FAMILY BUSINESS Travel Firm Launches Online Site By JACQUELINE FOX Staff Reporter Montrose Travel, a 33-year-old firm owned by the McClure family, hopes to send a few of the online travel sites packing, or, at least give them a run for their money. The brick and mortar travel agency, originally launched in 1956, but bought by Joe McClure Sr. in 1972, launched its own full-service travel booking site, Montrosetravel.com Oct. 24. The company, now run by McClure’s son, Joe and daughters Andi and Julie, owned and operated the Arizona-based online discount airline ticket firm, Airforless.com, but after faltering sales in the wake of the dot.com crash, sold the subsidiary in 2001. Montrosetravel.com, says Joe McClure Jr., aims to take its rightful place among the top players in the industry, including Expedia and Orbitz, and he’s projecting the move from bricks to clicks to generate between $10 million to $15 million worth of new business in its first year. Sure, it’s not their father’s firm. But, says McClure, the changes are necessary in order to extend the life of the family legacy. “Those who are going to survive in the industry offline, need to move on line to survive,” said McClure. “That’s just the nature of the way the industry is moving, and we are moving with it.” The new integrated site will offer users live booking inventory options for airline tickets, car rentals, hotels, cruises and vacation packages, as well as contracting opportunities for “at home” travel agents who refer customers to the site and its services. Webfare contracts with Northwest, Continental, United and US Airways have been secured, with others in the pipeline, McClure said. A bulk of the revenue, says McClure, will come through clicks vis-a-vis non-travel portals, such as credit unions and firms with large numbers of employees who can either click on the Montrosetravel.com website for travel help, or their organization’s own travel logo that will link users to Montrose Travel’s services. McClure said there are no plans to eliminate personalized service: customers searching for travel packages on line can always access a Montrose Travel agent via telephone, or do what they’ve always done: walk in the front door and ask for help. In addition, while the technology may allow the company to do more with fewer workers, there are no plans for laying off any of its 150 employees. “We are a family operation, and although we have many employees, we treat each one like a family member and we have no intention of changing that,” said McClure. “We kept employees informed of our plans to roll out the new site throughout the entire research process. We opened up discussions from the beginning and have been talking about our online vision and where the future of the company was headed, so nothing has been hidden.” When the siblings bought out their father in 1990, Montrose Travel had 14 employees. The first order of business, says McClure, was to buy a fax machine. The company has since grown from a $5 million to a $100 million operation. “The Christmas parties we once held in the living room at our folks house, we now have at the Oakmont Country Club, with a live band and about 300 people,” said McClure. This latest venture, says McClure, is the key to holding their father’s vision in tact, as he predicts the industry will remain depressed for at least another year.

SFVBJ FORUM – Over the Line? The strike by unions against Vons, Ralphs and Albertson’s supermarkets has touched everybody in Southern California as they must make a decision on whether to cross picket lines or go to other smaller grocery chains or independent markets until the walkout is over. Emotions have sometimes been running high as pickets confront customers who choose to still do business at the larger stores. So the Business Journal asks: Which side do you support in the supermarket strike? Philip L. Lichtenberger Executive Vice-President Holl Technologies Co. Camarillo It’s a tough question. I think both parties are losing. The workers have probably lost enough wages to pay for the health care, and the stores’ revenues are down. Yes, I did cross the picket line once, but I’ve tried to avoid it. I think the strikers are overly aggressive. Joe Hooven Owner Best Window Treatments Inc. Burbank I worked my way through college as a grocery store bagger, then I was a grocery clerk, and I became a member of the local 770 union. I’m very sympathetic to the union workers. But the grocery store owners need to be more specific about why they’re cutting costs. Being a grocery store worker is very hard work, and I’m honoring the picket lines. Steve Hulett Head of Animation Guild Local 839 Burbank I’d like to see strikers prevail and everyone to work things out. I’m specifically against a two-tiered wage rate. I think they should work something out on medical. I understand why they’re striking and I support them. I’m not crossing the picket line. Ben Pesta Attorney Century City I absolutely support the union workers and refuse to cross a picket line. I find myself going miles out of the way and standing in long lines. But so be it. I hope the strike ends as soon as possible. However, it will continue to be a personal inconvenience until the issue is resolved. Lynda Paige Fulford Director of Public Information California Lutheran University Thousand Oaks I thought the strike would be resolved by now, it’s dragged on way longer than I expected. But it hasn’t affected me that much, because I normally shop at Whole Foods.

