Kern Business Journal December 2015/January 2016 by The Bakersfield Californian Specialty Publications

KERN Journal Business

Vol. 4, No. 6

A MEMBER O F T HE

TB C M E DIA FAM ILY

Top retirement plans for small businesses Page 8

December 2015 / January 2016

Finance and E-Commerce Issue

Mobile Payments

What every small and midsize business should know By Mark Hahs

ommerce transactions in the U.S. completed on mobile phones and tablets over the next five years are expected to grow to $142 billion, according to the research firm Forrester. Two-thirds of those sales will happen via tablet computers, while the remainder will occur on smartphones. Up until recently, for many small- and mediumsize businesses without a traditional brick and mortar facility, the only viable option for a mobile payment system consisted solely of check and cash transactions, often using a gray metal cash box holding a tray with compartments for $20, $10, $5 and $1 bills and smaller compartments for coins. A single lock was considered security. For other businesses, such as those in construction or offering home or professional services and/ or nonprofit organizations, getting paid usually meant leaving or mailing an invoice and hoping the customer paid promptly or waiting for a check to clear the bank. No longer! The new mobile economy is upon us! As a result of advances in mobile technologies, Continued on page 18

Mobile payment processing has changed the game entirely for small and midsize businesses that once could only accept cash. Thanks to the ability of smartphones accepting credit cards with a card reader, everything a business needs can be carried in a pocket and there are no constraints to where they sell, what they can charge or how much a customer can spend.

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December 2015 / January 2016

Journal KERN Business Showcasing Kern County business and industry December 2015 / January 2016 Vol. 4, No. 6 Kern Business Journal is a bimonthly publication of The Bakersfield Californian. Copies are available from The Bakersfield Californian, Kern Economic Development Corp. and Greater Bakersfield Chamber of Commerce. Publisher Ginger Moorhouse President/CEO Richard Beene Chief Marketing Officer Mike Skrocki Editor Olivia Garcia Assistant Managing Editor Mark Nessia Specialty Publications Coordinator

Laura Liera

Art Director Glenn Hammett Graphic Designer Holly Bikakis To submit a story kbj@bakersfield.com To advertise Mike Skrocki, Chief Marketing Officer mskrocki@bakersfield.com 661-395-7385 To subscribe 661-392-5777

KERN BUSINESS JOURNAL

Editor’s Note

’Tis the season for smart finance and e-commerce decisions

ne of the busiest holiday shopping seasons has arrived. Many consumers are looking into a variety of ways to make their shopping experience into the easiest, happiest and quickest experience possible. Consumers also put financially smart decisions and excellent customer service at the top of their priorities as well. And businesses are hearing them loud and clear, especially with their embrace of technology. In this issue of finance and e-commerce, Olivia Garcia the Kern Business Journal touches base with a number of local businesses and experts to capture a glimpse into the industry. Our lead story is written by Mark Hahs who is a mobile platform development expert. Hahs examines issues that every small- and midsize business should know when it comes

to mobile payment systems, especially as more and more consumers are completing transactions on laptops, tablets, and smartphones. Sweet Surrender is preparing for one busy season, for instance, says contributing writer Laura Wiener. She points to the National Retail Federation’s holiday consumer spending survey that shows that shoppers plan to spend about $800 in the areas of food, decorations, gifts and more. And for the shopper in mind, Michael George of Kern Schools Federal Credit Union examines mobile banking, including debit card alerts, which can help prevent thieves from getting a hold of your credit cards and using them without authority. Meanwhile, Hossein Bidgoli, a professor of management information systems at Cal State Bakersfield, offers an analysis over e-commerce versus traditional commerce. He also explores the pros and cons of e-commerce

and commerce trends. A number of e-commerce trends will be a topic for 2016. Mira Patel of Six23 Media writes about video micro-moments or video consumption among consumers. She offers businesses tips on ways to stay relevant in video consumption. In addition, as people look to resolutions and goals in 2016, some are making plans on both extremes, such as starting a new business or retiring. Joe Newton, a retired professor of business at Bakersfield College, provides insight on small business administration loan programs. Contributing columnist Chris Thornburgh shares tips for small businesses evaluating the best retirement plan for them. In her column, Holly Culhane of P.A.S. Associates and P.A.S. Investigations wants businesses to stay in tune with changes in workforce laws.

Business at-a-glance Mark Borrecco has been named the new president and CEO of Rabobank N.A. effective Dec. 1. He will succeed John Ryan who announced that he would retire at the end of the year. As Rabobank’s current chief retail banking officer, Borrecco has had oversight on every facet of retail and business banking. He has monitored Community Investment Act initiatives, mortgage lending and trust services. Before his position at Rabobank, Borrecco worked leadership positions at Wachovia, World Savings and as a sales manager at Bank of the West. He began working at Rabobank in 2011 and is part of the board of directors, committees focused on compliance, credit and other integral banking functions. – Kern Business Journal Tejon Ranch Conservancy selects new CEO, president. Robert J. Reid has been selected as the new CEO and president of the Tejon Ranch Conservancy by the board of directors. He will be replacing the conservancy’s founding Executive Director Tom Maloney who left the organization in June.

Reid brings a variety of experience to the Tejon Ranch Conservancy. Before beginning his career at Tejon Ranch Conservancy, Reid was employed as the chief development and communications officer of the Catalina Island Conservancy. He focused on developing the base of the organization through membership, major gifts and program support. He has also served as the Los Angeles director of the Trust for Public Land and as a chairman of the board of the Los Angeles Neighborhood Land Trust. – Kern Business Journal Bakersfield families create Barmann Chaney Performance Studio for Valley Public Radio. Construction of the new Barmann Chaney Performance Studio is under way in the Clovis Technology Park with Valley Public Radio anticipated to relocate in March. The performance studio will feature musical performances from local and national artists and live broadcast presentations featuring valley youth. The new facility was made possible with the help of Bakersfield residents Bernard and Bee

Barmann and Lois Chaney. The Barmanns are involved in community organizations like the Bakersfield Symphony Orchestra and the Bakersfield Youth Symphony Orchestra. Bernard Barmann currently serves as an officer for Valley Public Radio and Bee Bernard helps co-produce the “Young Artist Spotlight.” Lois Chaney, who recently passed away, served in organizations such as the League of Women Voters and California State University, Bakersfield. “This is a great legacy the Barmanns and Lois have created for the Central Valley,” President and General Manager Mariam Stepanian said in a release. “This is an incredible gift demonstrating their love and gratitude for the place they call home.” Valley Public Radio is a public media service that provides content to listeners throughout Merced, Madera, Fresno, Kings, Tulare and Kern counties, as well as portions of Mariposa, Tuolumne, San Joaquin and Stanislaus counties. It can be heard on FM89.1 KPRX Bakersfield and online at www.kvpr.org. – Kern Business Journal

PHOTO BY JOE MOORE

Bee and Bernard Barmann pose with FM89’s Mariam Stepanian.

KERN BUSINESS JOURNAL

Chamber Roundups

December / January Events

Greater Bakersfield Chamber of Commerce

Kern County Black Chamber of Commerce

Dec. 17 – Chamber Holiday Mixer • 5:30-7:30 p.m. • $5 for members; $10 for nonmembers • Metro Galleries, 1604 19th St.

Dec. 15 – KCBCC Down Home Blues Holiday Mixer/ Member Appreciation featuring JT Butler and the Horizon Blues Band • 6 to 9 p.m. • Free to members; $15 nonmembers • For more information call 661-326-1529.

Dec. 24-25 – Chamber closed Jan. 1 – Chamber Closed – New Year’s Day Jan. 8, 22, 29 – Government Review Council • 7:30 to 8:30 a.m. • Greater Bakersfield Chamber of Commerce, 1725 Eye St. Jan. 14 – Labor and Employment Law Update Forum • Check-in/networking, 7:30 a.m.; forum, 8 to 10 a.m. • $20 for members; $40 for nonmembers • Greater Bakersfield Chamber of Commerce, 1725 Eye St. Jan. 22 – Annual Dinner Gala and Board Installation • Cocktail hour, 6 p.m.; dinner and program, 7 p.m. • Seven Oaks Country Club, 2000 Grand Lakes Drive.

December 2015 / January 2016

Dec. 18 – Upside Productions Free Christmas Party • 6:30 to 8:30 p.m. • 999 E. California Ave. • Lots of games, food and comedy, free raffle and toy giveaway. Donate a toy to benefit a girl or boy. Drop off to chamber office, 1309 L St. Jan. 18 – MLK Day of Service, • 8 a.m. to 6 p.m. • SOS Recycling, 11100 Olive Drive • Let’s recycle for service day!

Kern County Hispanic Chamber of Commerce Dec. 24 and 25 – Chamber closed Jan. 1 – Chamber closed Jan. 13 – Business Networking Mixers • 5:30 to 7:30 p.m. • Location TBD • For more information, contact 661-633-5495. Jan. 28 – Business Development Seminar • 11:30 a.m. to 1 p.m. • No charge • For more information, contact 661-633-5495. Feb. 6 – 31st annual Installation and Business Awards Dinner • Location: DoubleTree Hotel • 6 p.m. – No host bar and reception • 7 p.m. – Dinner and program • Followed by Southern California’s HindSite band

Valley Air District promotes e-mobility commerce By Cassandra Melching

valley through a wide variety of targeted grant opportunities. Since the inception of the E-Mobility Commerce program, the San Joaquin Valley Air Pollution Control District has funded many projects, such as a secure online test taking system for a valley college, additional laptop computers in police vehicles to expand the number of mobile computer units and upgrade the software to reduce frequent trips back to the police station and the installation of new hardware, software and operating systems for

-commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. With the ease of the around-the-clock availability, the speed of access, a wider selection of goods and services, overall accessibility and an international reach, it’s no wonder that more and more businesses are implementing this kind of model. The San Joaquin Valley Air Pollution Control District views e-commerce as a way to reduce vehicle miles traveled (VMT) and, in turn, Cassandra Melching reduce air pollution. E-commerce applications are the means of conducting business without actually commuting and valley businesses can reduce their contribution to the valley’s sometimes poor air quality by allowing their employees to work in a virtual office or work from home. “Through the investment and sacrifice of valley businesses and residents, the valley has been able to significantly reduce summertime smog,” explained Seyed Sadredin, the executive director for San Joaquin Valley Air Pollution Control District. “In fact, the valley population’s exposure to levels above the federal eighthour ozone standard has now been reduced by more than 90 percent.” As a public health agency whose mission is to improve the health and quality of life for all valley residents through efficient, effective and entrepreneurial

air quality management strategies, the San Joaquin Valley Air Pollution Control District offers many inventive programs to help residents and agencies reduce their VMT and mobile emissions. One such program is the Electronic Mobility Commerce program. Here in the valley, 80 percent of our pollution comes from mobile sources and since the federal EPA recently lowered the eight-hour ozone standard from 75ppb (parts per billion) to 70ppb, we must all do everything possible to voluntarily reduce mobile emissions wherever we can. The E-Mobility Commerce is a program that offers incentive funds for the development or expansion of electronic telecommunication services for government agencies, municipalities, public

educational institutions, community colleges and municipal courts. The goal is to reduce VMT and emissions by advancing electronic technology so that these entities can offer conferencing, document transactions, general information, work functions, school instruction and related applications all without having public commute to the location. The potential incentive for this kind of project is up to $150,000. But it’s important to note that the incentive amounts vary due to the direct cost effectiveness of each project. This program was created in the early 1990s, but was re-energized in 2005 when it got categorized with the district’s popular “Remove II” programs, which aim to reduce vehicle emissions throughout the

E-commerce applications are the means of conducting business without actually commuting and valley businesses can reduce their contribution to the valley’s sometimes poor air quality by allowing their employees to work in a virtual office or work from home. establishing online licensing, permitting, payments and other public services. To obtain more information or apply for this program, please visit www.valleyair.org/ grants/emobility.htm. – Cassandra Melching is an outreach and communications representative with the San Joaquin Valley Air Pollution Control District.

December 2015 / January 2016

KERN BUSINESS JOURNAL

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December 2015 / January 2016

Sweet Surrender looking forward to ‘sweet’ holiday By Laura Wiener

weet Surrender, an iconic Bakersfield store that features baked and candy treats, gifts and women’s clothing is gearing up for its busiest season. And as retailers throughout the nation are predicting, owner Kim Fiorini is expecting her holiday sales to exceed last year’s robust showing. According to the National Retail Federation’s holiday consumer spending survey, shoppers plan to spend an average of $800 this holiday Laura Weiner season on food items, decorations, gifts and more. This is the highest amount in the survey’s 14-year history. “Christmas – actually, the whole month of December, featuring many religious and cultural holidays – is our busiest season,” she said. “It’s a time for giving and sharing. And sweet treats seem to always please. They are traditions.” While about 65 percent of Sweet Surrender’s sales are to individuals, Fiorini reports that business-to-business sales are becoming an increasing part of her company’s market. “We do many corporate gifts for clients, co-workers and bosses,” she said, explaining that these gifts include sugary treats, as well as fun, unique gifts available for purchase in the Sweet Surrender store, which is located in the Sagepointe Village Shopping Center at Ming Avenue and Ashe Road. “We have personal gifts for family members, teachers, neighbors, babysitters, dog sitters, manicurists, hair stylists, etc.

Food is a long-established way to show love, friendship and appreciation. And when day-to-day life does not afford the time to prepare our own food, Sweet Surrender fills the void. As our clients’ lives become busier, they look to us to do the baking and creative gift presentations they may not have time to do on their own. Gift cards are also a big hit this time of year.” Sweet Surrender gears up for its peak holiday season by preordering gift items, candy and other items. The shop begins preparing for the next holiday season shortly after the present season ends. It increases its staff in the third quarter of the year. “The seasonal planning pretty much

PHOTO BY FELIX ADAMO

PHOTO COURTESY OF SWEET SURRENDER

PHOTO BY MICHAEL LOPEZ

goes on for the entire year,” said Fiorini, noting that other peak demands for its products accompany weddings and “Hallmark holidays” like Grandparents’ Day, Mother’s Day and Father’s Day. To respond to the demand, Sweet Surrender is updating its website (www. sweetsurrenderbakery.com) to incorporate easier online ordering of cakes. National recognition on The Food Network with Giada De Laurentiis and in the pages of O, The Oprah Magazine, have driven greater demand for corporate business. “We have many out-of-town companies

stopping in to buy corporate gifts or items for themselves,” said Fiorini. “They order cakes to be shipped out of town or out of state to other companies as thank you gestures. A lot of companies order cakes or baskets to be delivered to in-town clients. “These gifts also are used to show customer appreciation, pave the way for ‘cold calling’ on a new client, welcome a new employee or recognize existing ones, express farewell, extend sympathies, celebrate the birth of a child, purchase of a new home or observation of an anniversary.” Food is a long-established way to

show love, friendship and appreciation. And when day-to-day life does not afford the time to prepare our own food, Sweet Surrender fills the void. As tastes and dietary demands change, Sweet Surrender has adjusted its offerings. Gluten-free cakes, cookies, cupcakes and other treats are customer favorites. The shop carries a line of sugar-free chocolates. Additional innovative products are in development. Sweet Surrender opened in 1987 in the Sagepointe Village Shopping Center. Fiorini bought the business in 1989. Nearly three decades later, Sweet Surrender has expanded to fill 5,000 square feet of retail space and employs 40 team players. – Laura Wiener is the owner of Spectrum Communications in Bakersfield.

