The Importance of Leadership

How important is leadership within an organization? Very. Unfortunately I have the distinguished honor of supporting Liverpool FC who have not won the Premier League for more years than I care to remember (not as bad as the Cubs but getting there). There have been many factors which have played into this. From not enough support from the backroom, wasteful spending and bad leadership from the owners and the manager of the Liverpool Team.

Manchester United supporters you might as well stop reading now, as I am going to start praising Jürgen Klopp. For those who do not follow English Premier League Soccer, Jürgen was recently hired as the new manager of a floundering Liverpool Team. From the very first game of his tenure Liverpool FC look like a different team from what we witnessed at the beginning of the year.

The previous manager had placed blame of the poor results on the players. When watching the game you could see that the players/team were not happy, and were playing some of the worst soccer a Liverpool Team has ever played. Pundits were starting to say this was the worst squad in the History of Liverpool. Below is a statement made by the manager which probably lost him the respect of many of his players:

"I think I have shown in the early stages of my management -- without being arrogant -- that with a talented group of players I can compete at the top end of the league," Brendan Rodgers
"I know how to manage top players. If you give me the tools, I'll do the work," he added

This quote I believe shows that Rogers was still a manager and had yet to become a leader.
A leader builds confidence and takes the bull by its horns.

When hearing the quote above it would have not provided his players with the confidence they required to compete at the highest level. He was laying all the blame at the feet of his team, instead of taking ownership. The perception was that Rogers had lost faith in his players, so why would they still have faith in him their ‘leader’?!

Since then Liverpool have fired Rogers and replaced him with a leader. One of his first tasks was to build up his team’s confidence. He started this at his first conference.

“This is a great club with big potential, fast players, strong players, and good defenders. Everything is there. Four or five strikers you can work with when they are not injured, midfielders, and defenders are experienced and young, goalkeeper is really good.” –Jürgen Klopp

Which Leader would you prefer to work with? The one who blames his players, or the one who builds their confidence?

How the tides have turned. The pundits are now talking about Liverpool FC winning the league (my personal feeling is they are getting ahead of themselves), they are playing with a smile and extremely exciting soccer.

Jürgen has only been at the club for approximately 3 months, yet the changes and confidence in the players is immeasurable. Liverpool F.C finally have a Leader at the club. So what defines leadership?
Brendan was a Manager but unfortunately not a leader in 2015.

Here are some quotes from Brendan and Jürgen. Try and guess who said which.

"I am 'The Normal One'. I am a normal guy from the Black Forest. I was a very average player. I don't compare myself with these genius managers from the past."

“History is only the base for us. It’s not allowed that you take the history in your backpack. “Not always compared with other times. “Only state - this is a great team. Everything is there. Let’s try to start a new. This is the perfect moment.”

“I am the same guy who nearly won us the league, but better. I think I have shown in the early stages of my management – without being arrogant – that with a talented group of players I can compete at the top end of the league.”

“I don’t compare myself with these genius managers in Liverpool’s history. “It’s cool that you are looking forward to these next years with me but it’s not my [concern]. ““I don’t think ‘I want to be a legend’ here.”

'I always say a squad is like a good meal. I'm not a great cook, but a good meal takes a wee bit of time. But also, to offer a good meal, you need good ingredients.' 

 'My biggest mentor is myself because I've had to study, so that's been my biggest influence”

Leadership Characteristics

• Be Humble
• Build employees self-esteem and confidence
• Make people feel important and want to do their job
• Give direction and provide honest feedback
• Take ownership and do not place blame (the buck starts and ends with you)
• Have a positive attitude and be able inspire others
• Have Confidence and empathy
• Be committed
• Want others to succeed, and are willing to put the time into their people

What it is not:

• Giving orders
• Taking the ‘Glory’
• Being a Follower
• Being a  yes man/ woman
• Doing the same thing over and over because that is the way it’s always been done
• Avoiding Conflict
• Making everything about you
• Putting people down
• Passing the blame

Leadership is not about you, but the people who ultimately work for you. Leaders are able to transform teams/ staff, motivate them and are extremely knowledgeable in what they want to achieve. Be a Leader and not just a Manager.

“It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.” Nelson Mandela

 (Answer: Jürgen, Jürgen, Brendan, Jürgen, Brendan, Brendan)
YNWA (You Never Walk Alone).

“We make a living by what we get. We make a life by what we give.”- Winston Churchill

If you attend networking events on a consistent basis you may have noticed, that you are starting to see the same faces over and over. This initially is not a bad consequence, as you get to know all attendees well. The issue starts when you are not meeting new people at the events being held. This I believe is one of the main reasons some groups eventually fail.

