointments and portraits of prominent local citizens will ensure a board-level event. For eight to 80. 16489 N. Scottsdale Road (480) 348-1700 2502 E. Camelback Road (602) 952-8900 thecapitalgrille.com
El Chorro — Paradise Valley (Pictured)
The Arizona landmark is all about local charm and great food. This newly remodeled standard is anything but conventional. The authentic attention to detail and the establishment’s history are prevalent throughout. The dining rooms are appointed for parties of eight to 110. Dine amid Arizona’s history updated to world-class style, service and food. 5550 E. Lincoln Drive (480) 948-5170 elchorro.com
Coup des Tartes 4626 N. 16th Street • (602) 212-1082 • nicetartes.com
N o v e m b e r 2011
Photos: Coup des Tartes (top), El Chorro (bottom)
The Capital Grille — Phoenix & Scottsdale
Lending Guide 2012
Major Banks Community Banks Credit Unions Lending Institutions & Resources
Compiled by Brett Maxwell
Grow your business with an SBA loan
Work with the #1 SBA lender in the nation* At Wells Fargo we’re committed to helping small businesses succeed. Our SBA loans can help you: • Acquire a new business • Expand your existing business • Finance the purchase of real estate and equipment • Meet capital needs Plus, customized terms and payment options provide flexible financing options.
Make the most out of your business — contact us today
• Stop by a Wells Fargo location to talk with a banker • Call 1-800-545-0670 (Monday through Friday, 7:00 a.m. to 7:00 p.m., Central Time) • Visit wellsfargo.com/biz
* Wells Fargo is the #1 SBA lender by dollars according to the U.S. Small Business Administration as of September 30, 2010. All loans are subject to credit approval. For discussion purposes only. © 2011 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. (668702_03535) 668702_03535 7.875x10.375 4c.indd 1
10/25/11 3:29 PM
Business Lending Guide 2012
Arizona Is Open for Business Congratulations to In Business Magazine on this first annual lending guide. In Business Magazine recognizes the importance of available capital to economic growth, and I commend the editorial staff in providing this information to the readers as a public service. With nearly $85 billion in deposits, the Arizona banking industry has the resources and commitment to support the financial needs of individuals, businesses and all levels of government. In fact, Arizona banks distributed more than $11 billion in new and renewed consumer loans and more than $5.9 billion in new and renewed commercial loans in 2010 alone. As an industry, the banking sector in this state has a pretty impressive economic footprint as well. Arizona banks, as businesses, employ more than 40,000 Arizonans across the state working in more than 1,300 banking locations in each of Arizona’s 15 counties. As lenders, Arizona banks stimulate the economy by lending to businesses that will, among other things, use the capital to hire additional employees and purchase Paul Hickman is the president and CEO of Arizona Bankers Association, the trade association for the banking industry in Arizona. AzBA represents banks of all sizes and business niches in the state, from the largest, global actors to the smallest, one-branch, rural community bank. Hickman acts as the chief spokesman and advocate for the industry in Arizona.
facilities and equipment. Banks also lend to consumers who will buy goods and services, and finance purchases of homes, education, cars and major appliances. Additionally, banks help state and local governments fund a variety of public improvements like schools, roads, water and sewer, and public health facilities. As many In Business Magazine readers know, the economic recession and slow recovery we are currently experiencing has reduced loan demand. This has had the expected effect on price, and now is a great time to seek financing for capital expansion. This lending guide is a palpable demonstration that Arizona is open for business and that we have a robust and dynamic banking sector ready, willing and able to lend. Thank you In Business Magazine for a wonderful job in aggregating and publishing this very valuable information.
Paul T. Hickman President & CEO • Arizona Bankers Association
About our Guide: Funding
is consistently among the top concerns shared by our readers. As part of our “Money” issue of In Business Magazine, our editorial staff has created the first annual Business Lending Guide. This guide is a listing of local lenders, contacts and resources that will assist business owners in finding lending opportunities. We contacted federally and statechartered banks, credit unions and selected other lenders and resources to provide information about the variety of loans or assistance programs they offer locally. This guide will be available online and through
our partner organizations through December 2012. Our list is compiled of institutions based here locally who responded to our questionnaire by press time. Please check the information, as contacts and phone numbers may change throughout the year. Many of the institutions have multiple locations throughout Arizona; this guide lists their main office in the Greater Phoenix area. To participate or advertise in our 2013 guide, please contact us at email@example.com or visit our website at www.inbusinessmag.com. © 2011 InMedia Company, LLC.