December 2015 / January 2016

KERN BUSINESS JOURNAL

December 2015 / January 2016

Top retirement plans for small businesses By Chris Thornburgh

o you have the right retirement plan in place for your business? Quite possibly your best tax-reduction strategy, retirement plans also help attract and retain talented employees. One of the most important decisions you will need to make is what type of retirement plan is ideal for your business. The decision Chris Thornburgh can be understandably confusing given the options and complexity of various plans. ASK YOURSELF THESE QUESTIONS When choosing a retirement plan, ask yourself two questions: What do I want to accomplish with the retirement plan and how much flexibility do I need? In other words, do you want to fund the plan for the tax benefits or simply provide a pathway for employees to save for their own retirement? Do you want to maximize contributions to the plan during boom years but need the ability to suspend contributions in lean years? Your answers will help narrow down your choices. SIMPLIFY YOUR CHOICES Basically, all retirement plans can be divided into two categories. They are either IRA-based or classified as a qualified retirement plan. IRA-based plans are simpler to install and maintain and are usually less expensive to administer. True qualified plans are regulated by ERISA (the Employee Retirement Income Security Act) and are usually more complex and expensive to administer. Qualified plans, however, offer added benefits such as allowance of participant loans, ability to exclude groups of employees, possible protection from creditors and use of vesting schedules. Let’s cover the most popular plans for small businesses. SEP-IRAs Best for: Business owners who want to maximize contributions through an easyto-administer plan with low fees. You can open and fund an SEP (simplified employee pension) up until your extended tax filing deadline through a bank or brokerage firm. This is a huge advantage over other plans, especially if you ignored tax planning strategies prior to year-end and need a quick strategy in the eleventh hour. Sole proprietors, partnerships and corporations, including S corporations, can set up SEPs.

With the exception of higher contribution limits, this plan is subject to the same rules as a regular IRA. Maximum contribution: Up to 25 percent of compensation or $53,000 for 2015/2016, whichever is less. There are a few caveats if you have employees. Generally, a SEP-IRA must cover any employee who is 21 or older, earned at least $600 from the business and has been employed with the business at least three of the preceding five years. All contributions are made by the employer, not the employee. As an employer, you decide if contributions will be made year to year, giving you flexibility in lean years. However, you’re required to contribute the same percentage of an employee’s compensation as you contribute for yourself. That could end up being a hefty sum if you have more than a few employees. Furthermore, employees are immediately vested. SIMPLE IRAs Best for: Small businesses with 100 or fewer employees that want an uncomplicated avenue for employees to save for retirement. SIMPLE IRAs (Savings Incentive Match Plan for Employees) are easy to administer. Maximum contribution: Allows employees to defer up to $12,500 of salary in 2015/2016. Employees age 50 or older may contribute up to $15,500. Employers are required to match deferrals – up to 3 percent of contributing employees’ wages or make a fixed contribution of 2 percent to the accounts of all participating employees whether or not they defer to the SIMPLE plan. 401(K) PLANS Best for: Small businesses that seek higher contributions for employees, but desire flexibility. The most popular of qualified plans, the 401(k) plan allows contributions to be funded by participants through salary deferrals on a pretax basis. A 401(k) plan can also have a Roth 401(k) option, which allows after-tax deferrals. Additionally, employers can design the plan to provide a match or profit-sharing contribution. Procrastinators beware: The 401(k) plan must be established by Dec. 31 of the year for which plan contributions are made. Maximum contribution: Employees can defer $18,000 for 2015/2016 ($24,000 if age 50 or over). While employers can provide a match or profit-sharing contribution, there is a limit. The sum of the employee elective salary deferral, match and profitsharing contribution (all sources) cannot

exceed $53,000 or the lesser of 100 percent of employee compensation for 2015/2016. These plans can be extremely expensive to administer, but the employer’s contribution cost is generally very small. Thus, in the long run, 401(k) plans tend to be relatively inexpensive for the employer. Bonus Tip: If you are the only employee other than your spouse, a “Solo 401(k)” plan may be attractive since these plans are exempt from ERISA filing requirements. You can make a deductible profitsharing contribution of up to 25 percent of pay (to $265,000) on your own behalf in 2015/2016, and in addition, you can make deductible pretax contributions of up to $18,000 (plus an additional $6,000 of pretax catch-up contributions if you’re age 50 or older). However, total annual additions to your account can’t exceed $53,000 ($59,000 if age 50 or older). DEFINED BENEFIT PLANS Best for: High-income business owners with stable income and few employees. Defined benefit plans are ideal for older business owners who have saved little for retirement but can now afford to sock away large annual contributions. Maximum contribution: Defined benefit plans potentially offer the largest

tax deduction and the highest retirement benefits to business owners. By far the most sophisticated type of retirement plan, a defined benefit plan guarantees a set monthly payment in retirement. Actuarial assumptions and computations are required to figure contributions. It’s not uncommon to see a 50-year-old contribute $100,000 to $150,000 each year for 10 years. Understand the financial commitment when considering a defined benefit plan. Annual employer contributions to the plan are mandatory, regardless of your business’s profitability. If cash flow is uneven or unpredictable, use caution when selecting a defined benefit plan. THE BOTTOM LINE As you can see, there are a number of options for small businesses. Talk to a CPA who is knowledgeable in retirement plans to determine which plans offer the best combination of savings opportunities and tax advantages for your business. It’s best to get all the facts, then weigh them in light of business plans and future goals. – Chris Thornburgh is a CPA and partner at Brown Armstrong Accountancy Corp. Contact her at cthornburgh@ bacpas.com or 661-324-4971.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Increase success by outsourcing document management By Jim Damian “Here is the prime condition of success: Concentrate your energy, thought and capital exclusively upon the business in which you are engaged.” – Andrew Carnegie

rom equipment repair businesses, banks or plumbing companies, all businesses are created with the goal of delivering a core set of goods or services. Indeed, the most successful organizations have a relentless focus on a single primary objective. Unfortunately, in addition to their main services, businesses are often forced to execute a wide variety of administrative tasks that are fringe to the core mission. One Jim Damian of these fringe tasks is managing the documents that are associated with jobs, clients or projects. Document management is a sizable task at any organization; every person is responsible for creating or updating some sort of document (work orders, investment documents, medical records, spreadsheets, etc.). At first glance it doesn’t seem like a problem to have a mechanic fill out a paper-based work order and take it to the billing department for manual processing. It certainly doesn’t seem like a bad idea to have a banking professional spend a minute or two adding documents into a client’s folder. Doctors are typically as efficient as they are smart and so logging progress notes into a paper chart doesn’t sound like a poor use of time. Albeit necessary, these administrative activities eventually become distractions from an organization’s core mission. Document management tasks, when executed by internal staff, dilute the concentration of an

organization’s focus on the core goals. It’s no secret that productivity and profit suffer when focus gets diffused. Lost productivity and lower profit margins are not the only problems that a decrease in concentration brings to bear. Using internal staff to build and maintain document management solutions can also lead to staff discontent. Doctors, plumbers and bankers are unlikely to have chosen their vocations based on a desire to fill out repetitive forms. Discontent staff are not motivated to achieve great results. Another problem that arises when internal staff are used to implement and oversee document management solutions is the lack of innovation. Many internal document management efforts lack the experience and singular focus that a professional document solutions company provides. It is not uncommon for internal programs to cost more but at the same time be less efficient and altogether lackluster with respect to innovation. For example, internally developed solutions often lack the paperless elements that are enjoyed by companies that choose to stay focused on their core tasks and outsource document management to professional solution providers. Qualified document solutions providers will enable organizations to stay focused on their core mission and will deliver a cost-effective paperless system that is robust with respect to usability, automation and scalability. If we are to believe Andrew Carnegie, then organizations are best served by maintaining an impassioned focus on their core work. One way to achieve this focus is to take fringe activities, such as document management, human resources, accounting, legal, marketing, etc. and outsource those to a professional solutions provider. – Jim Damian is the founder and CEO of Stria, a document management solutions company.

KERN BUSINESS JOURNAL

December 2015 / January 2016

SBA loan programs to help you start, manage and grow your business By Joe Newton

WHAT ARE SBA LOANS? The U.S. Small Business Administration is a federal agency committed to furthering the growth and development of small businesses. One of the ways it does this is by guaranteeing loans to small businesses made through lending partners nationwide. Bakersfield has a number of participating lenders. Visit Score.org for more information. Score is a nonprofit Joe Newton association partnered with the SBA to provide free education and counseling to small businesses, including how to obtain an SBA-guaranteed loan. It’s important to note that SBA does not directly provide funding to small businesses but sets the guidelines for loans, which are then made by lenders, community development organizations, microlending institutions and other partners. SBA then guarantees these loans will be repaid, mitigating the risk to lenders. This means that when businesses apply for an SBA loan, they are actually applying for a commercial loan backed by SBA and structured accordingly to the agency’s requirements but still handled following the lender’s credit and other criteria.

million in financing to fund startup costs, purchase new equipment, refinance debt and buy machinery, supplies, materials or other essentials for expanding operations. There are also several special purpose 7(a) loan programs, including CAPLines for short-term and cyclical working capital needs, export loan programs to help businesses sell internationally and advantage loans that provide financing to entrepreneurs and small businesses in underserved communities. Score can help in learning about eligibility requirements, repayment terms, processing times and how to apply. • The Microloan program provides small businesses up to $50,000 in financing through specially designated intermediary lenders, which are nonprofit communitybased organizations with experience in lending as well as management and technical assistance. Funding can be used for working capital, inventory, furniture, machinery and other purposes. • The Certified Development Company/504 loan program offers small businesses funding for important fixed assets, such as real estate and equipment. CDCs are regulated by SBA and work with lenders to provide financing to small businesses. Small businesses can use CDC/504 proceeds to purchase land or improve or modernize facilities. • SBA provides low-interest loans to businesses located in declared disaster zones. Disaster loans can be used to repair or replace real estate, personal property, machinery and equipment and inventory, or business assets. SBA also offers assistance to residential property owners and renters, military and businesses suffering economic injury. For more on SBA loan programs, go to SBA.gov/loan programs or contact the local Bakersfield Score chapter and/or the local SBA Fresno district office.

THERE ARE FOUR MAIN TYPES OF SBA LOAN PROGRAMS: • 7(a). SBA’s most common loan program helps small businesses get up to $5

– Joe Newton is a certified Score counselor and retired professor of business at Bakersfield College.

f you’re planning to start a business or expand an existing business, you might need financing help. The Small Business Administration (SBA) participates in a number of loan programs designed for business owners who may have trouble qualifying for a traditional bank loan.

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December 2015 / January 2016

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Ag and Land

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Jeffrey Andrew Senior Director Principal 661.633.3827

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Alex Balfour Associate Director 661.633.3856

Patrick Thompson Associate Director 661.633.3813

Kevin M. Palla Senior Associate 661.633.3803

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Retail

Vincent Roche Senior Director Principal 661.633.3817

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Duane Keathley Senior Director Principal 661.633.3816

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Josh Sherley Senior Associate 661.633.3840

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5060 California Ave., Suite 1000 Bakersfield, California 93309 661.327.2263 Main 661.633.3801 fax WWW.PACCRA.COM

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December 2015 / January 2016

E-Commerce

Opportunities, challenges and trends By Hossein Bidgoli

-commerce transactions that fall into nine categories (see the table below) have a significant financial impact on all types of organizations both in public and private sectors. Organizations are increasingly adopting e-commerce applications in order to reduce cost, improve their competitiveness in the marketplace and enhance customer service.

E-COMMERCE VS. TRADITIONAL COMMERCE Although the goal of e-commerce and traditional commerce is the same – selling products and services to generate profit – they do it quite differently. In e-commerce, the Web and telecommunication technologies play a major role. Often, there is no physical store, and the buyer and seller do not see each other. Many companies now operate as a mix of traditional commerce and e-commerce, however, and have some kind of e-commerce presence. These companies, referred to as click-andHossein Bidgoli brick e-commerce, capitalize on the advantages of online interaction with their customers yet retain the benefits of having a physical store location. For example, customers can buy items from the company’s website but take them to the physical store if they need to return items. ADVANTAGES AND DISADVANTAGES OF E-COMMERCE Businesses of all sizes use the Internet and e-commerce applications to gain a competitive edge. For example, IBM does business with more than 12,000 suppliers over the Web and uses the Web for sending purchase orders, receiving invoices and paying suppliers. In addition, IBM uses the Internet and Web technologies for its transaction-processing network. Similar to traditional business, e-commerce has many advantages and disadvantages. If e-commerce is based on a sound business model, its advantages outweigh its disadvantages. Advantages of e-commerce include the following: • Creating better relationships with suppliers, customers and business partners • Creating “price transparency,” meaning all market participants can trade at the same price • Being able to operate around the clock and around the globe • Improving customer service • Increasing flexibility and ease of shopping • Increasing the number of customers • Increasing return on investment because inventory needs are reduced • Offering personalized services and product customization • Reducing administrative and transaction costs E-commerce also has the following disadvantages, although many of these should be eliminated or reduced in the near future: • Bandwidth capacity problems (in certain parts of the world) • Security and privacy issues • Accessibility (not everybody is connected to the Web yet) • Acceptance (not everybody accepts this technology) TREND IS YOUR FRIEND: MOBILE AND VOICE-BASED COMMERCE According to eMarketer, mobile ads will top 100 billion and it will account for about 16.5 percent of total advertising spending in 2016. The top four spenders of mobile ads are the U.S., China, U.K. and Japan. This number is expected to increase as the worldwide adoption of smartphones continues to grow. In 2015, there were about 2.6 billion smart-

phone users. This number is expected to top 6.1 billion globally by 2020. Mobile commerce (m-commerce) is the use of handheld devices, such as smartphones or PDAs, to conduct business transactions, such as making stock trades with an online brokerage firm. There are apps available for just about any popular business applications. As of July 2015, there were more than 1.6 million apps for Android users and more than 1.5 million for iOS users. These apps bring the world of e-commerce applications to the fingertip of any decision maker. The next technology is voice-based e-commerce (v-commerce), which relies on voice recognition and text-to-speech technologies that have improved dramatically in the past decade. For example, you will soon be able to simply speak the name of the website or service you want to access and use voice commands to search a database by product name and find the merchant with the most competitive prices. V-commerce is suitable for such applications as making stock trades, looking up sports scores, reserving movie tickets and getting directions to a restaurant. Currently, the iPhone 3GS and beyond support voice-based Google searches. The iPhone 4S and beyond are equipped with Siri, which lets users send messages, make calls, set reminders and perform other tasks using their voices. Android devices use Google Voice for this purpose. One method of conducting voicebased e-commerce is using e-wallets (virtual wallets). In addition to storing financial information, e-wallets can store such information as the customer’s address and driver’s license number. In conclusion, businesses of all sizes should take advantage of e-commerce applications and make their organizations more competitive. – Hossein Bidgoli is a professor of management information systems at Cal State Bakersfield.