The question becomes how does your group not become a statistic?! Consider Winston Churchill’s quote, “We make a living by what we get. We make a life by what we give.” This can have many interpretations dependent on the nature of the conversation. For a networking group, you are only as strong as your community and group you have created. Without your community and group members ‘giving;, your community and group will eventually fail.

If you/members are only attending a networking group to see what you/they can gain, the group will eventually become extinct. Individuals need to change the way they approach and feel about a Group.
The mindset of people attending and who have decided not to  attend Networking events should look to change. You should not look to go to a meeting/ gathering to see what you can gain, rather go to the meeting/ gathering to see how you can ‘give’.

A cliche, “What comes around goes around”. By being a resource and a connector people will naturally think of you when an opportunity in your field arises. Be generous with your time.

There are no hard and fast rules showing which groups will succeed or fail, however my belief is: If more people have the mind set of Winston Churchill's quote there would be more success in business and life in general.

When you were climbing the ladder of success, would it not have been great to meet your future self to give yourself advice on what you should have done or not have done.

CEO’s, CFO’s, COO’s, Business Professionals, Business Owners, Entrepreneurs I invite you to volunteer your time. Choose a group (s) and attend on a regular basis, speak at local business events, invite your connections and share your knowledge and expertise.

2015 is coming to an end, let the rest of the year and 2016 be the year that everyone listens to Winston Churchill.

Good luck with your groups and making new connections.

Some Questions to ask yourself if you are looking to create a Networking Group:

• Who are you looking to attract to the group? (Who is your target market?)
• How are you going to generate a list of professionals to invite
• Where are you going to have the meetings (morning /+evening, how often etc.)
• Will you have speakers? Will you invite outside speakers
• How are you going to get the ‘big hitters’ to attend? How you going to get anyone to attend?
• WHAT IS THE GOAL OF THE GROUP YOU ARE CREATING?

“Never, Never, Never, Never…..Give Up!” –Winston Churchill

Opportunity does not always knock

Looking for a new job/ career can be very stressful. Within the past five years I have changed companies, and have had quite a few friends and colleagues move onto new jobs and careers during this time.

There are hundred different reasons’ you may be looking for a new position. Your reason for looking/ leaving your current position will be one of the first questions you will be asked.

The first step in your job ‘hunt’ is to position the reason you left or looking to leave into a positive light. You need to make the hiring manager/HR feel confident in you as a candidate.

Below are some of the lessons that have been learnt. Many are common sense, yet I feel it is always a good reminder.

Lessons Learnt:

·         Even if you are not looking to change companies, grow your network with companies you could see yourself working for.

·         Decide what is most important to you (e.g. medical, salary, commute, hours etc.)

·         Keep in contact with ex colleagues. They generally stay in the same field, and are excellent resources. (e.g. providing you information about their new company, getting you in front of the right people)

·         Do not apply online! Make sure to get a contact within the organization to send your resume too.

Use LinkedIn to find Managers and HR Leaders within the organizations you are looking to work for. Contact the Manager and HR directly. If they are interested they will have HR reach out to you or the Manager will reach out too you personally. (I.e. send separate emails to HR and Manager)

Ask questions during the interview which are relevant for you, not just what you found on the internet. (E.g. Give scenarios of current situations happening at your current work which you do not like and/or do like and see how they would handle it. If medical is important to you, find out about the coverage available)

·         Research Research Research (What does the company stand for, who are the leaders/ managers…what is their philosophy etc.) With the internet become a ‘stalker’. Google ‘everything’.

·         Discuss salary, benefits etc. with the hiring manager (time it correctly), not only with HR.

·         There can be miscommunication which could make an offer fall through. Make sure everyone’s message is clear  (https://goo.gl/Gu3GdU)

·         Make sure everyone knows what the next steps and expectations are.

·         Salary is negotiable

·         Ask to meet the staff you will be working with

·         Rapport is extremely important.

·         Send follow up email to thank whomever you met (make sure to get everyone’s business card that you meet)

·         Some questions to ask yourself: “Can I see myself having a career with the organization”, “Can I grow, and learn?”, “Are their growth opportunities?”, “Would I enjoy going for a drink with my manager and colleagues?”, “Are the goals attainable?”, “What  can I achieve for the company”

·       

  Remember that it is a two way relationship. What do you bring to the ‘party’?