Lendingss Guid e 2012
Major Banks Community Banks Credit Union s Lending Ins titutions & Resources
d by Bre
In B u s i n e s s M a g a z i n e
Business Lending Guide 2012 Banks
Types of Loans/Services: revolving lines of credit, term loans, letters of credit, real estate, SBA loans
Alerus Bank 17045 N. Scottsdale Rd. Scottsdale, AZ 85255 Contact: Rob Schwister Phone: (480) 905-2407 Website: www.alerusfinancial.com Types of Loans/Services: SBA loans, term loans, lines of credit
Alliance Bank of Arizona 2701 E. Camelback Rd., Ste. 110 Phoenix, AZ 85016 Contact: Karen Goettl Phone: (602) 952-5400 Website: www.alliancebankofarizona.com Types of Loans/Services: commercial real estate, term loans, construction loans, residential construction, construction, equipment, letters of credit, SBA loans, revolving lines of credit, business vehicle
Arizona Bank & Trust 2036 E. Camelback Rd. Phoenix, AZ 85016 Contact: Troy Norris Phone: (480) 844-4558 Website: www.arizbank.com Types of Loans/Services: commercial loans, including lines of credit, equipment, real estate, construction
Arizona Business Bank 2600 N. Central Ave., Ste. 2000 Phoenix, AZ 85004 Contact: Toby Day Phone: (602) 240-2700 Website: www.azbizbank.com
Bank 1440 7010 E. Chauncey Ln., Ste. 120 Phoenix, AZ 85054 Contact: Mary Wells Phone: (623) 334-6047 Website: www.bank1440.com Types of Loans/Services: commercial term mortgages, business loans, construction loans
Bank of America, NA 201 E. Washington St. Phoenix, AZ 85004 Contact: Small Business Banking Phone: (888) 287-4637 Website: www.bankofamerica.com Types of Loans/Services: lines of credit, term loans, SBA lending
Bank of Arizona, NA 16767 N. Perimeter Dr. Scottsdale, AZ 85260 Contact: Business Banking Department Phone: (602) 808-5331 Website: www.bankofarizona.com Types of Loans/Services: revolving lines of credit, real-estate lines of credit, equipment or vehicle term loans, real-estate term loans, construction financing, equipment leasing, SBA loans
Bank of the West 9502 W. Van Buren St. Tolleson, AZ 85353 Contact: SBA Lending Department Phone: (866) 306-7254
Website: www.bankofthewest.com Types of Loans/Services: commercial lending, equipment financing, SBA loans, commercial real estate, lines of credit, construction, agricultural
Bankers Trust Co. 4742 N. 24th St., Ste. 165 Phoenix, AZ 85016 Contact: Patrick M. Joyce Phone: (602) 224-2025 Website: phx.bankerstrust.com Types of Loans/Services: commercial lending, commercial real-estate financing
BBVA Compass Bank 4010 E. Thomas Rd. Phoenix, AZ 85018 Contact: Romeo Zavala Phone: (602) 522-2580 Website: www.bbvacompass.com Types of Loans/Services: SBA loans, lines of credit, commercial real-estate lending, working capital financing, residential construction, energy lending, business leasing, business credit cards
BNC National Bank 8330 E. Hartford Dr. Scottsdale, AZ 85255 Contact: Scott Hupp Phone: (913) 647-7014 Website: www.bncbank.com Types of Loans/Services: revolving lines of credit for short-term operating needs, working capital loans, term loans for business equipment, commercial realestate loans, SBA loans, 504 commercial real-estate loans, business agricultural loans, letters of credit
Central Arizona Bank
Put the best face on the loan application Business owners seeking financing should have a written and welldocumented business and marketing plan. The plan should outline the strategy and tactics necessary to provide a return on investment that is able to cover the cost of financing. In addition, a applicants should outline their experience, years in business and successful track record operating a business as well as assets necessary to secure the loan. Financial statements are also required. These are standard requests for those seeking financing, and will vary depending on the type of business and the existing relationship a business may have with a lender. —Paul B. Stull Senior Vice President, Strategy & Brand • Arizona State Credit Union
N o v e m b e r 2011
7001 N. Scottsdale Rd., Ste. 1000 Scottsdale, AZ 85258 Contact: Dan Klenske Phone: (480) 596-0883 Website: www.centralarizonabank.com Types of Loans/Services: commercial term loans, commercial lines of credit, construction lines of credit, lease financing, corporate credit cards, agricultural loans