December 2015 / January 2016

KERN BUSINESS JOURNAL

New year brings in significant workforce laws By Holly Culhane

ern County employers need a heads-up when they round the corner into 2016 and find some new laws recently passed by the California Legislature awaiting them. While some of these laws represent “minor tweaking” of existing labor laws and rules, others will have a profound impact on how workplaces are managed. Some laws went into effect immediately, while others will go into effect in January. New labor laws include: Holly Culhane

FAIR PAY ACT – Perhaps the “big daddy” of all the new laws is California’s Fair Pay Act, which goes into effect in January and many consider it to be the strongest wage equity law in the nation. In a nutshell, the act ensures male and female employees who perform “substantially similar” work will receive equal pay, even if their job titles differ, or if they work in different offices for the same employers. For example, unless the employer can document widely different skills and responsibilities, a hotel’s housekeepers, who

are generally women, should be paid the same as its janitors, who are generally male.  A significant feature of the new California Fair Pay Act, is that it places on the employer, the burden of proving a man’s higher pay is based on factors other than gender bias. The act also protects employees from retaliation if they ask about pay disparities and discuss wages with their co-workers. Workers can complain to the state Division of Labor Standards Enforcement about perceived pay discrimination or file a lawsuit in superior court. Employers found to have violated the act can be liable for unpaid wages, interest and costs, including court and attorney’s costs. WAGE THEFT – By signing SB 588, Gov. Jerry Brown put some bite into the wage theft debate, which stems from not paying workers overtime, paying workers below minimum wage and requiring employees to “work off the books.” Considered to be the strongest in the country, existing California wage theft laws gave regulators little enforcement authority. Effective in January, the new law gives the California labor commissioner expanded authority, including the ability to place a lien on the property of an employer cited for wage theft and requires businesses to

pay a bond of at least $50,000 to $150,000 to remain open. According to a study by the U.S. Department of Labor, wage theft has cost Californians around $29 million in lost income per week. More than 300,000 wage and salary workers in California are thought to be victims of wage theft. RIGHT TO CURE – Signed into law as an urgency bill, AB 1506 already has gone into effect. This law is intended to protect employers from “predatory lawsuits” based on technical violations of the state’s wage statement laws. Basically, these laws require certain information, including an employee’s name and address, employer’s address and pay period dates, to be included on a pay stub. Before an employer can be sued over missing information, this new law gives the employer limited time and mechanisms to “cure” the omission. MEAL PERIOD WAIVERS – Another urgency bill, SB 327, was rushed through shortly before the Legislature adjourned and signed into law. It, too, already has gone into effect. It clarifies an earlier law addressing the ability of health care workers to waive, under some circumstances, their right to meal periods. The law was in response to a California court ruling earlier

this year. PAID SICK LEAVE – It’s not certain if AB 304, an urgency bill to clarify last year’s sweeping paid sick leave bill, actually brings clarity to the issue. With this law also taking effect immediately, it may have created new questions about who is covered and how California’s paid sick leave law is implemented. The original law exempted some employees, including in-home caregivers, employees covered by collective bargaining agreements, and certain workers in the air carrier and construction industries. AB 304 created new exemptions, including some for public-sector retired annuitants. Who’s in and who’s out of the coverage may be the subject of ongoing debate in 2016. As they begin a new year, employers should proactively consult with their attorneys and human resources consultants to fine-tune company policies and procedures to understand and meet the demands of these new laws. – Holly Culhane is president of the Bakersfield-based human resources consulting firm P.A.S. Associates and P.A.S. Investigations.  She can be contacted through her website www.PASassociates. com and the PAS Facebook page.

KERN BUSINESS JOURNAL

December 2015 / January 2016

Understanding micro-moments for your video strategy By Mira Patel

V time in most households used to be a compromise. You know, finding something that was on that everyone could agree upon. Today, we can each watch exactly what we want and when we want, thanks to our mobile phones. This may mean sports for dad, while mom catches up on “How to Get Away with Murder” and the kids each watch their favorite set of cartoons. Everybody’s happy. Videos are constantly being uploaded to various channels each minute, so when we turn to our mobile devices to watch video, we can choose from a nearly limitless library of on-demand content. That makes what we choose to watch more Mira Patel personal than ever. With video consumption happening all the time, it’s important to address the shift in behavior when it comes to one’s video strategy. When consumers look for answers, learn new things or make choices, they’re often turning to platforms like YouTube or Vimeo for help. Or as Google calls it, “micro-moments.” These moments of intent are redefining the journey; more than ever, people want the information right away. Most brands have identified opportunities to connect with consumers through video, but to win at video micro-moments, you have to know how to identify them and how to act on them. According to Google, video micro-moments generally fall into four categories: 1. “I want to watch what I’m into” moments, when people are seeking videos on their passions or interests. 2. “I want to know” moments, when people are trying to learn something. 3. “I want to do” moments, when they’re looking for step- by-step instructions on how to make or do something. 4. “I want to buy” moments, when they’re using video to try before they buy.

Brands can ensure they’re relevant and useful by understanding their consumers’ intent. Expand your focus from just who consumers are to what they want. In a micromoments world, intent trumps identity. HERE ARE A FEW WAYS TO MAKE SURE YOU’RE STAYING RELEVANT AND USEFUL WHEN IT MATTERS: 1. Find where your audience’s goals and your brand’s goals intersect. Video platforms are used numerous times each day as people are always looking for videos that meet their needs, wants and interests. Think of your consumer’s journey. What are his or her needs and questions, and when does he or she look for them? Once you’ve mapped out your consumer’s moments, understand your brand’s place. 2. Be there when your audience is looking with useful content that answers their needs. Once you understand how your brand maps to consumers’ video micro-moments, you can build a plan to be there when people are looking. The first step is creating relevant, useful content that adds value. The second is making sure

your brand shows up when they need you with organic and possibly paid search. 3. Help your audience find you, even when they're not looking, with relevant video ads. Even when people aren't actively looking for answers, brands can “show up” with messaging that's relevant to their interests. That means going beyond demographic targeting and connecting with viewers based on signals of intent or context. Through choice-driven ad formats, show that your brand understands and respects people’s intent. If someone chooses to watch your ad, it's a powerful signal of his or her interest. Not only is the context of the video message key, so is the context of when it is shared. For example, sharing your ad when a consumer is watching a relatable video. The purchase journey has been fragmented. It’s important that brands be there with relevant, useful videos. If your brand isn’t there in your audience’s moments of need, it’s likely another brand will be. – Mira Patel is the owner of Six23 Media, a local marketing and public relations consulting firm.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Mobile banking saves time and money By Michael George

t’s a typical problem faced by many people on a regular basis: too many things to do and not a lot of time to do it. But what if there was a way to eliminate some of the time associated with these chores? What if there was more time to enjoy what you really Michael George want? You may be untrusting of, and even fear, some technology – perhaps even loathing it or finding it intrusive – but much of this comes more from unfamiliarity than anxiety. In fact, evidence clearly shows if someone were to show you how to use certain tech devices, you would not only embrace them, but they would become a part of you. In fact, they already have. After all, when was the last time you washed the dishes in the sink? Or got up from your chair to change the TV channel? From a service perspective, when was the last time a gas station attendant cleaned your windshield while gas was being pumped into the car? Indeed, times have changed. And while the pace of technology has obviously affected multiple industries in recent years, one of the most deeply impacted has been banking and finance. And this is to your advantage. By taking advantage of some of the latest technologies available, you could easily rid yourself of more than one hour of running errands without even leaving your house. Here’s how: MOBILE BANKING – Perhaps the biggest complaint financial institutions receive is the long lines at branches. In reality, however, many transactions do not even require you to visit your local branch. Take the example of having to deposit the birthday check from grandma. Sure, you could go to a branch or even use an ATM. With mobile banking, however, there’s no need to even do this. Instead, through “remote deposit capture,” or some similar name variation, you could simply snap a picture of the front and back of the check and be done. Similarly, why worry about driving across town to pay your mother? Yes, you still have to pay mom. After all, she is your mother. But, if mom happens to be mildly tech savvy, through “person-to-person” payments, via products like Popmoney, you could easily send her a message letting her

know the money will be delivered directly to her bank account. The only thing mom has to do is provide her account information and the funds will be automatically deposited in a couple of days. Your financial institution should be able to not only provide more information about remote deposit capture and personto-person payments, but also have the inhouse expertise to provide a demonstration. Please check with your bank or credit union to obtain more information on both these easy-to-use, convenient services. DEBIT CARD “ALERTS” – By simply using your debit card, you could eliminate a trip to the ATM or branch, further streamlining your already navigation-heavy day. “But I don’t trust using my debit card.” If this is your mantra, then a debit card “alerts” product is perfect for you! Alerts give you the ability to track transactions made on your card in real-time. In fact, they are so timely you may receive purchase notification, via your mobile or online device, before you even finish cleaning your windshield while the gas is being pumped into your car. In the event you see a card transaction not authorized by you, simply contact your financial institution. You will not be held accountable for any fraudulent activity on your account. YOU WIN! – So are financial institutions providing these products and services to rid you from using branch facilities? The obvious answer is “no!” After all, branches are not going away. One thing financial institutions do know, however, is traditional banking via brick-and-mortar facilities is extremely expensive. This, along with enhanced federal regulations, is why you do not see a lot of new bank and credit union branches being built. Instead, technology products and services that achieve the same end result are not only less expensive for your bank or credit union but, more importantly, give you 24/7 access to your money. A branch cannot do this. And fewer expenses equate to better loan rates and higher dividends for you as well as everyone else who uses a specific institution. So, when you use technology not only do you win, but so does everyone else. – Michael George currently serves as senior vice president of operations and marketing for Kern Schools Federal Credit Union. He has been employed with Kern Schools since July 1994 and, during that time, has served in various audit, marketing and operations roles.

KERN BUSINESS JOURNAL

December 2015 / January 2016

The Year Ahead

Bakersfield’s tourism scene kicks off in 2016 By David Lyman

he new year will ring in exciting additions to Bakersfield’s tourism scene. Here is a preview: Two new exhibits will open at California Living Museum (CALM). The first, the California Coast Room, will feature a docent-led touch tank with native sea creatures and a jellyfish breeding exhibit. In addition, CALM will open its high and low ropes course and climbing tower, a unique outdoor adventure experience. The high and low ropes course will offer a team-building expeDavid Lyman rience in a spectacular outdoor setting. The climbing tower will allow visitors to climb 35 feet in the air on a wall similar to a rock climbing wall. In 2016, The Kern County Museum will celebrate its 75th anniversary. Watch for the opening of Merle Haggard’s boxcar and an agricultural equipment exhibit. Also opening in 2016 will be the new Aera Gallery, a 4,000-plus square foot interactive exhibit featuring the only full timeline of Kern County history in the state. Two new rotating exhibit galleries will also open. One will be a historic photo gallery, and the other will be a gallery for the display of larger artifacts in its collection. The new Bakersfield Californian Foundation Research Center and Archive will provide unprecedented public access to the museum’s photo and paper archives. Its more than 450,000 historic photos will be in this new space that will allow visitors to conduct genealogical and other types of research. Also celebrating an anniversary in 2016 will be the Bakersfield Museum of Art. Its 60th year will be filled with unique exhibitions featuring local artists and collectors, highlighting paintings from the East Bakersfield High School collection, an exhibition of the Automobile Club’s “Westways” cover art program from 1928-1981, a retrospective of local painter Ed Reep and a yearlong exhibition featuring the works of BMOA founder Marion Osborn Cunningham. BMOA, in conjunction with The Bakersfield Californian Foundation, will be involved in a large-scale public art installation spanning downtown Bakersfield. Another milestone anniversary in 2016 will be the Kern County Fair, celebrating its 100th year. Look for bigger entertainment, exciting new ground acts and new carnival rides. Murray Family Farms is headed into the new year with new attractions, including the Murray Hill Slide and Ride, a giant

PHOTO BY JOHN HARTE

Steve Murray of Murray Family Farms manages a huge assortment of berries, fruits and nuts at the Kern County Nut Festival.

PHOTO BY JOHN FARRAND

The boxcar house that Merle Haggard grew up in arrives at the Kern County Museum and is lowered into place at its permanent home.

PHOTO BY HENRY A. BARRIOS

The Kern County Fair will be celebrating its 100th year in 2016.

AstroTurf hill where kids of all ages can climb to the top and slide down on cardboard. It provides hours of fun. Watch for an expanded and improved Amtrak parking lot at the downtown station, featuring charging stations for electric vehicles and a new, separate area for overnight parking. Next year, Visit Bakersfield will launch a new museum promotion program and a walking tour of downtown public art, each designed to bring more visitors to Bakersfield. Events-wise, Polar Bear Plunge returns Jan. 1, the Kern County Plein Air Painting Festival has its second run April 5 through 9, the Kern County Nut Festival returns May 14, and First Fridays and its Art Walk will continue in downtown’s Arts District every month, rain or shine. Also expect the return of many large groups to Bakersfield, including CIF Boys Wrestling Championships, March Meet, Cali Finale, Western Street Rods Nationals Plus, Jehovah’s Witness conventions, Sweet Adelines and Hot Rod Reunion. New hotels will be opening to provide additional rooms to accommodate these and other events. For an up-to-date listing on what is going on in Bakersfield, check out the events calendar on the all-new VisitBakersfield.com. – David Lyman is manager of Visit Bakersfield. He has spent the last 31 years involved in countless facets of promoting his hometown, including business attraction, business retention, redevelopment, enterprise zone and, now, helping visitors spend their money.

December 2015 / January 2016

KERN BUSINESS JOURNAL

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December 2015 / January 2016

Continued from page 1 accounting software, mobile applications and the evolution of the cloud for data storage, it is possible for smartphones, tablets, laptops and even Mark Hahs virtual credit card terminals to remotely process credit and debit cards and other noncash payments. Now, even the smallest business can enjoy all of the benefits of accepting payments in any form anywhere, no matter where the customer may be, immediately, and in many cases, for only pennies per transaction. A (VERY) BRIEF HISTORY AND FORECAST FOR MOBILE PAYMENTS Back in 1997 in Finland, Coca-Cola is believed to have been the first business to allow customers to send a text message to purchase its products. In 2011, Google introduced the Google Wallet mobile payment system. It uses a mobile app to store credit, debit and loyalty cards that allows customers to pay via thousands of PayPass terminals at stores across the U.S. Business should move toward a mobile payment system that accepts credit and debit cards.