“Finding a job that is a good fit is as much about you selecting the right company as it is about them selecting the right candidate.” ― Miles Anthony Smith

“When my father was 17, he went to Montreal and found these submarine sandwich shops that were really successful, and weren't in Toronto [his home town]. So he went to my grandparents and said: "Look, you have to give me the seed money to open up one of these places. We'll make a fortune. They've got lines going round the block. There's nothing like that here." And my grandfather's response was: "Look, I'm sure these sandwiches are really good, and if we scraped the money together we could make a lot of money and your mother and I would be really proud of you, but you need to find something that has *magic* in it for you.

It was off of that conversation that my father went to college on a music scholarship, started a film club and became one of the most successful directors of all time.” ― Jason Reitman

Good luck in your search and may you find the career you deserve and are looking for.

South Africans in Illinois Networking Group: We bring together and connect South Africans living in Illinois or moving to Illinois

We have created the South Africans in Illinois Group on LinkedIn so like-minded people can create relationships that support each others goals and visions through social and business connections. As members we are looking to build long-term, trusting relationships within our community. We have hundreds of people visiting our LinkedIn page and Facebook Group (South Africans in Illinois Networking Group) on a monthly basis who are looking for your business or profession to work with.

JOIN NOW:
https://goo.gl/x2Op7m
https://goo.gl/zYBMiH

Plus, here are some additional benefits for our members:

MEET DOZENS OF CONNECTORS
BUILD LONG-TERM, VALUABLE BUSINESS TO BUSINESS RELATIONSHIPS
ADVERTISE YOURSELF/ BUSINESS FOR FREE ON OUR LINKEDIN AND FACEBOOK GROUP
POST JOB OPPORTUNITIES
CREATE MANY ADVOCATES FOR YOU AND YOUR BUSINESS
OPPORTUNITY TO GIVE PRESENTATIONS ABOUT YOURSELF AND BUSINESS
MAKE BUSINESS HAPPEN MEET LIKE MINDED BUSINESS OWNERS AND PROFESSIONALS
GET TO ENJOY EVENING  EVENTS CONNECTING/ SOCIALIZING
EVENTS HELD IN CHICAGO AND SUBURBS
GET TO SPEAK ABOUT RUGBY, SOCCER, CRICKET, Mrs. BALLS Chutney etc.
GET TO MEET A DIVERSE GROUP OF PROFESSIONALS
COMBINED INTERNATIONAL EVENTS

Sound interesting? I hope so. We invite you to get engaged in discussions, ask questions and share your thoughts. Best of all it does not cost you a penny to join.

CLICK HERE TO JOIN:
https://goo.gl/x2Op7m
https://goo.gl/zYBMiH

“Understand that you can’t achieve your dreams if you don’t connect with people who guide you to improve on upon the skills you have.” ― Israelmore Ayivor

No Answers Provided- No Judgment Given- Your Advice Only

I have included  scenarios, which have come up in  numerous group and individual conversations I have had over the years. (Number 7 not so often- that was a very unique situation).

I have purposely not included my views as would like to hear how  you the professional  would respond. There will be many viewpoints, as everyone will have a different perspective due to their work background, industry/ field  or management level.


The interesting ‘read’ will come from you the reader through your suggestions and views.


When providing  your opinion/ advice  please provide the scenario number.


What would be your advice be in the scenarios below? (what would you do?)