Comerica Bank 425 S. Mill Ave. Tempe, AZ 85282 Contact: Bob Willcoxson Phone: (480) 966-0849 Website: www.comerica.com Types of Loans/Services: commercial property loans, business lines of credit, business loans, credit cards
Commerce Bank of Arizona 4110 N. Scottsdale Rd., Ste. 120 Scottsdale, AZ 85251 Contact: Larry O’Malley Phone: (480) 253-7003 Website: www.commercebankaz.com Types of Loans/Services: business-related loans of all types
Are you looking to build a long-term banking relationship? Hometown Bank Experienced Bankers Decisions Made Locally Well Capitalized Good Liquidity We Do What is Right For the Customer
Enterprise Bank 3900 E. Camelback Rd., Ste. 180 Phoenix, AZ 85018 Contact: Mike Theile Phone: (602) 824-5700 Website: www.enterprisebank.com Types of Loans/Services: commercial loans, equipment, real estate, construction, SBA loans, lines of credit
James E. Christensen
First Fidelity Bank
President/CEO Office: 480-358-1000, ext. 205 Email: firstname.lastname@example.org
6232 N. 32nd St. Phoenix, AZ 85018 Phone: (602) 912-5555 Website: www.ffb.com Types of Loans/Services: revolving lines of credit, commercial real estate, residential real estate, equipment, SBA, oil and gas production loans, commercial leasing
NE Corner Power & Warner
First International Bank & Trust
See us for all your commercial lending needs!
6840 E. Indian School Rd. Scottsdale, AZ 85251 Contact: Craig Ealy Phone: (480) 946-2967 Website: www.firstintlbank.com Types of Loans/Services: agriculture, business, SBA
First Scottsdale Bank 15190 N. Hayden Rd. Scottsdale, AZ 85260 Contact: Ben Danner Phone: (480) 998-8408 Website: www.fnbscottsdale.com Types of Loans/Services: commercial lending, SBA
FirstBank 2525 E. Camelback Rd., Ste. 115 Phoenix, AZ 85016 Contact: Humphrey Shin Phone: (602) 667-6900 Website: www.efirstbank.com Types of Loans/Services: commercial real estate, construction, business first line of credit
Please contact me with any questions and for additional information:
Humphrey Shin Vice President FirstBank - Phoenix Metro Market 2525 East Camelback Road, Suite 115 Phoenix, Arizona 85016 602.381.7804 Member FDIC
efirstbank.com In B u s i n e s s M a g a z i n e
Business Lending Guide 2012
Great Western Bank
6860 E. Warner Rd. Mesa, AZ 85212 Contact: James L. Christensen Phone: (480) 358-1000 Website: www.gcbaz.com Types of Loans/Services: commercial lending
1721 N Arizona Ave., Ste. 1 Chandler, AZ 85225 Contact: David Telya Phone: (480) 917-0139 Website: www.greatwesternbank.com Types of Loans/Services: commercial and consumer loans
Gold Canyon Bank 6641 S. Kings Ranch Rd., Ste. 2 Gold Canyon, AZ 85118 Contact: Dan Govinsky Phone: (480) 474-2005 Website: www.goldcanyonbank.com Types of Loans/Services: business, personal, SBA
Goldwater Bank 7135 E. Camelback Rd., Ste. 201 Scottsdale, AZ 85251 Contact: Lori Abreu Phone: (480) 281-8190 Website: www.goldwaterbank.com Types of Loans/Services: business lending
Heritage Bank, N.A. 4222 E. Camelback Rd., Ste. J200 Phoenix, AZ 85018 Contact: Ward Hickey Phone: (602) 852-3462 Website: www.heritagebankaz.com Types of Loans/Services: SBA and conventional for commercial real estate, business acquisition, equipment and credit lines
JPMorgan Chase 201 N. Central Ave. Phoenix, AZ 85004 Contact: SBA Lending Department
Three areas for a business to consider to improve its chances of securing a loan — financials, projections and repayment Financials Have up-to-date and timely financial statements to include the last three years’ fiscal year-end and most recent interim period. It is imperative that the business owner and senior management have a thorough understanding of financial results, trends, significant events that have impacted performance, and ratios such as debt service coverage, leverage, working capital, receivable turn days, etc. The financial institution will expect management to be the expert and help them analyze the business from a financial perspective. If there is a loss, be prepared to explain why. Projections While the financials tell the story of