Javelin Strategy & Research. As a result of this final point, and even though the methods of mobile payments are evolving, this report will focus on why and how small- and midsize businesses will be best served by moving toward a mobile payment solution that accepts credit and debit cards in order to compete in today’s and tomorrow’s marketplace. Apple Pay

In 2014, Apple introduced its mobile payment system, Apple Pay, which allows consumers to use an iPhone 6 and/or Apple Watch to make purchases at store checkout. Merchant Content Exchange (MCX) has slowly been unveiling its mobile payment platform, CurrentC, which is expected to be widely accepted by major retailers throughout the U.S. sometime in 2015. The mobile economy is blooming at an even faster rate than expected – by 2017, it will be valued at $3.1 trillion, $200 billion more than the $2.9 trillion Yankee Group forecasted in October 2012. However, while forecasts seem positive for Apple Pay, Android Pay (Google’s relaunch of Google Wallet that will be preinstalled on many Android phones in the near future) and other mobile payment solutions, most consumers still prefer to pay with credit cards. In fact, by 2017 just 23 percent of all point-of-sale purchases are expected to be made with cash, while more than three-quarters of transactions will be conducted with credit and debit cards, according to a study by market research firm

BENEFITS FOR BUSINESSES GOING MOBILE Ability to accept larger transactions According to Bankrate.com, 78 percent of Americans now carry less than $50 in cash, 50 percent say they carry less than $20 and 9 percent say they don’t carry cash at all. In addition, in a GOBankingRates survey conducted in March 2014 that asked how often banking customers wrote personal checks, the most common response was “never” (37.8 percent), followed by “several times a month” (25.6 percent), “a few times a year” (20.5 percent) and “once a month” (16.1 percent). A few years ago, before credit card payment processing went mobile, this sort of news might have been especially troubling for small- and midsize retailers that do not accept credit and debit cards. With people having less cash on hand today, those same businesses face losing sales if their item costs $25 and the customer only has $20 on them. Mobile payment processing has changed the game entirely for small- and midsize businesses that once could only accept cash. Thanks to the ability to use smartphones to accept credit cards with a

card reader, everything a business needs can be carried in a pocket and there are no constraints to where they sell, what they can charge or how much a customer can spend. This is especially great news for those who sell goods at farmers and flea markets, trade shows, outdoor events and art fairs, as well as for sidewalk vendors and cab drivers. The possibilities for so many smalland midsize businesses are limitless thanks to mobile payment processing. Link transactions directly to accounting systems It is possible, and actually preferable, to find a mobile payment processing solution that allows every transaction to flow automatically into the business accounting system. Seamlessly integrating payments into a business management system saves both time and money by eliminating the need to manually enter receipts at the end of every business day. Advantages for integrating payments for small- and midsize businesses: • Improved cash flow – Every transaction can be automatically deposited into a bank account and instantly available to pay suppliers, employees and other costs, greatly reducing payment cycles. • Reduce errors – Manually entering data at both the point of sale and again later into the accounting system presents more opportunity for human error. That is eliminated when data is automatically integrated between the two at the moment payment is accepted.

• Save time – Time once spent on data- entry tasks can now be used to improve marketing, sales and customer service. Easy to use Any small- to midsize business can be up and running with the right mobile credit card payment solution in no time. First of all, most mobile credit card payment applications can be quickly downloaded from the Apple App Store or Google Play. At the front end, where cards are accepted, all that is needed is a card reader, obtained from the mobile payment processor, which plugs directly into a smartphone or tablet. Almost everyone is familiar with the process of swiping a card through a reader at counter terminals and doing the same through a mobile card reader is really no different. Once the card is swiped, completing the payment can also be very easy. Many mobile credit card processors provide easy to understand and clear steps on the device’s screen that require minimal effort to collect the customer’s signature and either print a receipt on a mobile printer or send it to the customer’s email address. In addition, many solutions will automatically calculate taxes or tips for each sale. MOBILE PAYMENT PROCESSING IS NOT JUST FOR RETAIL Many small- and medium-size businesses that are not retail operations can also get the benefits of processing credit and debit cards using a smartphone. The ability

December 2015 / January 2016

to accept credit card payments away from the office or through a mobile device is a valuable opportunity for all types of businesses to improve cash flow and increase sales and income. Mobility for contractors and construction businesses Construction companies stand perhaps the greatest risk of failure due to cash flow problems than all other businesses. It has traditionally been a business sector that relies on initial cash outlays or extension of credit for labor, goods, tools and equipment in order to perform contracted work and then waits for invoiced payments or checks from clients to clear the bank in order to pay outstanding debts. For most contractors who work in the field and on job sites, using a mobile payment process presents tremendous opportunities to minimize cash flow problems and reduce other risks: • Accept payments for deposits, installments and final balances as work progresses or is completed. • Allow clients to use their own credit cards to pay large sums immediately rather than stretch payments over time. • Avoid the possibility of lost checks or checks that bounce. • Save valuable time by doing away with trips to the bank to make deposits. Service-based businesses can benefit from mobile payment processing Time is money. That is especially true for small- and medium-size service-based businesses. Tasks that take away from time spent working directly with clients, such as billing and bookkeeping, eat into profits. With mobile processing, a business can collect payment upon completion of the service and instantly receive fund approval. Invoicing for service companies, such as carpet cleaning or lawn care, is quickly becoming a thing of the past. Mobile payment processing reduces collection efforts and the need to prepare and send invoices. There are other advantages to using smartphones and tablets to complete business transactions for service-based businesses: • Every member of the work staff is able to accept payments and every employee becomes a cashier. • As businesses evolve and grow, the role of integrating payments with accounting processes also evolve. Mobile payment processes make this possible. • Unlike mobile card readers, on-site card readers can have costly monthly rental fees. Nonprofit organizations increase donations with mobile payments Whether a nonprofit organization accepts simple donations, hosts silent auctions, accepts admission based on donations, or sells postcards, stickers or T-shirts, having the ability to accept credit or debit

KERN BUSINESS JOURNAL

card transactions has become essential to maximizing revenue. A case in point is the Girl Scouts of America. Since 2012, 32 Girl Scout councils in 23 states, representing more than 40,000 troops, have been using mobile payments to process transactions during their annual spring cookie sale drive. By accepting mobile payments, Girl Scouts in the North Carolina Coastal Pines area reported a 13 percent increase in overall cookie sales that first year, while the size of average transactions skyrocketed nearly fourfold, to $80, for Central California South scouts. Nonprofits can seize upon other opportunities to increase donations and find new revenue streams: • Sell cause-related merchandise at booths and informational events no matter where the event is held. • Encourage larger donations by offering advantages of using credit cards rather than cash on hand. • Track donations more effectively and immediately acknowledge donor kindness.

Girl Scouts in North Carolina posted a 13 percent increase through mobile payments. In Central California, the average transaction size grew to $80 per customer.

HOW TO BEGIN ACCEPTING MOBILE PAYMENTS Step One: Find the mobile payment processor that’s right for your business Since there are a lot of mobile card processing services available, the real challenge is finding the right processor that not only meets your current needs, but can also grow and meet your needs as your business evolves. For instance, fee structures are an important consideration for small- and midsize businesses. Some services charge per transaction, some offer a monthly service fee and others require both. It’s important to take a long-range look at the way you do business and determine which fee option

works best for you. Other things to consider are whether the payment processor requires a contract or has a setup fee, handles things like

Change is inevitable for the future of mobile payment processing. Your customers will demand better service and more options as mobile payments become the accepted norm for the way businesses operate. automatically adding sales tax or allowing tips to be added to sales totals, and offering the ability to email receipts to customers. In addition, choosing a payment processor from the start that offers the ability to grow with your business and will support more complex payment solutions down the road will serve you better in the long run. For companies that experience high volumes of sales at specific times of year, like during holidays or during the summer tourist season, keep in mind that it is usually possible to order multiple card readers for single accounts. In some rare instances, the ability to step up to virtual terminals that are accessed through laptops or wireless credit card terminals during peak times may need to be taken into account. It might be prudent to make sure your mobile payment processor can support this. Finally, it is always a good rule of thumb to trust companies that have been in the mobile payment game for years. With the growing popularity of mobile credit card processing, there have been a lot of new companies entering the market that do not have a proven track record of security compliance. They also lack the experience that comes from working with small- and midsize businesses and helping them grow and prosper. Step Two: The equipment In terms of equipment required to begin accepting mobile credit card payments, chances are you already have the most important component for a mobile payment transaction: a smartphone or tablet. The only other piece in the mobile payment process that you will need is a mobile credit card reader, a small device that is inserted into the audio jack or paired via Bluetooth with your smartphone or tablet. Your mobile payment provider will provide this to you. They come in all shapes and sizes, but they all perform the same basic function – you simply swipe the card through the reader’s slot. These credit card

readers instantly turn a smartphone or tablet into a credit card payment terminal. Step Three: App downloaded, you’re good to go Practically all mobile payment services are available by downloading mobile applications, or “apps” as they are more commonly known, from Google Play or the Apple App Store, so once you’ve decided on the right mobile payment processor to use, the rest is a snap. Within minutes, you’ll be ready to take credit and debit card payments using your smartphone or tablet. Consumers are already very comfortable with the concept of swiping a card to complete a transaction. There’s very little training required for you and/or your staff. If you’ve chosen your provider wisely, payments will automatically be deposited directly into your bank account and transactions efficiently integrated into your accounting system. You’ll immediately begin enjoying all the benefits of mobile credit and debit card processing. CONCLUSION As you can see, there are quite a number of factors that need serious consideration before deciding on the mobile payment solution that works best for your company. It is important to find a mobile payment processor that will work with you as your company grows and can simplify the entire process so that you can concentrate on your business and making it a success. Change is inevitable for the future of mobile payment processing. Your customers will demand better service and more options as mobile payments become the accepted norm for the way businesses operate. The company you turn to should be a leader in payment technology. Do your homework now. Find a trusted and experienced mobile payment processor that has a track record of working with businesses just like yours. Find a company that offers all payment types and solutions, from simple to complex, that understands your business and will work with you and provide the right answers to all of your mobile payment questions. Most importantly, find a company that is prepared to grow with you and nurture your business no matter what your situation requires. Once you have, you’ll be able to embrace the benefits and opportunities that the new mobile economy offers. – Based in Bakersfield, Mark Hahs is an accomplished interactive executive, mobile platform development expert and creative thought leader with broad experience in helping clients small, medium and large since 1994 build and grow a wide range of interactive and mobile businesses from the ground up, from entrepreneurial startups to established market leaders.

KERN BUSINESS JOURNAL

December 2015 / January 2016

Financial Wellness

Protect retirement plans even when hit by layoffs By Steven Van Metre

t’s a common problem prompting a common question: I have just been laid off. What should I do with my retirement money? During the layoff frenzy of the Great Recession of 2009, I was answering this question nearly every day until economic recovery kicked in and people returned to work. But in recent months, many of my clients once again are struggling to keep their retirement plans on track as jobs are lost in Kern County’s oil patch. With the price of oil tanking in the world market, blue collar and executive jobs are being cut from the workforces of international and independent producers and related service companies. Sadly, this setback has hit close to home, with widespread Steven Van Metre layoffs reported in Kern County. My initial advice to financial planning clients hit by these layoffs is: don’t panic; don’t act hastily. A wrong move now can jeopardize your retirement security in the years ahead. Withdrawing funds from tax-deferred savings plans, such as company-sponsored 401(k) plans, or borrowing against these funds are attractive options for meeting special needs when a regular paycheck is lost. But they should be “last resorts.” According to Bankrate.com, 30 million Americans last year used their retirement savings to pay for an emergency. These withdrawals did permanent harm to people’s retirement plans. Basically, when it comes to tapping funds placed in a tax-deferred 401(k) retirement savings account, a person

has two choices: borrowing or withdrawing. Both have few benefits and many risks. Loans, which are available for limited purposes, are generally made at lower-than-commercial-market rates and can make funds available even to people with marginal credit scores. They also will not count against an individual’s credit score.

Don’t panic; don’t act hastily. A wrong move now can jeopardize your retirement security in the years ahead. But borrowing denies the money the opportunity to compound over time and diminishes the overall value of the savings account. And failure to repay loans during a specified time frame (usually five years) will require the borrower to pay hefty taxes and penalties. Simply withdrawing money from a 401(k) before a saver has reached 59 ½ years of age also requires the saver to pay taxes and penalties. The Internal Revenue Service reports that $5.7 billion in penalties were paid in 2011 on $57 billion prematurely withdrawn from tax-deferred retirement plans. Before tapping these savings plans for emergency money, consider alternatives: Obtain a home equity line of credit, personal loan, or loan from a family member or friend. Resist withdrawing funds or borrowing. In the meantime, decide what to do with money in your company 401(k) plan. Unless you immediately get a new job, you basically have two options: leave your money in

the plan or roll it over into an IRA. Your ability to leave it in the old plan will depend on how much money you have saved. If your account has more than $1,000 but less than $5,000, your former employer can transfer the money into a Safe Harbor IRA of that company’s choice. If you have less than $1,000, you likely will be given a check for that amount, minus taxes. The advantage of leaving the money in the former employer’s plan is convenience and credit protection. Federal law prohibits creditors from attaching 401(k) plans. However, you lose the ability to manage your own investments as you would with an IRA. Rolling your money into an IRA provides a wider range of investment options. There is no single magic strategy to securing retirement plans and savings in a layoff. The key is taking thoughtful, careful steps: Cash-flow projections – Develop a realistic picture of your finances. Include such income as severance and pension payouts, investment interest, real estate income, unemployment benefits, Social Security, etc. Develop a budget, which identifies current spending and potential cutbacks. Look for work – Begin networking for another job immediately after being laid off. You may need to “reinvent” yourself, identifying skills that can be applied to other industries not affected by job cutbacks. Being laid off does not kill your retirement plans. It just means you will need to be more determined to keep them on track. – Steven Van Metre is a Bakersfield certified financial planner who specializes in retirement income strategies and teaches a course on retirement planning for the Levan Institute for Lifelong Learning at Bakersfield College. For more information, visit www.stevenvanmetre.com.

Consider financial resolutions in new year By Justin Leland

any people look to the new year as a time for renewal and personal reflection. It is an opportunity to change and improve your life. This year, when you’re sitting down and setting those goals to lose weight or get a new job, don’t forget to take this opportunity to make important financial goals. However, you want your goals to stand throughout the year, unlike the resolution to run a mile every day. To be successful, you should set goals Justin Leland with small attainable steps that will help you to achieve the bigger goals that you need

to reach. Consider these three areas when you are setting your financial goals for 2016: GOAL NO. 1: GET CONTROL OF YOUR BUDGET If you are not already tracking your spending, now is the time to start. Take advantage of free online resources like Mint. com to make tracking your expenses a breeze. You can’t save or adjust your spending if you don’t know where your money is going. Are you spending $50 a week on lattes? You could use that $200 a month to help with goal No. 2, and my guess is you could make better coffee at home or at the office. GOAL NO. 2: LOWER OR ELIMINATE YOUR DEBT You should make it a high priority to lower your debt. Learn what you can do to

set up a debt payment plan that will speed up the process and ways that you can find more money to apply to your debt. Don’t forget that the hardest part of getting out of debt is to stop adding to it. Use some restraint and delay the satisfaction of buying an item that you can’t afford. Are you hoping to get a substantial tax refund? Use half of that money to pay down debts, and use the other half to start you on goal No. 3. GOAL NO. 3: SAVE AND INVEST FOR RETIREMENT You should want to continue investing in retirement even if you are not completely out of debt. If you invest up to your employer’s match, then focus the rest of the income toward getting out debt. You can do both things at the same time. As an added bonus, that 401(k) match is free money given to you that is invested and has the

ability to grow. A good support system will help you reach your goals. So be sure to share your goals with a trusted friend and ask him or her to hold you accountable by checking on your progress. Create a debt reduction checklist and track your progress. By tracking your spending, lowering or eliminating your debt, and increasing what you invest for your future, you will quickly find yourself on the path to becoming “moneywise.”