Commons in Noho Takes on Suburbia By SHELLY GARCIA Senior Reporter On December 1 the first shovelful of dirt will be cast from a plot of land near Lankershim Boulevard and Cumpston Street, finally breaking ground on a project that has been more than two decades in the making. The symbolic gesture will mark the start of construction of Noho Commons, arguably the largest residential complex built in the San Fernando Valley in 20 years and the culmination of years of planning, wrangling and politicking to redevelop a blighted and underutilized portion of land in the center of North Hollywood. Developed by J.H. Snyder Co. at a projected cost of about $180 million, Noho Commons is on the cutting edge of the so-called New Urbanism movement, a brave new world where elevators replace backyards, rail and bus lines stand in for autos, the affluent rub shoulders with the working class and the neighborhood lies within walking distance. The Commons will be something of a testing ground for a growing movement to staunch the flight to suburbia and reinstall the city as a center for living and working. The question is, can it change a community hounded by years of neglect and a Valley built on a backyard and barbecue mentality? “It will really take a lot of time to transition North Hollywood into a totally gentrified area,” said David R. Diaz, assistant professor of urban studies and planning at Cal State University Northridge. Lying between Magnolia Boulevard to the south, Cumpston to the north, Lankershim to the west and Blakeslee Avenue to the east, the Commons will wrap around the Academy of Television Arts and Sciences and fan out into residential, retail and office buildings. When completed, the project will include more than 700 residential units 438 one- and two-bedrooms and 278 loft apartments ranging from 600 square feet to 900 square feet that will rent for $1,100 to $2,200 per month. A portion will also be set aside for low income tenants. The section housing the lofts, to break ground in the first quarter of next year, will also include 60,000 square feet of ground floor retail space fronting Lankershim and another 20,000 square feet of storefronts designed as live-work spaces along Weddington Street that can be used for a host of businesses from graphic design studios to financial planning services. A third phase, to include an office building, additional retail space and a community clinic and daycare center, will be added later. Designed as an urban village, parking will be hidden from street view, and walkways, gardens and sitting areas will connect the residential portions to the retail amenities, including supermarkets and restaurants, that create a self-sufficient neighborhood. High-rise apartments Across from the Commons development site, JSM Construction is building Noho Tower, a $43 million, 191-unit high rise apartment building at 5445 Lankershim, and a 78-unit building on McCormick Street, both luxury residences with features like 50-square-foot patios, granite kitchen countertops and hardwood and tile flooring. The high rise will have a sixth floor deck with a gym, spa and media room and a rooftop garden. The developers and others who have watched Los Angeles become swallowed up in suburban sprawl believe such projects will gain unstoppable momentum. City traffic has grown intolerable and, for the first time in decades, the scarcity of available land, the demand for residential units and the financing terms available are providing ample incentive for developers to build apartments instead of office buildings. North Hollywood, with its Metro Rail stop connecting the area to downtown and the planned busway that will link it to the western end of the San Fernando Valley, along with the availability of density bonuses that allow developers to build more units than they could in other areas, may prove an ideal test of the New Urbanism movement, they say. “If you don’t get housing built there, I don’t know where it will be built,” said Craig D. Jones, JSM president. The Community Redevelopment Agency of the City of Los Angeles, which first set its sights on North Hollywood in 1979, managed to complete a retail project and the Academy building and it made some inroads in creating the Noho Arts District before the economy stalled. But for the most part, North Hollywood remained a working class neighborhood with aging homes and apartment buildings. Late in the 1990s, as the last recession was ending, a developer came