where the business has been and where it is now, a set of well-thought-out projections with assumptions will tell the story of where management believes the company will go in the future. The more detail the better. Stress testing the projections is a plus. Repayment Financial institutions, when analyzing a loan, are all about the repayment sources. Collateral alone will not get you approval. Cash flow is king because most lenders are cash-flow driven in their repayment analysis. That is the typical primary repayment source, with collateral being the second. Generally, with collateral, the more liquid and stable, the better. —Kevin Lewis Division Executive, Business & Commercial Services Desert Schools Federal Credit Union
N o v e m b e r 2011
Phone: (888) 536-3722 Website: www.chase.com Types of Loans/Services: commercial lending, SBA lending
Johnson Bank Arizona 3131 E. Camelback Rd., Ste. 100 Phoenix, AZ 85016 Phone: (602) 381-2100 Website: www.johnsonbank.com Types of Loans/Services: lines of credit, commercial mortgages, equipment leasing, SBA loans
M&I Bank 1 E. Camelback Rd. Phoenix, AZ 85012 Contact: Greg Recker Phone: (602) 241-6529 Website: www.mibank.com Types of Loans/Services: SBA loans, commercial loans, lines of credit
Meridian Bank, NA 3550 N. Central Ave., Ste. 110 Phoenix, AZ 85012 Contact: Erik Frandsen Phone: (602) 274-7500 Website: www.meridianbank.com Types of Loans/Services: term/installment loans, business line of credit, SBA loans, commercial loans
Metro Phoenix Bank 4686 E. Van Buren St., Ste. 150 Phoenix, AZ 85008 Contact: Kevin O’Regan Phone: (602) 346-1800 Website: www.metrophoenixbank.com Types of Loans/Services: commercial lending
MidFirst Bank 3030 E. Camelback Rd. Phoenix, AZ 85016 Contact: Barb Bandura Phone: (602) 801-5000 Website: www.midfirst.com Types of Loans/Services: SBA loans, business express loans, business lines of credit, business term loans, commercial real-estate lending, business equipment lease financing
Mutual of Omaha Bank 9200 E. Pima Center Pkwy. Scottsdale, AZ 85258 Contact: Kevin Halloran Phone: (480) 458-2249 Website: www.mutualofomahabank.com
Types of Loans/Services: commercial, commercial real estate, SBA, mortgage, personal, energy and association lending
National Bank of Arizona 6001 N. 24th St. Phoenix, AZ 85016 Contact: Bruce Guest Phone: (602) 235-6000 Website: www.nbarizona.com Types of Loans/Services: small business, business, commercial, commercial real estate, consumer, residential real estate
Parkway Bank 11011 N. Tatum Blvd. Phoenix, AZ 85028 Contact: Spencer Campbell Phone: (602) 765-8501 Website: www.parkwaybank.com Types of Loans/Services: an array of conventional business loans as well as SBA financing
Pinnacle Bank 14287 N. 87th St., Ste. 123 Scottsdale, AZ 85260 Contact: Greg Thorell Phone: (480) 609-0055 Website: www.pinnaclebankaz.com Types of Loans/Services: lines of credit, equipment loans, term loans, real-estate construction loans, standby letters of credit, SBA loans
Republic Bank 909 E. Missouri Ave. Phoenix, AZ 85014 Contact: Ashley Mapes Phone: (602) 277-2500 Website: www.republicbankaz.com Types of Loans/Services: commercial loans and lines of credit, commercial real-estate loans, commercial construction loans, SBA loans
Sonoran Bank, N.A. 3877 N. 7th St., Ste. 150 Phoenix, AZ 85014 Contact: Frank Coumides Phone: (602) 332-7828 Website: www.sonorabank.com Types of Loans/Services: commercial loans to small and mid-size businesses for equipment, real estate and expansion
Stearns Bank Arizona, NA 9225 E. Shea Blvd., Scottsdale, AZ 85260
Contact: Bill Brindley Phone: (480) 391-5912 Website: www.stearnsbank.com Types of Loans/Services: SBA loans, commercial and construction lending, equipment finance and leasing, USDA rural development loans
Sunrise Bank of Arizona 3033 N. Central Ave. Phoenix, AZ 85012 Contact: Katherine Brandon Phone: (602) 522-3756 Website: www.sunrisebankofarizona.com Types of Loans/Services: commercial real-estate loans, lines of credit, equipment and term loans, SBA loans
Sunwest Bank 60 E. Rio Salado Pkwy. Tempe, AZ 85281 Contact: David Matthews Phone: (480) 366-6021 Website: www.sunwestbank.com Types of Loans/Services: commercial real estate, commercial and industrial