– Justin Leland is a financial adviser at Moneywise Wealth Management. He is also a host of the “Moneywise Guys” radio program on KERN 1180 AM and 96.1 FM weekdays from 10 a.m. to noon. His email is Justin@moneywiseguys.com and website is www.MoneywiseGuys.com.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Invest like a millennial By David A. Milazzo

o you want to become a bleedingedge, millennial-style market investor, do you? Awesome sauce. There are two simple rules: 1. If you make the trade, it better be free. 2. If someone else makes the trade, that someone better be a robot. Oh yeah, and the robot trade should also be (almost) free. Internet stock trading is nothing new. We’ve laughed at more eTrade baby David A. Milazzo commercials than we can hope to remember. And there are dozens of worthy platforms catering to every niche of the trading market: retirement, day trading options – you name it. But within the last year, a few new ideas have come out of the woodwork. Personally, I’m falling back in love with a market that left me for dead in the mid-2000s. But I’m finding it to be fun again. Let’s start with free trading. In a world typically charging $10 for an online trade, we’ve been wooed by marketing that brings the cost down to $7.99 or $6.99 per trade or gives you 999 free trades for some obscenely short period of time. Hogwash. Check out Robinhood (robinhood.com). This little gem allows 100 percent free trading all the time. It’s a slimmed-down app for your mobile device – so you won’t find tons of market analysis and trading tools baked in. But did I mention trades are totally free? The clean and simple interface makes investing easy for novices and pros alike. And in case you were wondering, the company turns a profit by capturing the interest on a combination of uninvested deposits and margin trading. But with the exception of a very cool zero-cost model, there is nothing earth-shattering from a technology perspective. But it sure lubri-

cates your ability to change positions at the drop of a hat. A more futuristic and potentially paradigm-shifting technology is the “robotrading” concept coming into prominence. These investment engines seek to handle long-term wealth building using proprietary algorithms to balance portfolios across stocks and bonds according to a desired level of investment risk. The two leading platforms are Betterment (betterment.com) and Wealthfront (wealthfront.com). Both platforms offer a low initial deposit (as little as $5 to $500) and extremely low annual fees. Instead of the average 1 percent a traditional broker might charge, these “roboplatforms” charge between .15 percent and .35 percent per year. And in addition to this substantially reduced management cost, the platforms offer some inventive tax magic. They call it tax-loss harvesting. Wealthfront describes this as “harvesting previously unrecognized investment losses to offset taxes due on your other gains and income. You can reinvest these tax savings to significantly grow the value of your portfolio.” Basically, you can make money on your losers – who doesn’t like the sound of that? This is just the tip of the iceberg. Delve in to these platforms to find how they can help you save for retirement, education, health care – anything. I’m using Robinhood for the thrill of investing and Betterment for our daughter’s college fund. I can’t wait to see what investment platforms will be waiting for our little Gianna when she becomes an adult. Let’s just hope the phrase “awesome sauce” is long gone by then. – David A. Milazzo is the founder and principal of Bakersfield-based Macroscopic, an Apple enterprise technology consultancy focused on bringing Mac and iOS technologies to businesses, schools, agencies, and independent professionals. Send your questions to him via email at milazzo@macroscopic.net.

KERN BUSINESS JOURNAL

December 2015 / January 2016

Trail of 100 Giants is accessible through Long Meadow Grove within the Giant Sequoia National Monument.

PHOTO BY CASEY CHRISTIE

A responsible investment in jobs, conservation pays dividends for Kern County By Natalie Blanning

s President Teddy Roosevelt said, “The nation behaves well if it treats the natural resources as assets, which it must turn over to the next generation increased and not impaired in value.” Those comments shared in 1901 by our 26th president are more spot on now than more than a hundred years ago. Unfortunately, over the last nearly four decades, Congress has cut the percentage of the federal budget going to Natalie Blanning conservation in half. The Interior and Environment Appropriations bills now before Congress, would slash conservation’s share of the overall budget even further to below 1 percent. So why is this so important? Why does this issue require the attention of leaders in Congress such as Rep. Kevin McCarthy? Because adequate federal funding for conservation, recreation and preservations

now play a critical role in the economy of Kern County. This year, after years of flat or decreasing funding, Consumer Alliance for a Strong Economy (CASE) strongly encourages Congress to invest at least $31 billion to support jobs, business, clean water, fish and wildlife, public lands and preservation of our national treasures. CASE absolutely understands the need for fiscal discipline throughout the process. We recognize that our federal government must be held accountable to maintaining and staffing these public lands for all Americans to enjoy. However, the most compelling factor for investment is protecting jobs, businesses and livelihoods in our state. Consider the fact that the California outdoor recreation economy is responsible for: • $85.4 billion in consumer spending • 732,100 direct California jobs • $27 billion in salaries and wages • $6.7 billion in state and local tax revenue CASE members are among millions of conservationists, sportsmen, business owners and history buffs who support adequate and responsible funding for our

natural resources and outdoor heritage. Here in Kern County, we are fortunate to have plenty of year-round excitement for the outdoorsman, explorer or naturalist. The region is home to an incredible selection of geography: ranging from the wide-open Central Valley to the peaceful Sierra Nevada to the striking terrain of the Mojave Desert.

CASE members are among millions of conservationists, sportsmen, business owners and history buffs who support adequate and responsible funding for our natural resources and outdoor heritage. Our national parks also offer something for the history buff. Some protect significant paleontological sites, while another landmark preserves the original fort headquarters of the United States Army Camel Corps. Residents of our region can visit

breathtaking Sequoias at the Giant Sequoia National Monument or Trail of 100 Giants. Activities abound in the Los Padres National Forest and peaceful retreats found in the surrounding mountain communities. In the southern San Joaquin Valley, residents can witness rare tule elk or Mojave’s magnificent and scenic cliffs, buttes and spectacular rock formations. We’re fortunate to enjoy the best of California, and it’s all right here in Kern County. We hope you’ll recognize the numerous advantages of supporting public lands, battlefields, waterways, parks and monuments in Kern County and join our efforts to call upon leaders, such as Rep. McCarthy, to validate the famous quote of America’s roughest rider, President Roosevelt. It’s a responsible investment that pays us all back many times over. – Natalie Blanning is the executive director of Consumer Alliance for a Strong Economy. The statewide advocacy organization supports state and federal initiatives, which bolster economic growth, small business and jobs. For more information, visit www.consumeralliance. org

December 2015 / January 2016

KERN BUSINESS JOURNAL

December 2015 / January 2016

Question and Answer with Rob Hallum

Mission Bank: Keeping an eye on Kern’s agriculture

PHOTO BY HENRY A. BARRIOS

A field is irrigated in an area near Panama Lane and Fairfax Road south of Bakersfield. The drought in California is a threat to California agriculture.

By Maureen Buscher-Dang

ob Hallum is senior vice president in charge of Mission Bank’s agricultural division. A Mission Bank executive for more than 12 years, he has nearly three decades of banking experience, having worked previously for Wells Fargo Bank and Bank of America. Born and raised in Bakersfield, Hallum graduated from West High School and earned a bachelor’s degree in business administration from Baylor University in Waco, Texas. He and his wife, Robyn, live in BakersMaureen Buscher-Dang field with their three children: Cole, a senior at Campbell University in North Carolina; Brock, a freshman at Bakersfield College; and Drew, a junior at Centennial High School. Hallum recently responded to questions posed for the Kern Business Journal about providing banking services to the local agricultural industry and trends the veteran banker sees in agriculture. Since Mission Bank opened its River Walk Business Center in southwest Bakersfield a year ago, how is it meeting local banking needs? Opened in August 2014, River Walk is a full-service office that is recognized for providing an exceptional banking experience. Its state-of-the-art design features no teller lines. All business is conducted sitting down at desks in a professional and personal environment. There is no other bank in town like ours. Experienced business bankers provide a full range of services, including taking deposits, cashing checks, opening new accounts, sending wire transfers and researching account issues. They frequently go to a customer’s location to conduct business, rather than having them come to the bank. This is the advantage of working with a community bank. Mission Bank provides a personal touch and has local bankers who can make lending decisions in a matter of days, rather than waiting weeks and months for an answer from a national or regional bank.

MISSION BANK HAS CONCENTRATED ITS AGRICULTURAL SERVICES AT ITS RIVER WALK CENTER. WHAT DOES THIS ENTAIL? Headquartering the agriculture division at River Walk enhances the growth of the customer base, as well as loan production. However, all of Mission Bank’s business centers in eastern Kern County, the High Desert and the San Joaquin Valley, offer agricultural products and services. Together with business center staff, bankers from the agriculture division will meet with customers in business centers or at the customer’s business location. WHAT BANKING SERVICES DOES MISSION BANK PROVIDE? Customers range from large agricultural corporations to modest family farms. The bulk of Mission Bank’s clients can be described as small- and medium-size farms. Services include “treasury management,” deposits, online banking, etc.; loans for annual crop production, permanent crops and livestock; and real estate loans, including loans for development and farm equipment. Through use of programs such as Farmer Mac, real estate loans can go up to $50 million. WHY IS IT IMPORTANT FOR LOCAL FARMERS TO WORK WITH A BANK THAT HAS AN AGRICULTURAL SPECIALTY? Banks with an agricultural specialty, such as Mission Bank, are committed to the industry. They understand and accept the volatility that is inherent in the agricultural industry. Sometimes you will see a bank suddenly begin reaching out to the agricultural industry. But without that understanding, they will back out of the business, declaring it too risky or too complicated. Our commitment is for the long term. AS KERN COUNTY STRUGGLES THROUGH ITS FOURTH YEAR OF DROUGHT, LOGIC WOULD SUGGEST THAT LOCAL AGRICULTURAL ACTIVITY IS DEPRESSED. IS THAT TRUE? Definitely not. Local ag land values are probably at their highest, particularly if the land has good access to water. Permanent crops, such as almonds and pistachios, have exceptionally high returns. Almonds are considered a “super

Rob Hallum

food” and are being very well marketed. Pistachios have also reflected strong returns with California comprising approximately 98 percent of the U.S. crop. Kern County pistachios account for 50 percent of California’s crop. Citrus and grapes also are receiving robust returns driven by supply and demand.

WHAT IMPACT IS THE DROUGHT HAVING ON MISSION’S AGRICULTURAL CUSTOMERS? The drought is posing both challenges and opportunities. Many thousands of acres that rely on water distributed from federal or state projects have been taken out of production. But some service industries, such as well drilling and repair, are going on 24/7. And farmers are installing sophisticated and innovative systems to stretch limited water supplies to maximize production. Mission Bank has provided loans for some of these systems due to their high costs. Wells can cost as much as $800,000. THE NATIONAL MEDIA IS REPORTING THAT INVESTORS ARE BUYING UP PRIME AGRICULTURAL LAND AS FARMERS RETIRE. ARE YOU SEEING THIS IN KERN COUNTY? Absolutely. Pension funds, industry associations and church conglomerates are among the very active investor groups buying farm land. Investors seek high returns. With peaking land values and crop prices, the ag industry has been a good investment. Once the real estate is purchased, local farmers continue to benefit because there is an opportunity to manage the property. These groups typically hire a local farm manager to manage the operation. – Maureen Buscher-Dang is a Bakersfield public relations and marketing consultant.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Mercy and Memorial hospitals look to share health, healing and humankindness By Michelle Willow

ercy and Memorial Hospitals have embarked on a multiphase improvement project that will enhance the patient experience and patient healing through a humanized and personalized design approach. The Bakersfield market makeover is part of a $220 million network project that includes Dignity Health’s 39 hospitals throughout California, Arizona and Nevada. While the investment is significant, leadership at the three Dignity Health Bakersfield Michelle Willow facilities recognize the role that the physical environment has the ability to improve healing and the overall experience of patients, their families and visitors. Dignity Health is making this investment as part of its commitment to humankindness and to improving the experience of everyone who steps into a Dignity Health facility. Enhancements for Mercy Hospital Downtown, Mercy Hospital Southwest and Memorial Hospital are targeted to be complete by the end of 2016. The systemwide improvements were thoughtfully

Guided by feedback from patients and their families, the improvements will flow from five design directives: welcome me as a guest; make me feel comfortable and comforted; help me navigate with ease; see me as a person first; and inspire my spirit to heal. constructed to bring to life Dignity Health’s pillars of humankindness in the hospital environment. Guided by feedback from patients and their families, the improvements will flow from five design directives: welcome me as a guest; make me feel comfortable and comforted; help me navigate with ease; see me as a person first; and inspire my spirit to heal. In the coming months, improvements in our patient rooms, emergency departments, nurses stations, family and

surgery waiting areas, main lobbies, parking areas, gardens, and common areas will emerge. The updated hospital environments will invite healing, peace and humankindness — elements conducive to a healthy recovery. Going beyond the physical improvements and environment, our staff embraces the culture of kindness and brings this to work each and every day, strengthening the connection of healing and kindness. Dignity Health also embraces the principles of environmental stewardship. These enhancements incorporate environmental principles, policies and procedures that include water conservation, reduced waste and increased recycling, elimination of hazardous chemicals, and tracked greenhouse gases. Humankindness is at the heart of everything our caregivers do, and now our physical environment will reflect that humankindness as well. Beyond the proven science of hospital design enhancing patient outcomes, the simple truth is everyone appreciates kindness, warmth and comfort when we are trying to heal. – Michelle Willow is director of communications for Dignity Health Central California Service Area South. She oversees internal and external communications for three Dignity Health Bakersfield hospitals, public relations activities and is an active member in the community.

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KERN BUSINESS JOURNAL

December 2015 / January 2016

CAPK’s volunteer income tax assistance program turns 10 Community Action Partnership of Kern’s Volunteer Income Tax Assistance Program (CAPK VITA) Locations and Dates of Service By Appointment Only Bakersfield Main CAPK VITA Site: • 300 19th St., Bakersfield, CA 93301 • Open noon to 4 and 5 to 8 p.m. Tuesday –Thursday; 10 a.m. to 2 p.m. Friday; and 10 a.m. to 2 p.m. every other Saturday, Jan. 30 through April 2. McFarland New Satellite Office: • Family Life Worship Center 501 West Perkins Ave., McFarland, CA 93250 • Open 10 a.m. to 2 p.m. every other Saturday, Feb. 6 through March 19.

Walk-in Only Wasco Satellite Office: • Grace Community Church 1544 7th St., Wasco, CA 93280 • Open 10 a.m. to 2 p.m. every other Saturday, Jan. 30 through April 2. Tehachapi Satellite Office: • Mountain Vineyard Church 502 Pinon St., Tehachapi, CA 93561 • Open 10 a.m. to 2 p.m. every other Saturday, Feb. 6 through March 19.

By Louis Medina

ommunity Action Partnership of Kern’s Volunteer Income Tax Assistance Program (CAPK VITA), which provides no-cost tax preparation for low-tomoderate-income taxpayers, is turning a mature 10 years old in 2016. VITA has been in existence since 1971, but CAPK only began offering VITA services in 2006. That year, CAPK VITA completed a modest 129 returns for local taxpayers. In the past four years, the program has averaged some 4,200 returns per year—a 32-fold increase in less than Louis Medina a decade. Taxpayers earning $54,000 a year or less qualify for the program. Taxes are filed electronically on their behalf to ensure faster returns, and VITA tax preparers screen clients thoroughly to determine whether they are eligible for the federal Earned Income Tax Credit (EITC) and child, education, and other credits, which can greatly increase the amount of their return. In 2016, clients will also be screened for California’s new state EITC, which is designed to help the poorest of the poor: single taxpayers earning $6,000 a year or less, and families earning $13,000 a year or less. Outreach to college students, homeless individuals and other low-income groups will be carried out to ensure they don’t miss out on filing for the state EITC. Effective outreach to some 3,000 prior-year CAPK VITA clients will also be carried out at the beginning of the New Year, with a mailer reminding them to call in and schedule

their tax appointments. “About half of our clients are returning clients,” Program Manager Sandi Truman said. “Some of them move to other areas but come back to us during tax season to have us prepare their tax returns.” CAPK VITA stimulates the local economy yearly with some $10 million in recovered tax and EITC return dollars that might otherwise go unclaimed. The success of CAPK’s VITA program is largely due to two things: Truman’s passion and her trustworthy volunteers, the “V” in VITA. “Our program depends heavily on volunteers,” she said. “Without them, we would not be able to provide the services we do, or complete the amount of returns we file each year. We have die-hard volunteers who have been with us from one to nine years. I greatly appreciate all the time our volunteers give to help the community with this valuable service.” What’s in it for them? VITA volunteers get to learn or practice valuable office skills such as tax preparation, accounting, appointment scheduling, in-person or over-the-phone customer service, and translation and interpreting. “Over the years, we have been able to accommodate clients who speak other languages because of the diversity of our volunteer pool,” Truman said. “So we now offer help to taxpayers in English, Spanish, Punjabi, Arabic, and Chinese.” The program is popular among aspiring certified public accountants who receive credit for their volunteer hours. Each year, volunteers who donate 80 hours or more to the program are treated to a sunset dinner cruise in the Los Angeles Harbor. – Louis Medina is the outreach and advocacy manager for Community Action Partnership of Kern.

