Category Archives: Articles

Free DVD Describes Criminal Career of New Mexico Con Man

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Bruce R. Kohl, Director, New Mexico Securities Division

Bruce R. Kohl, Director, New Mexico Securities Division

While billion-dollar swindles like Bernard Madoff’s make the national news, most investment fraud is a local crime committed close to home. In most cases, the victims are friends, business acquaintances and relatives of the perpetrator.

Such was the case with Henry Rivera, a Taos con artist who scammed more than 50 New Mexicans out of millions of dollars before he was indicted on more than two dozen counts of securities fraud in 1994. Rivera fled to Mexico before his trial and lived under an assumed name for nearly a decade before he was recaptured. His 2006 fraud conviction resulted in the longest prison sentence ever handed down for a white-collar crime in New Mexico.

The Rivera case is the subject of Betrayal of Trust, an 18-minute documentary produced by the New Mexico Regulation and Licensing Department’s Securities Division to raise public awareness of the risk posed by financial predators in our communities. The documentary is being distributed in DVD format at no charge to libraries, churches, senior centers and civic groups statewide. For a free copy of Betrayal of Trust, e-mail InvestorInfo@state.nm.us or call the Securities Division toll-free at 800-704-5533
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Getting the Ear of an “Angel”

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John Chavez

John Chavez, President, New Mexico Angels (at time of writing)

Because they’re investing their own money, angel investors are picky about the ventures they bet on. Of the 80 deals reviewed by the New Mexico Angels in 2008, only four were funded.

One of these was Santa Fe-based Vista Therapeutics, which is developing nanotechnology tools that can help medical professionals make accurate and relatively inexpensive assessments of organ damage. The company received an additional $1 million in March.

Biotechnology companies like Vista Therapeutics receive about 18 percent of all angel investments, according to a November 2007 Kauffman Foundation poll of 86 North American angel investor groups. Other industries favored by angel investors include software (19 percent), business products and services (16 percent), consumer products and services (15 percent), hardware (12 percent) and media/entertainment (7 percent).

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‘Angels’ Among Us

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John Chavez, President, New Mexico Angels

John Chavez, President, New Mexico Angels, at time of writing

The first investor in any new business is usually the entrepreneur — with help from friends and relatives whose motivation is often more personal than financial. But once the market research is done and the idea is patented, it’s time for the entrepreneur to begin the second round of financing.

Startups typically find traditional lenders wary of lending money at this stage to small, risky ventures with no track record. They’re better off looking for an “angel” investor — a wealthy individual or group of individuals willing to put their own money on the line for a business venture in hopes of reaping substantial returns in a short period.

A niche in the financial ecosystem

Unlike venture capitalists, who invest other peoples’ money from a professionally managed pool or fund, angels dig into their own pockets. Where a venture capitalist typically invests more than $1 million and seeks an annual return of 25 to 30 percent, an angel investor typically gives between $25,000 and $250,000 in expectation of a payback of 10 times that amount over three to five years.

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As Good As It Gets: 504 Loans

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Owner occupied businesses eager to take advantage of deflated real-estate prices to purchase the building they’ve been leasing, to buy land to construct a building or to renovate existing facilities are finding plenty to like in the U.S. Small Business Administration’s 504 loan program.

The program was created in 1980 to help small, independently owned companies — the biggest job-creators in the country — secure the fixed assets they needed to expand and modernize.

Because the federal government underwrites 40 percent of each loan — with the business owner contributing as little as 10 percent – many traditional lenders are more willing to offer a first mortgage for the remaining 50 percent of the loan amount. The business owners can get money they otherwise might not be able to get at lower-than-market rates for owner occupied fixed asset financing, allowing them to conserve cash for other operating costs.

What it buys

A 504 loan can be used for anything that constitutes a “fixed asset.” It can be used to buy land or a building or to construct a new facility or renovate an older one. Other eligible site improvements include road building, installing utilities, adding a parking lot and landscaping. Durable machinery and equipment with a 10-year work life can also be purchased.

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Outfoxing the Competition Begins with Detective Work

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Betsy Gillette, Director of Market Research & Planning, TVC

Betsy Gillette, Director of Market Research & Planning, TVC

Intelligence gathering isn’t just for international spies and private detectives. It’s also a way to identify one’s business rivals and compile information about them in order to gain a competitive advantage.

In many cases, the information is easy and inexpensive to obtain. Competitors can be found in industry directories, many of which list members online. Articles and advertisements in trade journals offer competitors’ names, as do conversations with business owners in the same industry or even their customers. A public or specialized library can be a source of names beyond what’s available through industry directories on the Internet.