forward with a proposal for office buildings, sound stages and a hotel on the site, but the development proved too complex for the company, and Snyder acquired the rights to develop the site. “I think this may be just what the area needs,” said Tim Dagodag, chair of the urban studies and planning department at CSUN. “It needed the residential component to turn this area around.” With a population of largely professional residents, the Commons will likely foster new commercial investment, and it has the potential to increase land values. Tough task But restoring the community’s lost luster may take even more than the ambitious Commons development and the ancillary projects underway. “The issue is whether the gentrification is actually going to move into the interior residential zones or if the projects are going to remain on the perimeter close to the Lankershim area,” said CSUN’s Diaz. The new residents expected will constitute only a fraction of the population, many of whom live, two families apiece, in surrounding apartments. And the businesses expected to move there are too few in numbers to significantly impact employment opportunities for those residents. Indeed, in other cities where such gentrification efforts are underway, the results have been mixed, said John McIlwain, senior fellow for housing at the Urban Land Institute, a not-for-profit research and education group. “It won’t have an impact unless the project itself is viable,” said McIlwain. “There are experiences from almost no impact to extremely positive impact, and again, it depends on the design and the targeting of the retail.” Nor is North Hollywood’s train and bus access guaranteed to get residents out of their cars. While the transit access will surely be attractive to those who work downtown, the city’s transit infrastructure has not yet reached a level where these alternatives can be used efficiently by a majority of workers. Mostly though, the biggest obstacle to remaking North Hollywood and Los Angeles may be the city itself. In cities like New York or San Francisco, neighborhoods are small enough so that a single development can make a difference, but L.A.’s population is too dispersed to have the same effect. “It’s much more difficult to gentrify L.A. because we’re so spread out,” said Diaz.

THQ Optimistic as Outlook Brighter for Holiday Season CORPORATE FOCUS By JACQUELINE FOX, Staff Reporter Economic forecasts for a brighter holiday retail season this year have officials at video game software manufacturing firm THQ Inc. treading into their busiest time of year cautious, but optimistic. Net income for the Calabasas-based company’s second quarter ending Sept. 30 was $3.6 million or 9 cents a share on revenues of $127 million, compared to net income of $4.8 million or 12 cents per share on revenues of $97.3 million for the same quarter a year ago. THQ did earn 6 cents per share from a $4 million settlement with its insurer National Union, which put actual profits at $1.1 million, or 3 cents a share. Nonetheless, THQ positioning is much more solid than it was a year ago, when the company was forced to downgrade its earnings forecast for fiscal year 2003, even after posting a 50 percent growth in net income. The company blamed the weakened economy and unpredictability in the retail sector for the revisions. This year, however, is a new game. Analysts surveyed by Reuters Research, a unit of Reuters Group PLC, were initially expecting THQ to report earnings of a penny a share on revenues of $105.2 million for this year’s second quarter after the company cut its earnings forecast to 1 cent from 8 cents due to the delayed release in September of two new franchise products. But the second quarter also included the release of several other titles that helped offset the cost of the delays, including “SplashDown: Rides Gone Wild” from THQ’s Rainbow Studios in August. New versions THQ is now in the middle of a rollout of several new versions of existing products including a new installment of its popular SpongeBob Square Pants franchise with “SpongeBob Square Pants: Battle For Bikini Bottom” for multiple platforms, as well as the two new products, “Tak and the Power of JuJu” and “Sphinx and the Cursed Mummy.” Net income for the quarter, however, reflected heavy investments in licensing and marketing costs affiliated with the new franchise agreements, according to THQ’s CEO Brian J. Farrell. “You really have to look at the video game business over a lot