The perception of risk has substantially changed over the past four months. Creative destruction is not pretty. What investors thought in the past as safe and steady blue chip investments have become more volatile than investing in a startup. Investors may be cautious about investing in new concepts and ideas but one thing is for sure, their view of a “safe investment” has changed forever. It will take awhile for investors to realize the risk factor between a hundred year old company and a startup are not as far apart as they previously thought.

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Don’t despair. As the old saying goes it “is always darkest before the dawn.” Now that the financial community is starting to shed its bad habits and new opportunities will arise. Contrary to popular belief, the world is not coming to an end. There is no doubt that 2008 was a wakeup call for all of us. The pain continues and will take at least until the end of this new year to fully work its way through to a healthy rebalancing. Our years of overindulging ourselves – borrowing to buy bigger houses, more expensive vehicles and many things we didn’t need have come back to haunt us. In the new equilibrium we, as Americans, will return to one thing we do better than anyone else – creating innovative goods and services that the rest of the planet will want.

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There will be no tears shed as 2008 is shown the door at midnight tonight. In my 35 years in the financial services business I cannot remember any previous year where there has been such an avalanche of continuous bad financial and economic news. And just when you thought it could not get any worse Bernard Madoff serves up the coup de grace in December; a $50 billion dollar ponzi scheme that duped and wiped out many unsuspecting, yet sophisticated, financial advisers and investors.

With 2009 just a day away you have to ask yourself the following question: “Is that a light at the end of the tunnel or an oncoming train?” There is no doubt that 2009 is going to be a transition year. People are very fearful not only about their own future but the future of the country as a whole. But, what got us into this situation in the first place. One word “GREED.” Everyone was trying to make a quick buck with no concern for the consequences or long-term effects.

This week I watched an old Gary Cooper movie called “John Doe”. The movie described the hardships and despair people felt during the depression and it struck me how similar the situation is that we are facing today. The message of the movie was “all of us little guys have to stick together and look out for each other.”

Our President-elect Barack Obama recently conveyed a similar sentiment during his recent holiday address. He said “These are tough times for many Americans…. We must rededicate ourselves to the notion that…. I am my brothers keeper.”

If we, as a people, are to survive in the future we must first return to the values that were prevalent back in the 1950’s and 60’s. Back then you knew all of your neighbors and everyone watched out for every kid on the block. People looked out for each other. Saving for the future was the norm. If someone were in trouble friends and family would offer assistance and wouldn’t think twice about it. It is time we reassess our priorities and reinstate “A return to family values”.

As you are sitting at home relaxing on New Years day reflect upon what is really important to you and your family. Finding fulfillment is not about the stuff you buy. Those things are only objects. It is the people in your life that should matter the most.

Tomorrow is the beginning of a brand new year for all of us. Let’s make it the best year we possible can.

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Deteriorating economic conditions are of great concern to small-business decision makers in the US. They are increasingly worried about the future of the economy and how it affects their organizations; a new Business Journals Network survey shows.

A recent national survey of 1,700 owners, presidents and CEOs of businesses with one to 499 employees revealed there was no “optimism bump” after the election of Barack Obama as president. The City Business Journal performed the survey Nov. 17-23, 2008.

Here’s a look at some of the survey’s key findings:

* Eighty-two percent of those surveyed in November said the financial meltdown had affected their business. In the prior survey, taken in October as the $700 billion financial bailout plan made its way through Congress, 73 percent said they had been affected.
* Another 80 percent said they were “very concerned” about the U.S. economy, with 62 percent blaming bankers and sub-prime lenders for the economic mess.
* When asked how they expected things to shake out at their own companies in the next 12 months, 37 percent said “a little better” or “a lot better” — a slight erosion from October (after the bailout was announced but before the presidential election) when 40 percent were optimistic. When asked that same question back in January 78 percent of respondents were bullish.
* Business owners by and large don’t expect a quick turnaround. On average, they expect the economy to take 2.4 years to turn around.
* Thirty-seven percent expect their business prospects to get worse, while 26 percent expect prospects to remain the same.
* A substantial minority, 41 percent, were “very concerned” about the long-term survival of their own companies. That’s actually a more encouraging number than it was back in January, at what we now know was the early stage of what has been a yearlong recession. Then, 47 percent were “very concerned” about long-term survival. But the number has grown since October, when only 35 percent rated themselves “very concerned.”
* About the only significant bright spot came in the area of energy costs. Concern over rising energy costs has declined as the price of oil has fallen. Forty-five percent were “very concerned,” down from 77 percent in June, when the average price for a gallon of gas was $4.10.