The business researcher can start with some of these resources:

10-K reports: The 10-K report is a publicly traded company’s annual performance report to the U.S. Securities and Exchange Commission. Found at  www.sec.gov or any publicly traded company’s Web site, these reports include information about a company’s financial statements, organizational structure, equity, market risks and pending litigation.  A researcher might even discover a rival’s market shares and future plans.
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Sizing Up the Competition

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Betsy Gillette, Director of Market Research and Planning, TVC

Betsy Gillette, Director of Market Research and Planning, TVC

The first step for an aspiring entrepreneur is to determine who the competition is. There are several categories to consider: companies with similar technology, companies with different technology and companies that represent indirect competition because they solve problems in a novel way. Companies in each of these categories have products that promise to solve or address the same customer problem. Another form of competition comes from the customer, who can decide to live without a product or service.

After collecting the names of competitors, an entrepreneur needs to investigate each and consider how his or her company compares with these rivals in the following ways:

Product features: How similar are products offered by these competitors? Does the competition offer some features and benefits that are better than the prospective newcomer’s?

Competitor size: Who’s the biggest competitor and how does its size impact its market position? If it’s a big company, is it focused solely on one industry, or has it branched out into others as well? Who are the smaller rivals? What is the mix of large vs. small companies? How can the new company position itself against big and small rivals?
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Embracing Adversity Can Build a Business

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Julianna Barbee

Julianna Barbee, Director, NMSBDC at NNM College

While economic wizards try to rescue America from the worst economic downturn in 70 years, New Mexico is doing what it can to bolster small businesses, because the state’s recovery depends on it. The most recent data from the U.S. Small Business Administration’s Office of Advocacy show that New Mexico’s 36,430 small businesses employ 96.2 percent of the state’s work force and created 54.3 percent of new jobs between 2004 and 2005.

Many New Mexico businesses are suffering the effects of the high-risk business practices — easy credit and poor planning and oversight — that characterized much of the past few decades in our nation. Some have been destroyed, others merely wounded, by the contracting economy. Continue reading →

Keeping Heart When Times Are Hard

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Roberta Scott, Director, NMSBDC at UNM-Valencia

Roberta Scott, Director, NMSBDC at UNM-Valencia

Raising morale while cutting costs during an economic downturn is one of the toughest jobs a manager can face. To succeed, managers must be honest with employees about the need to reduce costs, including those associated with wages and benefits.

Accurate information is imperative, and managers can pre-empt the toxic effects of speculation and rumors by being open and truthful about the company’s performance. Well-informed workers can focus on the company’s business rather than being distracted by anxiety about their future and the company’s.

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Making the Most of Every Investment

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Sandra Taylor Sawyer, Director, NMSBDC at Clovis Community College

Sandra Taylor Sawyer, Director, NMSBDC at Clovis Community College

Making money is the reason most people start a business, but when the economy sours, just covering expenses and staying solvent can be challenging enough.

Business owners who are wondering whether to invest in their business or elsewhere during a recession have many tools at their disposal, but one of the most helpful is the return-on-investment ratio.

Do the math

Determining a realistic return on investment, or ROI, is a matter of numbers. A prudent business owner will consider the ROI when preparing a business plan, reviewing year-end financial statements, evaluating the effectiveness of marketing and deciding whether to add or drop a product or service.

When considering if more money should be put into a business, the goal for return on investment should be to exceed the average certificate of deposit rate for one year. Return on investment is determined by dividing net profits (sales minus expenses) by total assets (what the business owns).
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Road Show Aims to Open Eyes to Opportunities

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Paul Goblet, Financial Advisor, NMSBIC

Paul Goblet, Financial Advisor, NMSBIC

The New Mexico Small Business Investment Corporation and its partners will take to the road this month to let New Mexicans in the southern part of the state know where and how to get the advice and the money they need to start or expand a business.

“Financing Your Business” is the topic of the event planned for 5:30 to 7 p.m. Monday, April 27, in the Tularosa Room, Hotel Encanto, 705 S. Telshor Blvd., Las Cruces. It features presentations by representatives of the New Mexico Small Business Investment Corp., the U.S. Small Business Administration, The Loan Fund, the New Mexico Gap Fund and the New Mexico Small Business Development Center network. There is no charge for admission.

Lt. Governor Diane Denish, who ran her own business before being elected in 2002, spearheaded creation of the SBIC in 2000 on the premise that small businesses employing 25 or fewer people are the engine of New Mexico’s economy. Through financial partners like ACCION New Mexico, WESST Corp. and The Loan Fund, NMSBIC has helped more than 1,600 businesses get the capital or equity investment they need to get started or to grow. And five equity funds now have headquarters in New Mexico.
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