1. The company you work for implement new procedures that they believe will improve their overall process. Instead it causes ‘headaches’ for the staff on the front line. You provide feedback to management as requested on how your previous employer dealt with the same process they are looking to improve. Nothing changes. After an extended period of time (more than a year) they finally recognize it is not accomplishing what they had intended. They then put new managers in charge of the process and ask for feedback.
2. You have a telephone interview with HR. You go over your salary range and what you are looking for. You pass the initial HR telephone interview and then have telephone interview with hiring manager. HR then organizes in person interviews for you with multiple hiring managers. The managers like you, and HR offer you an option of positions.  HR mentions the salary, which is considerably lower than what you discussed. HR apologizes and states they must have written it down incorrectly, and will get back to you. The week that follows  there is complete radio silence and calls not returned. You finally make contact and HR state that the salary was higher than they were prepared to pay. They do not make any counter offer.
3. You have been hired for a position, and all they need to do is complete their background check. (They have provided you with a start date - you have signed all documents required). They see a short sale on your record and rescind their offer.
4. You resign from your job and leave on excellent terms with your immediate managers, and staff you worked with. (You always received excellent reviews and were a top performer for the organization). You hear (and find out it is true), that a higher manager you had limited contact with during your time with the organization is spreading negative information about you to managers who you did not work with. (What is being said will rule out boomerang hiring for you if you decided in the future you would like to re-join the firm)
5. You are a manager who is constantly short staffed; you are continuously working though lunch and having to wear multiple hats. Being short staffed is starting to effect the job you were hired for, managing the branch. You have spoken to your manager who has stated that they are looking for candidates. It has been months and nothing has changed.
6. You are a top performer for an organization. Salary history is common knowledge. You are earning less than many of your colleagues in salary who are not doing as well as yourself. You are earning better bonuses than your colleagues because of your performance, however overall you are earning approximately the same.
7. You have booked an overseas trip with a connecting flight months before departure. You give yourself plenty of time between flights. The airline emails you stating you have been bumped from the flight and put on the next flight. This will cause you to miss your connecting flight and increase your layover considerably. (They have not cancelled the flight you were initially booked for  –because you  booked early you got a good price- the airline is now selling the same tickets for more)
8. Your dentist informs you require a crown on your chipped tooth. The dentist for unforeseen reasons had to cancel your appointment, thus you go to a friends dentist. Your friends dentist looks as your tooth and states that your tooth just requires a small filling, and not a crown (tooth is in excellent condition). The dentist is shocked that your dentist had recommended a crown, and triple checks your teeth to make sure they were looking at the same tooth your dentist was.
9.  After providing your 2 weeks notice, management ask you to stay. They offer you a 'bump' in salary which they had previously denied. (matching the salary that the new company has offered)

“I don't pretend we have all the answers. But the questions are certainly worth thinking about.” Arthur C. Clarke

Feel free to add additional questions in the comment section.

From South Africa to America

When arriving in the States fourteen years ago my plan was to be here for one year, and then head back home to Cape Town, South Africa. Three Kids, A wonderful wife (of ten years), the ‘White Picket Fence’ and fourteen years I am still here.

During this time there have been many highs, some lows and some very ‘funny’ conversations. In 2001 South Africa was an unknown entity in the states, and the majority of the people I met were shocked I was white. Today, if watching television South Africa will be mentioned a minimum of once during the week. South Africa is no longer unknown and the questions below would not be asked today.

• Just like Lethal Weapon 2, people were continuously shocked that I was white
• Was asked how I got to the states……with a follow up….by Boat?
• During a ten- fifteen minute conversation was asked what language I was speaking. (mind you I was answering her questions and then she had follow up questions from my answers—she had miraculously learnt a new language and she did not know it)
• What do you do with all the animals? (I used to come up with a lot of fun answers for this one)

The first piece of advice I was given after arriving was too talk slower and enunciate. South Africans tend to swallow their words and run their sentences together. After fourteen years I still sometimes need to remind myself too talk slower. If you were looking to give yourself advice in life and business today what would it be?

I have learnt many lessons living in the states. There is a lot of competition in America which makes it  extremely competitive. When applying for a job, bidding on a new contract, prospecting etc. you are always competing with multiple people/ businesses. This I believe is one of the reasons that America is a leader in many segments. If you do not present yourself well, do not have the expertise and are not competitive it is difficult to succeed. There are always many people/ businesses standing in the wings waiting to replace to you.

A few lessons learnt:

• Build up your credit as early as you can
• Higher Education is extremely expensive- start that 529 Plan early
• Everyone is very Politically Correct
• Do not talk politics (very sensitive subject)
• Enunciate
• Your accent will be mistaken for English or Australian
• A lot of job positions like you to have an MBA
• Make internal connection within your company
• Network outside of your organization
• Your Major while studying does not need to be Finance to be in Banking
• Carry two pieces of identification with you
• Baseball is definitely not cricket AND Football is definitely not Football (soccer)
• America has a very diverse demographic (thus I believe miscommunication happens frequently)
• Make sure your message is heard correctly
• Generally people are very friendly
• “Just Now” is still the greatest South African saying (idiomatically used to mean soon, later, in a short while, or a short time ago)

AMERICA is still the land of opportunity.  If you are willing to work hard, listen and learn you are generally given a chance.

 List of South African Regionalisms:

 https://en.wikipedia.org/wiki/List_of_South_African_English_regionalisms

http://www.southafrica.info/travel/advice/saenglish.htm#.Vaam2_zF97k

 “My heart is in South Africa, through my mum. My mum being from here, me spending a lot of time here as well, I feel most connected to this part of the world.” Roger Federer

Make July the month we bring back common courtesy

Courtesy - excellence of manners or social conduct; polite behavior. A courteous, respectful, or considerate act or expression.