TCF Bank 11 S. McClintock Dr. Tempe, AZ 85281 Contact: Consumer Loans Department Phone: (800) 823-5363 Website: www.tcfbank.com Types of Loans/Services: working capital lines of credit, term loans, commercial real-estate loans, leasing, business credit cards
UMB Bank, NA 8800 E. Raintree Dr., Ste. 100 Scottsdale, AZ 85260 Contact: Robert Faver Phone: (480) 459-2153 Website: www.umb.com Types of Loans/Services: business real-estate loans, term loans, lines of credit, letters of credit, SBA loans, agriculture loans, capital purchase loans, leasing
US Bank 101 N. 1st Ave., Ste. 110 Phoenix, AZ 85003 Contact: SBA Division Administrative Office Phone: (800) 269-4309 Website: www.usbank.com Types of Loans/Services: SBA loans, lines of credit, equipment leasing, term loans, agricultural loans, quick credit, commercial real estate
What can a customer do to improve the chances of getting a loan? Besides having financial information in good order, a borrower who has future plans is more likely to get financing. This means having projections or a budget for the next 12-24 months and support for where the revenue growth is coming from. Is growth expected in more business from the same customers? New customers? New products? Geographic expansion? â€”Dean Rennell Regional President, Arizona Business Banking Wells Fargo
Wells Fargo Bank 100 W. Washington St. Phoenix, AZ 85003 Contact: Dean Rennell Phone: (602) 378-5723 Website: www.wellsfargo.com/biz Types of Loans/Services: business loans of all types, including real estate, lines of credit, equipment and SBA
West Valley National Bank 5635 N. Scottsdale Rd., Suite 150 Scottsdale, AZ 85250 Contact: Destin Simmons Phone: (623) 535-2487 Website: www.wvnb.net Types of Loans/Services: SBA 7(A), SBA 504, working capital, owner-occupied real estate, A/R lines of credit
Western National Bank 2525 E. Camelback Rd., Ste. 100 Phoenix, AZ 85016 Contact: Scott Stemm Phone: (602) 553-7444 Website: www.wnbank.com Types of Loans/Services: commercial lending, commercial real-estate financing, lines of credit, term loans, business credit cards, SBA loans
>> In B u s i n e s s M a g a z i n e
Business Lending Guide 2012 Credit Unions Arizona Central Credit Union
Desert Schools Federal Credit Union
2020 N. Central Ave., Ste. 100 Phoenix, AZ 85004 Contact: Todd Pearson Phone: (602) 264-6421 Website: www.azcentralcu.org Types of Loans/Services: SBA loans, commercial realestate loans, lines of credit, term loans
148 N. 48th St. Phoenix, AZ 85034 Contact: Herb Ramirez Phone: (602) 663-8674 Website: www.desertschools.org Types of Loans/Services: working capital financing, equipment loans, owner-occupied real estate, commercial real estate
Arizona State Credit Union
TruWest Credit Union
2355 W. Pinnacle Peak Rd. Phoenix, AZ 85027 Contact: Wendy Richardson Phone: (602) 467-4262 Website: www.azstcu.org Types of Loans/Services: term loans, SBA loans, working capital lines of credit, commercial real-estate mortgages, standby letters of credit, business vehicle loans, business credit cards
1345 W. Warner Rd. Tempe, AZ 85284 Contact: Daniel Desmond Phone: (480) 441-5900 Website: www.truwest.org Types of Loans/Services: business loans, secured and unsecured lines of credit, business credit cards, commercial real-estate lending, equipment financing
Credit Union West 2402 W. Grant St. Phoenix, AZ 85009 Contact: Business Service Center Phone: (602) 631-3200 Website: www.cuwest.org Types of Loans/Services: business loans
Selected Other Lenders & Resources ACCIÓN P.O. Box 41237 Tucson, AZ 85717 Phone: (520) 682-3648