Bakersfield Main CAPK VITA Site: • 300 19th St., Bakersfield, CA 93301 • End of Season Rush: April 15 and 16, and 18 (as the Internal Revenue Service is extending the filing deadline next year). Walk-in hours for these dates are still to be determined.

Information and Volunteering Call (661) 834-1724 or simply dial 2-1-1 to get information on how to file your taxes at any of the above CAPK VITA locations, or how to become a CAPK VITA volunteer.

What to bring to your CAPK VITA Appointment • Proof of identification – Picture ID • Social Security card(s) or Individual Taxpayer Identification Number(s) or ITIN(s) • W-2’s, 1099’s, gambling, Social Security, unemployment and any other tax documents/forms • Health insurance information • 1095A, 1095B or 1095C Form for health insurance • Interest and dividends statements • Bank routing and account numbers for direct deposit • Day care/provider information if applicable • If married and filing jointly, both spouses must be present

KERN BUSINESS JOURNAL

Retirement planning a function of relationships, not transactions By Scott Garrison

have been helping people plan and execute their retirement here in Bakersfield for the better part of 35 years. I truly like my job, which is good, since it’s not all that easy to accomplish the many complex goals that go into successful financial planning. When you mix government regulations, variations in financial markets, individual personalities, views about money in general, and Scott Garrison variable financial opportunities and risks, it makes for a complex set of variables. My job is essentially solving for X. When you plug in Social Security benefits, pension plan assets and other retirement funding, then project necessary savings, you typically get a solid place to start. You will need to state an assumed rate of return for your assets, but unless you choose an unrealistic number – say, 10 percent per year – the measurable milestones come clearly into view. When you select an assumed rate of return/goal, don’t use an inflated number. If the professionals that run the assets for the Harvard Endowment average 6 to 7 percent per year, your manager is not going to beat that number on a consistent basis. But when you choose an intelligent number, the probability for success becomes quite large. Retirement planning is like a jigsaw puzzle. The more you work at it, the more things come into focus. Things you need to do become more obvious, and the things you should avoid become obvious as well. It’s important to point out that this particular jigsaw puzzle in your life is NOT OPTIONAL. Many of us have relatives who had guaranteed pensions at retirement, but this is extremely rare now. It’s also worth noting that this particular jigsaw puzzle is going to become overwhelming at times and that you need to stay the course to achieve success. Most of us have a particular retirement goal in mind, usually a certain age, monthly income or perhaps net worth. But without proper planning and consistent discipline, this is not going to happen. When I was a college professor, I used to say, “Random events get random results.” They know what you value, what you want and why, and they can explain things to you in a way you can understand. I bring

this up because this is what I feel is the No. 1 skillset you should look for in a financial planning professional. Different firms have different products, and training varies from firm to firm, but the person who understands you best obviously has the best probability of success for you. Beyond listening skills, the individual(s) you hire needs to have excellent training, be gifted at motivation and patient when you experience setbacks The good news about these challenges is that today’s financial marketplace has lots of options. People can often buy their own pension and receive lifetime income. Financial products are better than ever at automatically adjusting to the market and economic conditions, and these products are often efficiently priced.

As with any important aspect of your life, school, family, church, etc., you want people who know you – who know your values, strengths and weaknesses – to help you consistently make informed and intelligent decisions. Speaking of efficiency, I always marvel at the numerous articles dealing with how much money can be saved by using products that have the very lowest fees. Finance is kind of the same. Do you really want the lowest fees on something as important as your nest egg? Also, keep in mind that when you buy virtually any financial product, you are co-investing with others who also bought that product. And fee-conscious shoppers are notoriously unpredictable. So, when you invest with others who can buy and sell financial positions (e.g., mutual funds, annuities), these people can directly affect your financial outcomes, and, as such, you want knowledgeable, stable people investing alongside you. Go ahead and Google “adviser funds versus no load funds over time.” In summary, you want your retirement outcome to be a function of relationships, not transactions. As with any important aspect of your life, school, family, church, etc., you want people who know you – who know your values, strengths and weaknesses – to help you consistently make informed and intelligent decisions. – Scott Garrison is the owner of locally based registered investment adviser Sierra Capital Management.

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December 2015 / January 2016

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December 2015 / January 2016

LIPO CHING/BAY AREA NEWS GROUP/TNS

Two Tesla EVs charge at the City of Palo Alto EV charging station in the public garage.

Annual new California electric vehicle registrations 2011 _ 5,302 2012 _ 5,990 2013 _ 21,912 2014 _ 29,536 2015 (through June 30) _ 16,930 Source: California New Car Dealers Association

Need an EV battery fill-up? At many charging stations, get in line By Louis Hansen San Jose Mercury News

SAN JOSE, Calif. – Joe Siudzinski travels around town just fine in his six electric vehicles. He can get by with a 15-minute charge on a round trip from his home to the San Francisco airport, or a breakfast break and a longer top-off on a drive to Monterey, about 50 miles south. But he’s found a bug in the network: people. They park gasoline cars at charging stations, unplug vehicles to refill their own batteries and otherwise foul up the system. Siudzinski, a retired engineering director, tries to debug an already strained network. He slips a red note under the windshield wipers of offenders _ gas powered cars, or fully charged or disconnected EVs _ with a reminder: “You are parked in an Electric Vehicle Charging Station. How would you react if your fuel tank was empty and someone was blocking your access to the only open fueling station in the area?” Said Siudzinski: “A charging station is not an automatic parking privilege.” As EVs have grown in popularity, businesses and governments in California are scrambling to meet the power demands of green vehicle owners and support a state goal to have 1.5 million zero-emission cars on the state’s roads by 2025. In some spots, demand for charging stations has outstripped supply. That demand has sparked competition at stations and among businesses looking for a position in a growing market. And no one seems to think there's a good solution in sight. The state Public Utilities Commission in September rejected a controversial proposal by utility PG&E to build

25,000 charging stations across the region, mostly at workplaces and at densely populated apartment and condominium complexes. The $654 million price tag would have been passed along to residential customers through a monthly fee of about 70 cents. The commission found the utility failed to ease concerns about its potential to dominate competition and chill innovation in the market. The utility recently resubmitted a scaled down plan to build up to 7,500 stations over three years. Aaron Johnson, PG&E vice president of customer energy solutions, said nearly one-quarter of all EVs sold in the United States are in the utility’s coverage area. About 160,000 EVs are registered in California. The company estimates the region has about 6,000 public stations and needs about 100,000 to meet future demand. A widespread charging network needs to be built, he said. Pasquale Romano, CEO of ChargePoint, an electric charging station network, said PG&E cannot meet the needs of Bay Area drivers as they extend past the utility’s coverage area. Romano said a robust infrastructure should be built with better public and private partnerships and also include balanced government incentives. ChargePoint counts nearly 25,000 commercial chargers in its international network. The company sells stations and collects monthly fees from owners hooked up to the network. “It’s not a gas station model,” Romano said. “It never will be.” Electric fill-ups cannot be as quick as gasoline _ taking anywhere from 20 minutes to a day or longer _ but Romano believes increased battery range and more familiarity with the technology will ease consumer concerns about running out of power.

Jerry Pohorsky, a zero-emission car owner since 1999, said so-called range anxiety can be overcome. Pohorsky gets about 75 miles from a charge in his 2002 electric Toyota RAV4, but he once made a 200 mile trip from his home to visit his mother. “Just to prove I could,” he said. Luxury automaker Tesla has taken another approach. The company is building a proprietary, worldwide network of charging stations that provide free hookups for Tesla owners. The vehicles claim a range of about 250 miles, several times greater than a typical EV. The network’s goal is to provide Tesla owners highpowered chargers in locations where drivers want to be _ shopping malls, tourist stops and other destinations, said spokeswoman Alexis Georgeson. The company has almost 250 Tesla Supercharger stations in North America and nearly 550 around the world. The fast chargers have proved so popular that the company emailed Tesla owners in August to remind them the fast-charging stations were designed for long distance travelers, not daily commuters. In some ways, the construction of a network is a chicken-and-egg problem. The existence of more charging stations encourages more people to buy electric vehicles, according to research by the International Council on Clean Transportation, and that means even more charging stations are needed. Joe Siudzinski said there are enough stations around the Bay Area to manage his daily routine and the occasional longer trip. He’d like to see more fast-chargers near highways so he can drive his Mitsubishi i-MiEV back from Monterey without a dinner-and-charge break. For now, he said, the message is to “plan where you charge.”

December 2015 / January 2016

KERN BUSINESS JOURNAL

Pay attention to use tax when making out-of-state purchases online By Joel A. Bock

ave you ever thought to yourself, “I’ll purchase this product on the Internet from an out-of-state vendor and avoid paying sales tax?” If so, you’re likely not alone. If an outof-state retailer does not have a sufficient physical connection to the state (i.e., nexus), then there may not be a requirement for the Joel A. Bock retailer to withhold and remit sales tax. In California, when a consumer purchases merchandise from an out-of-state retailer, if the vendor is not otherwise required to withhold and remit sales tax, then the consumer is liable for use tax due on the out-of-state purchases. The use tax rate is the same rate as the sales tax rate for the same location in California. In an effort to encourage use tax law

In California, when a consumer purchases merchandise from an out-of-state retailer, if the vendor is not otherwise required to withhold and remit sales tax, then the consumer is liable for use tax due on the out-of-state purchases. The use tax rate is the same rate as the sales tax rate for the same location in California. compliance and self-reporting, the state of California has created an alternative method for reporting the amount of transactions

subject to use tax annually. If an individual purchases less than $1,000 worth of items during the year for personal use on which use tax would be due, then the individual is allowed to use the Use Tax Lookup Table to estimate the amount of use tax due based upon the individual’s adjusted gross income and the amount of tax that can be reported on the individual’s California income tax return. If the purchases exceed $1,000 annually or if the purchases are used in a business, then the Use Tax Worksheet should be used in lieu of the Use Tax Lookup Table. The concept of sales and use tax nexus, or the minimum level of a seller’s physical presence within a state that permits a taxing authority to register, collect, and remit sales and use taxes has evolved substantially over the past several years. On June 28, 2011, the state of California enacted Revenue and Taxation Code Section 6203(c)(5), also known as the “Amazon law” or “Amazon tax,” which was patterned after a comparable law in the state of New York, and created a “click through nexus” law requiring

out-of-state online retailers meeting certain sales volume thresholds to collect sales tax on all taxable sales of tangible personal property made through Internet-based referrals. As a result of this legislation, Amazon’s initial response was to sever ties with thousands of California associates and publicly espouse the view that the law was “unconstitutional and counterproductive.” After several legal battles and negotiated delays, Amazon reinstated its relationship with its California associates and the “Amazon law” took effect Sept. 15, 2012. Despite these recent efforts, the California Board of Equalization estimates the “use tax gap” in California (i.e., the difference between the amount of use tax that is reported and paid and the amount of use tax that should be reported and paid based upon current law) to be in excess of $1 billion annually. – Joel A. Bock, CPA, MST is a partner in Daniells Phillips Vaughan & Bock, a Bakersfield accounting firm.

KERN BUSINESS JOURNAL

December 2015 / January 2016

Small Business Development Center

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Keep sharp eye on market trends to grow business By Kelly Bearden

here seems to be nearly endless sources of market information available to small-business owners. The trick is finding them and using them effectively. Rieva Lesonsky, the chief executive officer of GrowBiz Media and SmallBizDaily.com, highlighted some available information sources Kelly Bearden and the business insights they provide, during a recent national Small Business Development Conference attended by more than 1,000 business consultants. Using information about hot markets, hot businesses and hot trends, Lesonsky, the former editorial director of Entrepreneur Magazine, advised SBDC consultants how to keep close tabs on emerging markets and customers’ habits to help businesses succeed and grow. Every business plan should include a snapshot of the company’s existing and potential market – size and growth trends, competition and critical issues facing the company’s ability to sell products. This snapshot should include a factpacked summary of such things as who buys the company’s offerings and whether the prospects are growing, holding steady or shrinking. Customers should be defined by age, gender, race, educational level, marital status, income levels, lifestyles, beliefs and behaviors that affect the way

they make buying decisions. Markets also should be divided and analyzed by “segments” – consumers, business-to-business customers, and online and retail outlet customers. These segments should be further analyzed to consider such factors as demographics. Findings should be supported by data from such sources as the U.S. Census, industry reviews, media reports and company sales histories. The same approach should be applied to an analysis of competitors – “direct competitors,” companies that sell the same product or compete for the same customers, and “indirect competitors,” companies that go after customers in different, unexpected ways. For example, the “indirect competitors” of movie theaters are cable and satellite television, movie rentals and low-priced DVD outlets. Also consider how “outside forces” can or are now affecting business. Are economic conditions helping or hurting market demand? Has a change in public policy or social attitudes created expanded opportunities? How is the emergence of new technologies impacting the business? Consider just a couple of the many examples Lesonsky presented to demonstrate the importance of annually analyzing market trends and incorporating findings into business plans. The wedding industry is “hot.” It accounts for $51 billion in annual spending. The amount continues to grow as more and more millennials are tying the knot. The average age of a woman getting married today is 27. With gay marriage legal in about 40

percent of the U.S. and the recent U.S. Supreme Court decision seeming to open even more doors to same-sex marriage, the wedding industry growth potential is huge. TheKnot.com, a website that tracks spending on weddings, notes that gay couples spend more money on their weddings than heterosexual couples.

Every business plan should include a snapshot of the company’s existing and potential market – size and growth trends, competition and critical issues facing the company’s ability to sell products. This spending is shared by a wide range of vendors including those offering food goods, venues, publishing, travel accommodations, photography, clothing, flowers, hair styling and gifts. Many “business boats” float higher with this increasing wedding industry spending. Another hot industry is pets. An estimated $73 billion was spent by “pet parents” last year. In the 1970s, 67 million U.S. households owned pets. In 2012, that number jumped to 164 million, or 62 percent of all U.S. households. These pets

include 83 million dogs and 96 million cats. What are “pet parents” buying? Supplements, including glucosamine and omega-3s; energy bars; specialty foods, including gluten-free foods; fashion food bowls; cushy beds; and holiday costumes. The demand is so strong that investors are pumping big dollars into small companies offering innovative products and services. Other “hot” industries include clean technology, men’s grooming, specialty and fancy foods and m-commerce. More than 86 million Americans get retail information from mobile devices. In 2012, e-commerce accounted for $24.8 billion in sales. Globally, the amount rose to $133 billion in 2013. By 2018, e-commerce is expected to rack up $626 billion, with U.S. consumers placing $131 billion of these orders. Analyzing market trends is just one strategy SBDC consultants use to help local entrepreneurs develop business and marketing plans, and obtain funding. The Small Business Development Center at CSUB is one of five service centers within the University of California, Merced SBDC Regional Network, which is a partnership between the university and the U.S. Small Business Administration. The center at CSUB assists entrepreneurs and small-business owners in Kern, Mono and Inyo counties by providing free one-on-one consulting, small business training and research. For more information, go to csub.edu/sbdc. – Kelly Bearden is the director of the Small Business Development Center at Cal State Bakersfield.