of quarters, not any one quarter,” said Farrell. “It was a mix issue, and we had a much higher mix (of new products) in September and we’ve also been ramping up on new brands, so we are investing in the future. The fact that we came in higher in revenue shares is fantastic.” Retail holiday sales in 2002 rose only 2.2 percent from the previous year, the worst showing in more than a decade and barely in line with inflation figures. The National Retail Federation (NRF), however, is projecting sales of general merchandise, will climb by 5.7 percent in November and December over last year’s level. Good news for the industry, which earns more than 50 percent of its revenues between November and February, according to analysts’ reports. THQ has also signed agreements with Warner Bros. to publish titles to coincide with a 2004 theatrical release of “The Polar Express,” a co-publishing agreement with Sega Europe to produce three titles based on the “Sonic the Hedgehog” franchise and an agreement with Sony computer Entertainment America to publish Rainbow Studios’ “ATV Offroad Fury 2” in Europe. Discontinuing titles THQ’s decision to discontinue a few poor-performing titles in the last two quarters, coupled with key new licensing agreements, were, according to one analyst, solid moves. “They made the decision to focus on product quality, and killed a bunch of products that did not meet with new standards,” said John Taylor with Arcadia Investment Corp. “That’s certainly helped pull their earnings up. Last year consumers were just not responding to what the industry was selling. THQ has upgraded its overall quality, so they have a better chance of getting their numbers because they are better titles. The wild cards are Tak and Sphinx; we gotta wait to see how the consumer responds to this new list.”

EXECUTIVE SUMMARY Three companies that made the list of fastest growing private companies in the Valley in 2002 are again top gainers, joining 17 other firms this year on a list of businesses offering a wide range of products and services ranging from travel assistance to toner cartridges. Mobile Storage Inc. takes the No. 5 slot this year, showing revenue growth of 77.4 percent between 2000 and 2002. Revenues for 2002 were $149 million, up from $120 million in 2001 and $84 million in 2000. The company has added 205 employees since 2000, bringing the total to 407. Mobile came in at No. 6 out of 25 in 2002. At No. 14 on the list this year is J.D. Power & Associates, showing growth of 28 percent between 2000 and 2002, with revenues in 2002 of $132 million, up from $127.9 million in 2001 and $103 million in 2000. Jacqueline Fox THE PACESETTER Micro Solutions Enterprises takes the top slot on the list of fastest growing companies in the Valley, showing revenue growth of 111.3 percent between 2000 and 2002. MSE has 399 employees, up from 165 in 2000. Revenues for 2000 were $14.2 million and that number jumped to $21 million in 2001. Revenues for 2002 were $30 million. The Chatsworth-based company manufactures laser toner cartridges compatible with HP, Epson, Canon and other printers. It was launched in 1995 by brothers Avi and Yoel Wazana and, for some time, struggled for space in an already crowded marketplace. After a faltering first year, the brothers switched from reselling to re-manufacturing cartridges and, upon discovering that roughly 14 percent of their some 1,200 accounts represented more than 90 percent of their business, they refocused again, this time on wholesale and distribution markets. Their first break came in 1997 when they successfully rebuilt the first Optra C color cartridge, saving their client some $7,000 they would have had to spend on a new printer. Sales grew, and so did the company, so the Wazanas moved operations from a 600-square-foot location in Palmdale to a 3,000-square-foot facility in Chatsworth that same year. They now operate out of a 30,000-square-foot plant and a separate 1,300-square-foot cleaning room. The company has expanded its product line and now has distribution offices across the globe. What’s been the key driver behind the growth? Quality and customer care, says Avi, the company’s CEO. “It’s really an accolade and a compliment to our various employees, customers and vendors.” Jacqueline Fox Click Here for the LIST