There are several things customers can do to improve their chances of obtaining a loan. Do your research. Find out what a bank is going to ask for and obtain that information prior to talking with a loan officer. There is a typical list of information that banks ask for on a commercial loan. This includes three years’ tax returns (business and personal), updated financials, personal financial statement and a business plan. When a borrower is prepared, it gives the impression that the borrower has a grasp of the process. Understand and be prepared to discuss the weaknesses of the business. If the company had a down year, be prepared to explain why. Be thorough. Fill out all the documentation required. When forms are not filled out or inadvertently missing information, it tends to slow the process down significantly. Whether a loan closes in seven days or three months can come down to if the borrower provides the proper information and how detailed the information provided is. Be patient. Banks are under significant regulatory pressures to document and verify all the information provided. This tends to slow down the process and oftentimes the borrower may get irritated. Destin Simmons Chief Credit Officer • West Valley National Bank
N o v e m b e r 2011
Website: www.accionaz.org Types of Services: loans, lines of credit, management services, investment, governance
Arizona Commerce Authority 333 N. Central Ave., Ste. 1900 Phoenix, AZ 85004 Phone: (602) 845-1200 E-mail: email@example.com Website: www.azcommerce.com Types of Services: business-growing strategies, market research, licensing information, statewide resource information, workforce assistance
Arizona Loans for Assistive Technology Institute for Human Development University Affiliated Program Northern Arizona University 2400 N. Central, Ste. 300 Phoenix, AZ 85004 Phone: (602) 776-4670 Website: www.azlat.net Types of Services: loans for persons with disabilities to purchase assistive technology, training and technical assistance; equipment reutilization; Self Employment for Entrepreneurs with Disabilities program
City of Phoenix Expand Program 200 W. Washington St. Phoenix, AZ 85003 Phone: (602) 262-6005 Website: phoenix.gov/econdev Types of Services: assistance in finding loans for businesses, collateral reserve deposits
Community Development Financial Institution (CDFI) Fund 601 13th St., N.W., Ste. 200, S. Washington, DC 20005 Phone: (202) 622-8662 Website: www.cdfifund.gov Types of Services: credit, capital and financial services to underserved populations and communities in the United States
Industrial Development Authority (IDA) of Maricopa County c/o Maricopa County Administration Office 301 W. Jefferson St., 10th Floor Phoenix, AZ 85003 Phone: (602) 506-1888 Website: www.mcida.com Types of Services: conduit financing, project financing, manufacturing facility bonds
Neighborhood Economic Development Corporation (NEDCO) 635 E. Broadway Rd. Mesa, AZ 85204 Phone: (480) 833-9200 Ext. 117 Website: www.nedco-mesa.org Types of Services: alternative financing programs for new and start-up businesses, entrepreneur education, loan readiness assessment, business credit repair, loan application assistance
We Have the Authority to Make Decisions Quickly for Local Businesses We are experts in SBA 504 loans and SBA 7 A loans
Service Corps of Retired Executives (SCORE) 2828 N. Central Ave., Ste. 800 Phoenix, AZ 85004-1093 Phone: (602) 745-7200 Website: www.score.org Types of Services: resources, templates and tools to assist entrepreneurs in developing tools and plans
SBA — Small Business Administration (SBA) 2828 N. Central Ave., Ste. 800 Phoenix, AZ 85004-1093 Phone: (602) 745-7200 Website: www.sba.gov Types of Services: loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses
Small Business Development Center (SBDC) 2411 W. 14th St. Tempe, AZ 85281 Phone: (480) 731-8720 Website: www.azsbdc.net Types of Services: assistance for small businesses in every stage of development, SBA loan assistance, free one-on-one business counseling, workshops and training programs
Corporate Headquarters 12725 W. Indian school road, suite C-108 avondale, aZ 85392 phone: 623-536-9862 BuCkeye 111 e. Monroe avenue, suite 100 Buckeye, aZ 85326 phone: 623-535-2460
BANKING IS OUR HERITAGE
SBA & Conventional Loans at competitive rates. Let us know if we missed your lending institution this year. Contact us to be a part of our 2013 edition, which will publish in the November 2012 issue. firstname.lastname@example.org
Contact us 602.840.3400 The way relationship banking should be ™
www.HeritageBankAZ.com Phoenix • Tempe
In B u s i n e s s M a g a z i n e
A S A LOCA L BA N K TH E R E I S O N LY O N E TH I N G WE WA NT TO DO.