December 2015 / January 2016

KERN BUSINESS JOURNAL

New books on finance at the Kern County Library

By Katherine Ross

ern County Library’s 24 branches have books on a variety of topics, including finance. Even if your local library branch doesn’t have that one book you’re looking for, we can usually order it from one of the dozens of connected libraries in the San Joaquin Valley Library System. Unsure where to start? You might consider some of the following, published in the last three years: “Financial Fresh Start: Your Five-Step Plan for Adapting and Prospering in the New Economy,” by Shari Olefson. This book covers all the bases: borrowing, saving, investment, retirement, home ownership, and more. “Investing for Dummies,” by Eric Tyson. Don’t be insulted by the title; John Wiley & Sons publishing company is trying to appeal to people who want to learn and understand a subject by starting out with the basics, and there’s nothing wrong with that. “The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions,” by Carrie Schwab-Pomerantz. The author of the personal finance column “Ask Carrie” tackles retirement planning, transitioning and estate planning. “Combat Finance: How Military Values and Discipline Will Help You Achieve Financial Freedom,” by Kurt Neddenriep. The author, a veteran of the National Guard, writes in terms familiar to vets. He uses military concepts such as basic training, reserves and homefront to illustrate his financial tips. This book is just one of the dozens we have recently acquired on a variety of subjects dedicated to veterans’ concerns, shelved alongside our Veterans Resource Center at the Beale Memorial Library. “Entrepreneurship for the Rest of Us: How to Create Innovation and Opportunity Everywhere,” by Paul B. Brown. This book, aimed at those starting their own business, includes a chapter encouragingly titled “You Need Less Money Than You

Think.” “The Thin Green Line: The Money Secrets of the Super Wealthy,” by Paul Sullivan. New York Times’ “Wealth Matters” columnist explains why it’s more important to be wealthy than rich. “Flash Boys: A Wall Street Revolt,” by Michael Lewis. This startling behind-thescenes book will change the way you think about investing. “The International Bank of Bob.” According to Kern County Library’s One Book Project, “Harris’ entertaining and often humorous travels introduce readers to memorable characters and inspiring entrepreneurs, where we come to see that each of us can, actually, make positive change in the world.” For more details, visit www. kerncountylibrary.org. With insufficient space to annotate all of the new books, several have intriguingly self-explanatory titles: “Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown,” by David Wiedemer; “Credit Repair,” by Robin Leonard (published by the legal experts at Nolo Press); “Everything Investing in Your 20s and 30s Book: Learn How to Manage Your Money and Start Investing for Your Future–Now!” by Joe Duarte; “The 5 Mistakes Every Investor Makes and How to Avoid Them: Getting Investing Right,” by Peter Mallouk; “Live Your Life for Half the Price,” by Mary Hunt; “Living Well, Spending Less: 12 Secrets of the Good Life,” by Ruth Soukup; “Money, Master the Game: 7 Simple Steps to Financial Freedom,” by Anthony Robbins; “One-Page Financial Plan: A Simple Way to be Smart About Your Money,” by Carl Richards; and “A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing,” by Burton Malkiel. And don’t forget the older classics, including books by Suze Orman, Warren Buffett, Jane Bryant Quinn and Robert Kiyosaki (famous for “Rich Dad Poor Dad”). This is just a sampling of the wealth of resources available at your local libraries. – Katherine Ross is a librarian at the Beale Memorial Library, main branch of the Kern County Library system.

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KERN BUSINESS JOURNAL

December 2015 / January 2016

Mobilizing e-commerce to reach consumers By Lisa Beason

hether it’s banking, restaurant reservations or retail shopping, nearly every consumer activity has shifted to digital. Desktop and laptop computers were initially the primary vehicle used for online shopping, however, mobile now accounts for more than half of all e-commerce traffic. As consumer behavior continues to evolve, marketers must “mobilize” to adapt to the high demand for “alwayson shopping.” According to the Pew Research Center, nearly two-thirds of American adults owned smartphones in 2014, an increase of 35 percent from 2011. Mobile device adop-

In August 2014, Shopify (a provider of e-commerce platforms for online retailers) reported that more than 50 percent of traffic and 33 percent of actual orders on e-commerce websites were coming from mobile devices rather than a computer. tion has accelerated locally as well. As of March 2015, Scarborough Research reported 68 percent of adults in Kern own

a smartphone (up 58 percent compared to 2013). While smaller in number, tablet owners (48 percent of adults) surged 162 percent during the same twoyear period. Talk, text and email communication have dominated mobile device use, but accessing the Internet and online shopping are also becoming commonplace activities. In fact, online shopping sales in the U.S. are projected to reach $384 billion in 2016, according to eMarketer. In August 2014, Shopify (a provider of e-commerce platforms for online retailers) reported that more than 50 percent of traffic and 33 percent of actual orders on e-commerce websites were coming from mobile devices rather than a computer. In just one year (March 2014 to March 2015), adults in Kern shopping via smartphone grew 20 percent. Although teens and young adults typically adopt new technology at a higher rate, a wide range of consumers are enjoying the convenience of mobile shopping. In Kern County, most adult mobile

shoppers are between the ages of 18 and 34, Hispanic, white collar, married and parents of children under 18. The majority have household incomes of less than $50,000, however, this group is becoming more affluent. Compared to 2014, the number of mobile shoppers with a household income between $50,000 and $75,000 jumped 50 percent. In addition, a greater percentage of mobile shoppers are 55 or older, business managers, homeowners, homemakers and have children in the household. Many of these mobile shoppers are raising children and entering their peak spending years, purchasing a wide variety of products and services for their home and family. Compared to last year, a greater number of mobile shoppers in Kern County purchased women’s and children’s clothing and shoes, cosmetics, athletic clothing, home furnishings and accessories. Looking ahead, a greater number are planning to buy a tablet, mattress, major appliance, solar panels, home security system or primary residence in the next 12 months. It’s likely that a greater percentage of their purchases will be researched or purchased online. In fact, year after year, the number of adults in Kern who spent $1,000 or more online doubled compared to 2014. “Always o n shopping” is now a reality. Mobile devices allow people to shop and buy whenever and wherever it’s convenient for them. Mega retailers like Amazon, eBay and Wal-Mart are already capitalizing on this shifting consumer behavior. But what about small- and medium-sized businesses?

Are they ready for e-commerce? According to research conducted by RBC Capital Markets in September 2015, 67 percent of small and medium businesses (SMBs) in the U.S. still don’t have a mobileoptimized website. Not only are these businesses losing out on a large share of e-commerce sales, they are most likely showing up lower in search results as well. In April, Google implemented an algorithm change that includes more mobile-friendly websites in search results, so users will find it easier to get relevant, highquality search results that are optimized for their devices. The share of businesses with mobile sites is increasing (33 percent in 2015 versus 26 percent in 2014), but the majority are missing out on significant opportunities. While 75 percent of U.S. consumers research products both online and in store before they purchase, mobile shoppers spend 66 percent more than shoppers who buy in store only, according to MarketInsights.com. U.S. e-commerce retail spending is projected to reach $79.4 billion this holiday season, up 13.9 percent from $69.7 billion during the 2014 holiday season, according to eMarketer. Further, by the end of 2016, 25 percent of all retail e-commerce sales in the United States is projected to take place via mobile devices. So resolve now to “mobilize” your marketing and sales to capture a larger share of e-commerce in 2016. – Lisa Beason is the market research manager for TBC Media.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Inside a Public Relations Disaster

Lessons to be learned By Maureen Buscher-Dang

very year brings a new crop of public relations disasters that befall businesses and individuals. From accusations of the New England Patriots and quarterback Tom Brady deflating footballs, to Volkswagen’s admission of illegally installing emissionsfaking software, there are plenty Maureen Buscher-Dang of teachable moments. One such disaster involves Martin Shkreli, the smarmy, 32-year-old founder and chief executive officer of Turing Pharmaceuticals. Shkreli caused public outrage in September after acquiring the rights to Daraprim, a life-saving drug that has been around for more than 60 years. Long used by cancer and AIDS patients to fight infec-

tions, he promptly raised the price from $13.50 per tablet to $750 – an increase of 5,455 percent. The ongoing saga of Shkreli and Turing Pharmaceuticals offers some business lessons of what a company should do when disaster hits, as opposed to what Shkreli actually did.

use the drug for less than a year so the price was now more in line with those of other drugs used for rare diseases. “This is still one of the smallest pharmaceutical products in the world,” he said. “It really doesn’t make sense to get any criticism for this.”

PUBLIC TRUST IS EVERYTHING Companies who find themselves digging out of a public relations disaster need to fess up, apologize and tell people how they’re going to make things right. It’s also critical to appear sincere when attempting to regain the public’s trust. Without that trust, it’s game over. In a Sept. 20 interview with The New York Times, Shkreli said Daraprim was so rarely used that the impact on the health system would be minuscule. “This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business,” Shkreli told the Times. He went on to say many patients

SHOW GENUINE EMPATHY AND CONCERN It’s important to demonstrate an understanding of why people might be upset. It is equally important to show a serious concern for those who may be affected. Remember, it’s not all about you or your company. In media interviews that followed Turing’s August announcement of Daraprim’s purchase, Shkreli aggressively defended Daraprim’s price change. He said Turing would lower the cost for needy patients, that the new price would be below comparable medicines and that profits would be plowed back into developing a better drug.

In a tweet on Sept. 20, Shkreli quoted lyrics from rapper Eminem, “And it seems like the media immediately points a finger at me. So I point one back at ’em, but not the index or pinkie.” TRANSPARENCY IS KEY Be honest and open. The media and the public can generally tell if you’re hiding something. Dishonesty can create additional damage to a business’s reputation. On Sept. 24, Shkreli announced on “ABC World News Tonight,” “We’ve agreed to lower the price of Daraprim to a price that is more affordable.” He gave no new price or timeline. The price of Daraprim had not been reduced as of Nov. 1. THINK LIKE YOUR COMPETITION Turn the table 180 degrees and think like your competitor. A business rival will undoubtedly see opportunity and the potential for an increase in their market share. Act swiftly to identify all of the issues that need to be ad-

dressed and develop a strategic plan to stop the bleeding. In October, one month after Shkreli raised prices, competitor Imprimis Pharmaceuticals announced plans to offer an alternative drug that could be sold for as low as $1 per pill. In a statement, Imprimis CEO Mark Baum said, “While we respect Turing’s right to charge patients and insurance companies whatever it believes is appropriate, there may be more costeffective compounded options for medications, such as Daraprim, for patients, physicians, insurance companies and pharmacy benefit managers to consider.” Public relations disasters provide a reminder: Every company should prepare a “what if ” plan in advance. It doesn’t matter how good your reputation is or how long your company has been in business. No one is immune forever. – Maureen Buscher-Dang is a Bakersfield public relations consultant.

KERN BUSINESS JOURNAL

December 2015 / January 2016

Locally developed app helps conquer safety, training, HR, compliance monitoring By Mira Patel

echnology seems to be moving at the speed of light, but are paper memorandums, documents and spreadsheets slowing your business down? How about incompatible applications? Do you live in a world of stacks of paper, illegible forms and compliance nightmares? Are you confident in the training records and compliance procedures for your staff? Does an audit make you nervous? It’s okay, be honest – we won’t judge! Locally developed in Bakersfield, FormForce provides a better way to improve productivity, quality of service and compliance, all while monitoring and analyzing the perforMira Patel mance of your field teams. Implementing a qualitative process to track key performance data provides executives with detailed information to make better strategic decisions. FormForce is a Web and mobile database platform

focused on mobile data collection, storage and reporting for game-changing enterprise communication. By entering form data into a digital platform, information may be securely captured and accessed by multiple parties in real time. With a full database infrastructure, FormForce correlates employees, job sites, training, vendors, equipment and

more, all aimed at providing rich data for action, analysis, verification and validation. The application includes a robust form builder allowing full customization to meet your existing process and form requirements. Now submitted forms arrive in real-time with email alerts and push notifications. Not only are forms guaranteed to be legible, but they’re always in a consistent format. And leveraging “required fields” makes certain that all pertinent data is filled in before the form is submitted. FormForce digital forms reduce form-entry time and eliminate data-entry time, both of which can lead to significant payroll savings. Because data happens everywhere, why not capture it the moment it occurs? Do your field employees work in rural environments? Not a problem. Data is cached and synced back to the central source when the network is next available. Some real-world usage: A security company can verify and validate tasks performed, such as capturing the real-time lock or unlock of a facility. Continued on page 38

Cybercrime poses both property, liability risks to your organization By John Pryor

overall risk management system – a system that’s hopefully already ybercrime is as pervain place. If not, cybercrime risks sive a risk as we can can help get that process started. possibly imagine. California’s attorney general Here are some facts also tells us: from California’s attorney general • Although more than two- to support this assertion: thirds of business owners say • In only the first three months of the Internet is critical to their last year, there were more than success, only 10 percent have 1 billion cyberattacks installed any Internet security • 50 percent of all such attacks measures to mitigate this risk were aimed at small businesses • Only 29 percent provide any – principally, because they are training on Internet security to easier targets their employees • Many small-business owners believe (incorrectly) they are For too many small businesses, immune to cyberattacks “the door is wide open” to major financial loss by cybercriminals. Too many We’ve read about security small busibreaches at major firms such ness owners as Target and Neiman Marcus. believe they Yet, few of us know that Calihave little fornia law requires firms of all of value to a sizes to report security breaches cybercrimiwhere unauthorized access to John Pryor nal. They unencrypted personal data has overlook occurred. There seems to be no their customer information, the end to the multiple challenges money in their bank and the trade of cybersecurity risks and their secrets they’ve worked years to governmental regulations. develop and protect. Therefore, That’s an overview of the each business owner should be problem. The solution has to be certain to include this risk in their proactive prevention. More spe-

cifically, the California attorney general offers these risk mitigation measures: • Assume you’re a target. Small organizations are perceived to be easy targets. Have a plan to respond. • Lead by example. Owners must not simply delegate this risk to IT people. Leadership must champion this risk management effort – and make resources available to prevent hacking from occurring. • Use bank security. Use a secure browser connection – those with https:// with the S added – and other appropriate measures. Pay attention to bank notifications of account activities. Account access should required two-factor authentication – not merely a single pass code. Finally, enforce the traditional “internal controls” among staff so no one individual “does it all” in terms of check writing, check depositing, bank account reconciliation, etc. • Defend your business. Use firewalls, anti-virus software and secure connectivity. • Educate your employees. All staff members need to know how to control and reduce this

risk. These risks are evolving and measures effective a couple of years ago may not be useful today. Continuing education and training is essential. • Protect your organization’s data. This includes encryption capability, limited access of staff, data backup, secure disposal of stored data, etc. • Use strong passwords. Include at least eight characters with a random sequence of letters, numbers and other symbols. Most recommend a change of passwords every three months or so. Don’t use personal data in business passwords. Each employee should have an individual account with its own username and password. More detailed data can be accessed at: www.oag.ca.gov/ cybersecurity. Also, if you’d like a detailed checklist from my recent book, “Quality Risk Management Fieldbook,” email me at johnpryorqrm@gmail.com. I’ll email a complimentary checklist back to you. Finally, this discussion has focused principally on (first-party) property risks. There are also very

real (third-party) liability risks. The two principal liability risks are: • Media liability from websites and participation on social media • Privacy liability Cyberliability risks typically are excluded from conventional business liability insurance policies. However, special cyberliability policies are available – yet there is no “standard” form. Every policy has different terms and conditions. You’ll want to work closely with your insurance broker to be certain you have the most appropriate policy language for your needs – at a reasonable price – for both property and liability risks. Then you will have successfully combined all three elements of risk management – risk identification and measurement, risk control, and risk finance – for the best possible outcome over time. That includes a major goal of risk management: a quiet night’s sleep! – John Pryor is a local risk management consultant and author of “Quality Risk Management Fieldbook” published by the International Risk Management Institute in Dallas.