THE BRIEFING Coffee Shop Brewing Up New Competition The increasingly oligarchic coffee world presents a daunting environment for small business owners trying to carve out their own niche. However, Gus Ibarra, Nancy Rodriguez, Teresa Ibarra and Robert C. Leon, owners of the recently opened Just Coffee shop in Glendale, are attempting to succeed in the face of huge competition. Born in Glendale and raised in Glassell Park, Gus Ibarra is new to the coffee world. However, he attempts to combat a lack of experience with a diligent work ethic, toiling nine hours a day as an aerospace engineer at Hydro Air, and spending another six at Just Coffee. No stranger to a long workday, Ibarra paid his way through Cal State L.A. while working at Universal Studios on the backstage crew for films such as “The Flintstones” and”Beetlejuice.” Rodriguez, Ibarra’s wife of one year, certainly understands the intricacies of the coffee world, having worked for the previous seven years at a coffee shop in La Canada Flintridge. Born in Guanajuato, Mexico, Rodriguez immigrated when she was 14 years old, and has lived in Glendale ever since. In addition to co-owning the business, Rodriguez also manages the store from opening until closing. “We wanted to start our own business and be our own bosses, and since my wife had previously worked in a coffee shop she knew a great deal about the business. The coffee business has low inventory and start-up costs and seemed to be an ideal first business.” “Running the store has been a lot more work than we anticipated. The hours are long and we have to put up with each other for sometimes sixteen hours a day. At times, it can get extremely frustrating because no one walks through the door.” “Business has been slightly on the incline. We really enjoy when customers tell us that the coffee is really good and that the service is excellent. We’re very customer oriented. There’s going to be those big companies with a fixed clientele, but you can attract people that are frustrated with all the big companies in the world.” “We’ve loved owning a business so far, despite all the ups and downs there’s nothing better than watching your store grow. We just try to offer friendly and fast service, short lines, good coffee, and good food, and hopefully the store will prosper.” Jeff Weiss

Glendale Studios Boosting Its Volume of Productions By JACQUELINE FOX Staff Reporter The Makhanian family, the brother/sister/father machine behind Glendale Studios is in the early stages of transitioning from a small sound and stage rental company, to a full-fledge production house for its own products, including features, infomercials and cable shows. The saving grace for the company throughout what has otherwise proved to be rough times for many of its competitors as runaway production continues to take its toll on the local filming industry, is the firm’s healthy stable of infomercial filming contracts 89 this year so far alone. About two years ago, Al Makhanian, the founder, took what he’d learned from those clients and launched his own Direct Shopping Network, which sells primarily jewelry, and sales have been so profitable, the company is putting the finishing touches on a brand new studio for that show exclusively, which reaches roughly 17 million viewers through Direct TV and the Dish Network. The Makhanian family is now preparing to expand on that success with the launch of a second home-shopping product next year that will also offer jewelry, as well as fine art. “This was my dad’s vision, initially,” said Steve Makhanian, vice president of sales, who has also launched his own production company, Dreamquest Productions, which, if all goes according to the script, will begin ramping up production of the company’s own infomercials, feature films and products for the TV and cable markets over the course of the next two years. “What we are trying to do now is to move away from being a rental company and into producing our own products,” said Makhanian. “I’d say that runaway production is part of it, but the rental business is also very, very competitive.” Glendale Studios’ first major contract was with the producers of the syndicated sitcom “What’s Happening Now!” Others have included a multi-year contract to film “The Judge,” similar to “The People’s Court,” and a slew of infomercials including “Billy Blanks’ Tae Bo,” “Buns of Steel,” and “Body by Jake.” Current contracts include shows on the Food Network and ESPN’s “Rome is Burning,” as well as commercials for Subway, Burger King and IHOP. The feature list includes Disney Pictures “Freaky Friday,” 20th Century Fox’s “Garfield,” and Miramax’s “Down To You.”