Business owner sentiment mirrored the most recent Beige Book report from the Federal Reserve. The anecdotal report from the Federal Reserve’s regional banks showed weakness across all sectors, in every region of the country.

Consumer spending was down in most regions, according to the report released Dec. 3, lending was tight, and the labor market was softening.

The City Business Journals Network is an affiliate of bizjournals, representing 66 business publications located in major markets across the country.

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Now is probably one of the best times for a company to go public via a reverse merger. Shell prices are depressed so a company can purchase an OTCBB shells at steep discounts. The process is streamlined and allows a company that has already been audited to be public in thirty to sixty days. Once your company is public you will have a better chance of attracting capital from the equity markets. The key is to make sure you have retained the proper professionals to guide you through the entire process. Ventana Capital Partners, this writers company, can provide you with the OTCBB shell and resources to bring your company public and raise the capital you are seeking. Please feel free to contact me to discuss your company’s needs at (858) 729- 0075 or via email at Ralph@ventanacapitalpartners.com .

We want to wish all of our readers and their families a very Merry Christmas.

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If you are seeking access to capital then 2009 might be the time to consider taking your company public. The valuation of a public company is usually three to four times that of a private company. You can sell stock to potential investors (equity) and give up far less of the company than having to mortgage your entire company’s assets as collateral for a loan. Equity investments can be structured in a variety of ways and, provided you have not issued a preferred convertible stock, the investment does not require the company to pay back the investor. The investor makes money by betting on the future performance of your company that usually translates into an increase in the price of your publicly traded stock.

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Now is the time for companies to revise their business plans for next year. If you plan for the worst-case business scenario you can survive these tough economic times. Your planning should include alternative ways to fund your company over the next two years. The vicious credit crunch will affect all companies and now is the time to think out of the box and figure out the best way to attract capital. One way to access capital is to tap the public markets. Going public may not have been in your immediate plans but it is something you should consider. Why, you ask. Access to capital!

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Acquire Rather than Expire

So now that I have painted this rather grim picture let me tell you why I think the current market crisis also provides one of the greatest opportunities for emerging growth companies over the two years.

Lets face it. Only the strong will survive over the next two years. With survival comes opportunity. Companies that were previously your competitors may become partners or acquisition candidates. The time to merge or acquire competitors is when business is bad, not good. Smart entrepreneurs will be able to spot opportunities in the marketplace and pick up competitors for pennies on the dollar.
During tough times companies have to become aggressive. Certain industries can be best served to grow their companies through acquisition versus organic growth. A relatively small company with a strong balance sheet can become a large company in a short period of time by acquiring several companies in their sector.

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Competition of a different Form

Jim Furey of Furey Research Partners, an institutional research boutique that specializes in small-cap strategy, states the following: at recent market lows 59% of the small cap Russell 2000 index stocks were trading below $10 and more than half carried market values below the $250 million level that is commonly described as “microcap status”.

So, what does this mean to you? It means that smart investors with high risk tolerance may decide to buy established downtrodden stocks versus emerging growth stocks. Why should they buy your stock when they can by Citigroup whose stock has plunged almost 90% in the last two years? Right now investors can buy any number of former blue chip stocks at steep discounts and wait for them to return to their previous highs. You have to admit it is a pretty compelling argument, isn’t it?

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New Competition

Emerging growth companies will also experience competition from all of the public companies whose shares have been decimated by recent market selloff based on fear. Remember, most investors risk their money in new companies because of the huge upside potential. What happens when investors see that same potential in established companies with strong balance sheets and a depressed stock price due to market conditions? Do they risk their capital in a new publicly traded company with no history but substantial upside or bet on an established company whose stock price is down 90% because of the current fear in the marketplace. Right now there are a lot of companies whose stock is being battered for no apparent reason. It is the “throwing the baby out with the bath water” syndrome.

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