December 2015 / January 2016

KERN BUSINESS JOURNAL

Longer waits at the checkout counter? Blame credit cards with chip technology By Samantha Masunaga Los Angeles Times

LOS ANGELES â&#x20AC;&#x201C; Itâ&#x20AC;&#x2122;s a few days before Thanksgiving, and so many shoppers have queued up that their carts are backed into the aisles at a Los Angeles-area Trader Joeâ&#x20AC;&#x2122;s. Part of the checkout crush comes from the sheer number of people, several with baskets laden with fixings for Turkey Day feasts. But in a few lines, shoppers have had to insert their credit cards over and over again. One man pulls his card out of the terminal too quickly, prompting the cashier to reset the transaction while covering the card slot to prevent any premature movements. Another woman smiles apologetically at the next customer in line as she repeats her transaction. The holiday shopping season means waiting in line. But this year may be even worse. New chip technology in credit cards is making consumersâ&#x20AC;&#x2122; purchases safer but also appears to be causing longer lines at some retailers. The card with the tiny metallic square became more common after Oct. 1, which was when liability for covering fraudulent transactions shifted to the party that hadn't adopted chip technology _ either the merchant or the credit-card issuer. For merchants, that meant ensuring their sales terminals had a slot to read the new cards, as well as the software to accept these payments. The American Bankers Association estimates that 70 percent of credit cards will be chip-enabled by the end of the year. â&#x20AC;&#x153;I think whatâ&#x20AC;&#x2122;s happening is just people are getting used to this change,â&#x20AC;? said Matt Schulz, senior analyst at CreditCards.com. You have customers that are confused, you have people behind the counter that are confused, and you have a process that takes a little bit longer. â&#x20AC;&#x153;You add all that up, and it leaves you with a little bit longer lines at retailers.â&#x20AC;? The cards are designed to reduce counterfeiting by making it harder to create fakes using stolen data and easier for merchants to authenticate cardholders. Instead of swiping a magnetic stripe, a customer inserts the card into the reader, chip end first. The card then stays in the reader until the machine OKs its removal. Rebecca Mieliwocki, 47, said she noticed that credit card transactions now take a little bit longer, but she doesnâ&#x20AC;&#x2122;t mind because of the chipâ&#x20AC;&#x2122;s added security. â&#x20AC;&#x153;Relatively speaking, itâ&#x20AC;&#x2122;s not that much longer,â&#x20AC;? Mieliwocki said. â&#x20AC;&#x153;It takes a bit of getting used to, but it will be more than a few transactions before this becomes the norm.â&#x20AC;? Although large retailers such as WalMart Stores Inc., Target Corp., and Home Depot Inc. have already transitioned to the

new technology, many smaller businesses are still upgrading, Schulz said. Full compliance on the merchant side wonâ&#x20AC;&#x2122;t happen until 2017, when automated fuel dispensers are also required to have payment terminals that accept the chip card. Security experts estimate that standard cards with a magnetic stripe will remain in circulation for years, and even chip cards still have the stripe on the back. That can pose a problem in stores, where customers sometimes swipe their chip cards not realizing they need to insert them into the terminal. â&#x20AC;&#x153;We expressed concern with the card companies about the idea of rolling this out over the holiday period,â&#x20AC;? said Mallory Duncan, senior vice president and general counsel for the National Retail Federation, a trade association. â&#x20AC;&#x153;Ideally if youâ&#x20AC;&#x2122;re going to do the training period, you should do it during January or February when thereâ&#x20AC;&#x2122;s less traffic in stores.â&#x20AC;? Some retailers say they arenâ&#x20AC;&#x2122;t seeing delays in their checkout lines, which they attributed to early rollouts of chip-card technology. Wal-Mart spokesman Randy Hargrove said chip-enabled terminals were activated in stores in November 2014. â&#x20AC;&#x153;Right now, thereâ&#x20AC;&#x2122;s about a second difference between magnetic stripe transactions and insert-your-chip-card transactions, so theyâ&#x20AC;&#x2122;re virtually the same,â&#x20AC;? he said. All Target stores have accepted chip cards since mid-August, and the companyâ&#x20AC;&#x2122;s REDcards also have the chip, company spokeswoman Molly Snyder said. She said the company hasn't received guest complaints about transaction time. â&#x20AC;&#x153;It does take a few additional seconds, but we've tried to streamline the process as much as possible,â&#x20AC;? Snyder said. Home Depot finished its chip-card transition in September and conducted â&#x20AC;&#x153;significant trainingâ&#x20AC;? with cashiers, spokesman Stephen Holmes said. â&#x20AC;&#x153;As far as customers using it, itâ&#x20AC;&#x2122;s gone pretty smoothly,â&#x20AC;? he said. A Trader Joeâ&#x20AC;&#x2122;s spokeswoman declined to comment. In stores, employees have been telling customers that the transition to the new cards is to blame for checkout delays. To avoid the longer waits, Destiny Cervantes said she prefers to use cash or a debit card rather than her chip credit card. â&#x20AC;&#x153;Sometimes I avoid it just because it takes a little longer,â&#x20AC;? said Cervantes, 19. â&#x20AC;&#x153;When I do it wrong, it takes another whole minute for the next person to be next. It backs it up.â&#x20AC;? Shoppers will get a lot of practice over the next month. â&#x20AC;&#x153;The holiday season is going to be a crash course in how these things work,â&#x20AC;? said Schulz of CreditCards.com. â&#x20AC;&#x153;Over time, that issue is going to kind of lessen as people get used to it.â&#x20AC;?

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Why you might want to update your employee recognition program By Robin Paggi

any years ago, I had a supervisor tell me that she would forward an email complimenting my performance to me because she knew how much I needed getting a pat on the back. Therefore, it probably comes as no surprise that I am a proponent of employee recognition. However, I’m not in favor of telling employees that they’re being recognized because they’re needy, nor do I like employee of the month or tenure-based recognition programs. What’s wrong with employee of the month programs? First, employees usually have no idea what they’ve done to win the award. Neither do those who are giving the award. So, the winner is chosen based on what? Who is most attractive, who walked in the door recently, who most needs a pat on the back? Furthermore, the reward is usually meaningless. Most employees of the month are recognized by having their picture on a plaque Robin Paggi that hangs in the lobby, and which the employee never sees. Better yet, they might get rewarded (for what, we still don’t know) with a hat with the company logo on it. (Here’s a tip: If you see a lot of homeless people walking around wearing hats with your logo on it, the hat idea is not working). Another problem is there is only one winner each month. What happens if two employees do something outstanding that is worthy of recognition? Do you recognize one this month and the other the next? If so, the second employee has to wait around an entire month to be recognized. By then, whatever he or she did that was outstanding is old news. You might be thinking: “Ha! I don’t have an employee of the month program. I’m good because I only recognize my employees every five years.” Ok, that’s a different problem. Josh Bersin is the principal and founder of Bersin by Deloitte, an organization that provides research-based information for strategic HR management purposes. He says that employers spend about $46 billion each year on plaques, statues and other mementos (with the company’s logo on them) celebrating the fact that employees are still around. Evidently, lots of companies reward people this way because 87 percent of recogni-

tion programs focus on tenure (those five-, 10-, 15- and 20-year awards). Unfortunately, this kind of recognition program doesn’t work for two reasons: 1.) most people really don’t care about those mementos and they give them to Goodwill, and 2.) it has virtually no impact on organizational performance. What I’m about to say might sound a bit devious, but here goes: The business purpose of recognition programs is to positively impact the business. According to a Bersin by Deloitte report, organizations that effectively recognize their employees far outperform those that don’t. Employee engagement, productivity and customer service are about 14 percent better than in organizations where recognition does not occur. So, if you want employees to be more engaged in what they’re doing, more productive and provide better customer service, recognize them – but do it like this: • Recognize employees based on specific results and behaviors that align with your company’s values or goals. For example, if your company prides itself on delivering outstanding customer service, recognize employees when they deliver outstanding customer service. • Recognize employees when they deserve recognition, not just once a month or every five years. • Allow employees to recognize each other because the boss doesn’t always know what goes on. • Recognize employees the way they want to be recognized. For example, some employees like public recognition and others don’t. And, if you’re going to spend some money on recognizing employees, like with a gift card, ask them what they’d like instead of guessing. Of course, even without the business reasons, it’s always a good idea to recognize employees because they are human beings and, as such, they probably need that pat on the back. – Robin Paggi is the training coordinator at Worklogic HR where she creates and delivers workshops on topics such as harassment prevention, communication and supervisory skills. She can be reached at rpaggi@worklogiclegal.com or 695-5168.

December 2015 / January 2016

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December 2015 / January 2016

Health Partners

What value do you get for your health benefits dollars? By David E. Womack

hat value do you get for the money you spend on a health plan? Do you get only insurance coverage or do you get a health care partner? A true health care partner should deliver more than a package of insurance benefits. A partner should understand your business and be focused on what matters to you. A health care partner can help you manage costs, invest in the health of your employees and build a better future for your employees, their families and your business. Here are seven questions to ask when shopping for your health care partner. Q: WHAT IS MY POTENTIAL PARTNER’S BUSINESS MODEL AND WHAT BEHAVIOR DOES IT DRIVE? Most of the American health care system is very fragmented leading to competing agendas, inefficiencies, duplication of servicDavid E. Womack es and great complexity. Most health care providers operate under a fee-for-service model, which encourages overutilization of services and can result in poor quality care with higher costs. Most health insurance companies bear the financial risk for the health care providers’ bills so they are incentivized to control utilization and care. There is a better way. It is called an integrated care system; these systems combine care and coverage. Most fees are paid in advance so providers are not paid more for doing more to their patients. Doctors are free to do what is best for the patient without financial incentives. These systems are incentivized to keep their customers healthy. With a coordinated, team-based model, integrated care systems can provide the right care at the right time. This helps improve the health of your employees, reduce unnecessary treatments and leads to lower costs. Q: WHAT QUALITY DOES THIS POTENTIAL PARTNER PROVIDE? It can be hard for busy business people to measure the quality of care provided to their employees but there are many groups who have summarized key quality and service measures for you. Consumer Reports publishes quality rankings for health plans, as does the National Committee on Quality Assurance, JD Powers and Associates and Covered California for plans offered through the state exchange. The California Office of the Patient Advocate also publishes rankings for medical groups. A simple Internet search will provide you with a lot of insight into the quality of care you are getting for your money. Q: WHAT DOES THE PARTNER’S NETWORK LOOK LIKE? Many health plans seek to hold down costs by contracting with a few, low-cost providers, thus, limiting patient choice. These are often referred to as “narrow networks.” You will want to ensure there are adequate numbers of easily accessible providers that are

Continued from page 34 A janitorial company can take a picture of an area being cleaned – both before and after – to show the work was corrected and completed. An oil company can track employee training schedules, perform equipment inspections and document any required tasks performed. The training management and compliance tracker assists in keeping up–to-date information for all your staff and automatically sends prompts and reminders to alleviate human error. Audit preparation time is greatly reduced with efficient search and accurate data. Data can be strategically employed to address incident occurrence in relation to training and recertification. FormForce provides the tools to maintain compliance without relying on manual updates or editing of dispa-

accepting new patients. If your workforce is diverse, you will also want to know about language capabilities of the providers. You will want to know if your employees can choose their own personal physician and if they can change if they wish. Q: HOW EASY WILL IT BE FOR MY EMPLOYEES TO USE SERVICES? You will want it to be easy for your employees to get to care when needed. After all, time away from work is lost productivity. Factors to consider are geographic location of doctors’ offices and other providers in the network. Integrated systems often have the doctor’s office, pharmacy, lab and radiology all co-located for one-stop service. Other advanced features can be the ability to have a telephone or online appointment, emailing to personal physicians, 24-hour nurse advice line and free telephonic health coaching. Q: IS THERE HELP IF I WANT TO START A WORKPLACE WELLNESS PROGRAM? Some integrated systems can provide extensive guidance, advice and materials to help you build a healthy workplace. Studies have shown healthy employees perform better and are more loyal to their companies. Q: CAN I GET HELP WITH OCCUPATIONAL HEALTH AND MANAGING WORKERS’ COMPENSATION? An integrated system that has this option co-located with full health care services can be a great partner. Q: DOES THE PARTNER HELP MY EMPLOYEES AND I NAVIGATE THE COMPLEX HEALTH CARE SYSTEM? The key to reducing complexity and duplication, and thus driving down waste, in health care is the use of an electronic medical record (EMR) system. EMRs allow every care provider to fully understand the medical history and care plan of the patient. It also allows the computer to look for potential issues, such as drug interactions and contraindicated treatments. An advanced integrated health care system will have an EMR fully deployed across every site of care. A good partner will also have a member services department to help answer questions in person, on the phone and electronically. Another benefit to look for is a dedicated account management team that can fully explain all aspects of the system and stays with you after the sale. Integrated health care systems offer much more than just insurance. They offer care and coverage together, which drives improved employee health, lower costs, greater convenience and higher employee satisfaction. You can learn more about the value of integrated systems at www.businesshealth.kaiserpermanente.org. – David E. Womack is the executive director for Kaiser Permanente’s Kern County Service Area.

rate spreadsheets. Creating this transparency with your clients gives your organization a recognizable competitive advantage. A built-in messaging service delivers real-time notifications to audit and approve work and deliver companywide or site-specific alerts. Supervisors and staff receive updates instantly and can message “in-app” for a complete auditable message history. Also, included is a document management platform allowing for the digital delivery of your most important documents. As a cost-saving alternative to traditional document storage methods, the cloud-based platform allows companies to upload the latest versions of documents and have granular control over employee access. No longer is there a need to worry about outdated versions being referenced, printed or distributed. Access to key documents occurs in real time and no longer resides in

a dusty binder sitting in a field employee’s truck. Documents can vary per organization – text, photo, audio, video, etc. – and can range from employee handbooks, safe operating procedures, tailgate safety topics, or any policy and procedure documentation. Lastly, FormForce integrates with all of your existing software and services, providing rich import and export functionality. A leading business information platform, FormForce provides world-class security and rock-solid reliability while delivering continuous product enhancement. FormForce provides one platform to rule them all: safety, training, HR, and compliance. To learn more, visit formforceinc.com. – Mira Patel is the owner of Six23 Media, a local marketing and public relations consulting firm.

December 2015 / January 2016

KERN BUSINESS JOURNAL

December 2015 / January 2016