Strong Family Relationships Can Be a Help to Firms By ERNEST A. DOUD JR. Healthy family relationships drive businesses forward, whereas conflict-centered family relationships drive businesses down. Strength and unity of the family management team sends important messages to four key groups: employees; customers; suppliers; and competitors. Effective working relationships and a unified management team send good news that can pay dividends. Your employees will consider your business a good place to work. The dividend a more productive work force. Your customers will perceive you to be a dependable supplier with whom they enjoy doing business. The dividend customer loyalty. Your suppliers will treat you with the respect and service reserved for truly valued customers. The dividend dependable sources of supply. Your competitors will regard you as a force to be reckoned with. The dividend better competitive positioning. Conversely, the absence of these qualities sends negative messages to your four most important constituencies, which can add up to bad news for you. In non-family businesses, developing good working relationships is basically a business issue. However, because yours is a family-owned business, the interplay between family and business is substantial. Your challenge, therefore, is two-pronged, because family behavior patterns invariably spill over into the workplace. The reality is that you’ve been family members longer than you’ve been business associates. By the time the next generation comes into the business, the parent-child and sibling relationship patterns have had years to develop. They are deeply ingrained and have tremendous emotional “clout.” It is no wonder that most families find it difficult to separate their family roles and their business roles. I can’t recall a single family business with which I’ve worked where family roles have been kept totally out of the business. I’m not even sure that total separation is a good idea. After all, family bonds can add important strengths to the business. Families who are able to bring those strengths to bear in their businesses are those that have built healthy family relationships. Here are just three of the many ways in which family relationships directly impact business relationships. 1. How the family handles “power”: When children are young, authority is centralized in the parents. Ideally, the family decision making process becomes more decentralized as the children grow older. For a business to be well managed, some authority needs to be delegated. Families that allow and encourage appropriate participation in family decisions find it easier to effectively delegate authority in the business. Family businesses in which power remains highly centralized with the founder/leader typically mirror an authoritarian family power structure. 2. How the family handles interdependence and independence: Because families are support systems, it is second nature for family members to depend heavily on one another. That’s good, but that’s the easy part. The hard part is for families to effectively support each individual’s need for independence. Businesses benefit from interdependence because it fosters teamwork. But they also require independence which promotes individual thinking and initiative. When those two needs have been balanced at the family level, it is likely to be reflected in the business. Family members can be responsible to one another and to the business, yet have freedom to act independently. When the family’s emphasis on interdependence is too strong, family members may find themselves in the business out of a sense of obligation rather than because they want to be there. Lines of authority will be “fuzzy,” and individuals will have difficulty operating without undue interference in their areas of responsibility. 3. How the family handles disagreements: Many families don’t handle disagreements very well. Families depend on good relationships for stability, so head-on confrontations can be seen as threats to that stability. When we were kids it was easy. If brother or sister hit us we told Mom and she dealt with the problem. As adults, a more direct approach is needed; but old habits are hard to break. Most often, when two family members disagree, we will still take that conflict to a third party in the hope that someone else will deal with it for us. Nice try, but it doesn’t work. If the family has learned and practiced direct confrontation of family issues, then business disagreements can be productively resolved. Ernest A. Doud Jr. is the managing partner of DoudHausnerVistar, a consulting practice focusing on assisting clients to successfully manage family/business dynamics. Developing a Plan for Family, Management In the midst of the constant challenges of business, winners still manage to build strong teams: a strong management team to keep the business profitable and ahead of the competition, and; a strong family team that supports the successful execution of the game plan for the business. Here are some ideas that can help you, your business, and your family be winners on both counts. 1. Make sure the business is properly staffed and organized. You need the best players you can find and attract. Once you get them, make sure they: (1) know what their positions are (i.e., prepare and maintain accurate, up-to-date job descriptions); (2) know how to play their positions (i.e., prepare and invest in a management training and development plan and program); and (3) learn how to work together as a team (i.e., provide opportunities for team building). 2. Develop a game plan for both your business and your family. The planning process is the most practical and effective team building exercise we have ever seen. 3. Make yours a plan-driven business. Business planning takes two basic forms long-range “strategic” planning and annual operating planning and budgeting. Your strategic plan should contain a mission statement that answers four questions: What business are you in? Why are you in business? Who are your customers? and how do you want to be known? Ernest A. Doud Jr.