The Biltmore Bank of Arizona is the leading locally-owned and operated business bank in the state. We provide you direct access to key decision makers, experienced bankers and the financial capacity to meet your needs – so you can get down to business without giving up local service. Treasury Management | Commercial Lending | SBA Lending | Business Banking 5055 North 32nd Street, Phoenix, AZ 85018 | 14850 North Scottsdale Road, Scottsdale, AZ 85254 Phone 602.992.5055 | Fax 602.992.5054
www.biltmorebankaz.com ©2011 The Biltmore Bank of Arizona
* #1 Mid-Sized Bank by Ranking Arizona
INDE X Index by Name
Estabrook, Bard, 14
Kinni, Theodore, 29
Rennell, Dean, 22
Anderson, Orin, 10
Fillmore, John, Representative, 22
Lewis, Kevin, 22
Richards, Tim, 14
Andres, Erin, 14
Geehan, Sean, 29
Loud, Kevin, 25
Shapiro, Richard R., 29
Armstrong, Nadine, 30
Gordon, Andrew, 22
Miller, Bill, 25
Simmons, Destin, 22
Baldwin, Bob, 18
Grogan, Jeremy, 22
Mills, Jerry, 20
Spector, Robert , 29
Barrera, Marisa, 22
Halvorsen, Al, 31
Mills, Karen, 12
Strunk, Sarah, 10
Blaney, Robert, 10, 12, 22
Heasley, Kathy, 34
Miranda, Teresa, 22
Stull, Paul, 22
Bryant, Georgeanne, 18
Hess, Edward D., 28
Naylor, Bart, 18
Thorell, Mike, 50
Buskirk, Chris, 14
Hickman, Paul, 22, 41
Nefdt, Ralph, 12
Toney, Mike, 36
Butler, Jay, Ph.D., 12
Johnson, Tim, Senator, 50
Pacione, Ron, 38
Webb, Dennis, 12
Donati, Michelle, 14
Kidder, Rick, 31
Paine, Herb, 30
Wexler, Trish, 18 Wiest, Candace, 9, 50
Index by Company
Cassidy Turley BRE Commercial, 4
Grant Thornton, LLP, 12
Public Citizens, 18
Center for Services Leadership, 5
Central Phoenix Women, 32
Chamber of Commerce, 32
Reliable Background Screening, 15
Chicanos Por La Causa, 22
Heartland Payment Systems, 18
SCF Arizona, 2
AirSprint Private Aviation, 10
Children’s Museum of Phoenix, 4
Heasley & Partners, Inc., 34
Alerus Bank, 15
City of Phoenix Planning &
Heritage Bank, 47
Chamber of Commerce, 32
Arizona Bankers Association, 22, 41 Arizona Chamber of
Chamber of Commerce, 31, 33
Holmes Murphy, 8
Silverleaf Group, The, 7
Clear Growth Capital, 25
Leap Innovation, 33
Development Department, 14 College of Technology and Innovation, 14
Maricopa Workforce Connections, 17
Special Olympics Arizona, 30
Arizona Commerce Authority, 22
Conquest Training Systems, 8, 36
Mayo Clinic, 52
Cottman Transmission, 14
Mesa Chamber of Commerce, 32
Coup des Tartes, 38
Microsoft Store, 33
Tempe Chamber of Commerce, 33
Arizona MultiBank, 22
Darden School of Business, 28
Morrison School of Agribusiness and
U.S. Small Business
Arizona Small Business Association, 32
Desert Schools Federal Credit Union, 22
Arizona State Credit Union, 22
DMB Realty Network, 7
Musical Instrument Museum, 51
United States Senate, 50
Arizona State Legislature, 22
Economic Club of Phoenix, 32
National Association of
University of Virginia, 28
Arizona State University, 14
El Chorro, 38
Arizona Technology Council, 32
Electronic Payment Coalition, 18
National Bank of Arizona, 3
Waste Management, 11
Association for Corporate Growth, 32
Expect More Arizona, 35
Wells Fargo, 22, 40
Automobile Association of
Fennemore Craig LLP, 10
Commerce and Industry, 32
Chamber of Commerce, 32
Resource Management, 14
Women Business Owners, 32
Chamber of Commerce, 32
Chamber of Commerce, 33
Administration, 10, 12, 22
W. P. Carey School of Business, 5, 12
West Valley National Bank, 9, 22, 47, 50
Office of Customer Advocacy, 14
Az Entrepreneurship, 33
Florence Crittenton, 30
Olive & Ivy, 38
West Valley Women, 33
B2B CFO, 20
Frances Vintage, 18
Peoria Chamber of Commerce, 32
Whole Foods, 14
Bank of America, 22
Frito-Lay North America, 31
Performance Research Associates, 50
Women of Scottsdale, 33
Biltmore Bank of Arizona, The, 48
Fulton Homes, 12
Phoenix Black Chamber of Commerce, 33
Gateway Bank, 43
Phoenix Zoo, 21
Gina’s Homemade, 14
Pinnacle Bank, 50
Préstamos CDFI, 22
America, Arizona, 14
Centers of America, 13 Capital Grille, The, 38
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In B u s i n e s s M a g a z i n e
A Candid Forum
Will Business Feel the Dodd-Frank Financial Reforms? by Lila Nordstrom
The Dodd-Frank Wall Street Reform and Consumer Protection Act is big. Eight-hundred-forty-eight pages big, in fact, filled with arcane changes to banking regulations that attempt to discourage risky investments and trades and protect U.S. taxpayers from bailouts of “too big to fail” goliaths. Whether these regulations successfully do any of these things is a source of much controversy in the banking community, but Senator Tim Johnson, head of the Senate Banking Committee, feels this legislation is critical and efforts to tear it down, including the challenges mounting in House and Senate, are off the mark. “Critics say this bill is too long and complicated, but complex problems require complex solutions. They say it’s too expensive, but ignore the trillions of dollars we risk by not having strong regulations.” New Requirements on Lending and Lenders The legislation’s primary aim is to create new federal oversight for large banks and nonbank financial institutions. With this mission in mind, the law creates a body to regulate mergers and acquisitions for big banks and ensure that no bank becomes too big to fail. It creates tighter capital requirements for large banks and important nonbank financial institutions (those with more than $50 billion in assets). On the issue of mortgage-backed securities — the risky trades widely credited with causing the 2008 financial collapse — large banks will now have to hold 5 percent of the liability in these trades in-house. It bans banks from trading with proprietary funds; demands new levels of transparency so that consumers can be sure they understand all fees associated with their mortgages and loans; and will makes changes to the way banks are assessed, easing some of the burden on smaller banks. Most relevant to wary taxpayers, it strips the FDIC of any right to grant bailouts to individual financial firms, requires that large financial companies be on the hook for any shortfall in liquidating a large company, and makes the increased FDIC insurance rates of $250,000 permanent. Ripples in the Banking World Perhaps because it is so expansive in size and scope, implementation of Dodd-Frank has been slow going. According to the St. Louis Federal Reserve Bank, just over 60 of the more than 300 required rulemakings have been finalized, and not even all of those have become effective yet. Not surprisingly, keeping up with the onslaught of new rules is a
N o v e m b e r 2011
daunting prospect for most bankers. Mike Thorell, CEO of Pinnacle Bank in Scottsdale, worries that the cost of compliance will force smaller banks into merging, leading to less competition. “You have to be of a certain size to withstand the weight of all the regulation.” Candace Wiest, president of West Valley National Bank in Phoenix, estimates that her bank now spends $10,000 per month on compliance, a cost she fears will rise as Dodd-Frank regulations begin to pour in. Paul Hickman, president of the Arizona Bankers Association, has been hearing this concern from many small banks. “Smaller banks, those with below $10 billion, are gearing up for some serious challenges. It’s costing them money and they are right on the edge.” Implementation in Progress As for what has been accomplished so far, though many rulemakings are still in the process of being written or collecting comments, some changes are starting to appear. July saw the opening of the Consumer Financial Protections Bureau, which is already hard at work combining the two federal mortgage disclosure forms into one simplified form, a move that Hickman, though critical of much of the bill, agrees is both a good idea and helpful to smaller banks. September saw new rules go into effect requiring banks with more than $50 billion in assets to create emergency liquidation plans for themselves. According to Sen. Johnson, “This rule will help taxpayers never again have to rescue an individual failing financial firm.” October saw the inauguration of the controversial Durbin amendment, which lowers the cost of accepting debit cards for merchants. Though not wholly optimistic about the bill’s eventual impact on local banks, Wiest sees some opportunity for smaller financial institutions like hers buried in some of the upcoming changes. “I think there will be an opportunity for us to be more nimble and take away some of [the larger banks’] business, though there is no question that our margins are being squeezed. We’ll have to operate more efficiently than we’ve done before.” But, she adds, “Technology has been a great equalizer.” Arizona Bankers Association azbankers.org Johnson, Tim, Sen. johnson.senate.gov Pinnacle Bank pinnaclebankaz.com West Valley National Bank wvnb.net
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In Business Magazine covers a wide-range of topics focusing on the Phoenix business scene, and is aimed at high-level corporate executives a...
Published on Oct 31, 2011
In Business Magazine covers a wide-range of topics focusing on the Phoenix business scene, and is aimed at high-level corporate executives a...