I was recently at an event  and the question was asked, "Has common courtesy disappeared?" 150 people were invited to the event we were attending and less than 30 % responded. From our discussion we came to the conclusion that common courtesy has taken a backseat.   Today, when you email someone internally or externally from your company it’s a 50/50 chance they will respond in a timely manner or at all. The same seems to be the case when leaving a voice message, and the odds drop I would say to less than 30 % response rate when sending someone an Evite. Has technology been slowly eating away at our common courtesy?
Make the rest of July common courtesy month for yourself (hopefully it will continue). I am positive that if we show each other respect/courtesy, our colleagues, our prospects, our friends and our current clients will be happier and business service internally and externally will improve.
 Courtesy goals:

1. Return voice messages within 24 hrs
2. Respond to ALL email requests within 24 hrs
3. Respond to all invitations prior to the RSVP date (even if not going)
4. Say thank you and please
5. If you are on vacation, have an out of office message on your voicemail and email
6. Don’t have your phone 'out' while having a conversation (definitely no texting)
7. Turn off your phone ‘ringer’ when in meetings
8. Be on time to your meetings (aim to be 10 minutes early)
9. If you are running late (sometimes unavoidable), let whomever you are meeting know
10. If you have someone coming to your office, and your current appointment  is running long let your next appointment know (e.g.would it not be nice if your doctors office called/ text you to let you know they are running late and please come 30 min later) Treat everyone's time with respect.

 I am sure you have many additional courtesies that you miss. What is important to you to  add?
"The true greatness of a person, in my view, is evident in the way he or she treats those with whom courtesy and kindness are not required." Joseph B. Wirthlin

You deserve a banker who listens, understands and makes it work.

Everyone sets out with the best intentions, yet sometimes goals that have been set may affect the service and products that is provided to you. Generally banks offer similar products, with slight differences. The larger banks have more locations (brick and mortar) which if you have a lot of cash deposits may suite you ; otherwise most transactions can be done online.

With banks offering the similar services it can get difficult to find that right relationship. I say relationship because that is how I believe it should be looked at. As a business owner you should be looking to your banker for more than just taking your deposits, and being an order taker. The term Trusted Advisor is currently being overused in the market, however that is how you should see your banker. You should feel comfortable speaking to them about your business, personal banking and business banking needs. Your banker has an extended team who can assist on the business and personal side and should be there to make suggestions.

I was fortunate enough to start my Business Career with a top performing Cash Management partner and a Manager who loved credit. For the first 3 – 6 months I must have taken them on all my calls (which I will forever be grateful for, as they never complained). My Cash Management Specialist without fail always asked three questions.

1.       Tell me about your business. (a banker can read your website, but how you got started, what motivates you, what keeps you up at night can only be answered by you, the owner)

2.       How do you make your payments?

3.       How do you take your payments?

If a banker jumps in and tells you what they can do for you and how wonderful their bank is without finding out about you and your business that is a warning sign. By not asking questions they are directing you to what they want and not what you need.

Warning Signs it may be time to get a new banker or the banker is not the right fit:

·        They do not ask questions about you and your business

·        They keep telling you how great their bank is and continuously talk negatively of their competition

·        They do not introduce you to their team

·        They do not respond to your questions

·        They sound like a salesman (should be looking to provide services that make your life easier, not just to increase your service cost)

·        Only good thing they are offering you is interest rate

They Should Be:

·        Looking for opportunities to connect you with other business owners (not always possible)

·        Introducing you to partners within Bank (e.g. Wealth Management)

·        Providing you Articles about your industry or your personal interests you may find helpful

·        Providing you solutions on your banking and credit needs. (e.g. Could be as simple as letting you know what the bank requires for you to get the increase in the line of credit, and making suggestions)

·        Being available

·        Asking questions about your business

·        Bring suggestions to the ‘table’ without being asked

Choosing a banker and a bank is a big decision. Once you have narrowed down the banks and banker that fit your needs, ask yourself this simple question, “Would you mind being stuck at an airport with them?" or “Would you enjoy spending an evening with them?” If the answer to the question is no, they may not be the right fit for you.  Being comfortable and confident in your banker is equally important.

Like any good relationship it takes time. Don’t end your search until you have both.

Stop the Screaming and take a step back

Yesterday I was reminded of many good lessons about life and dealing with people from my five year old daughter.

When arriving home I heard a lot of screaming coming from upstairs.  Thankfully this is not the norm in my house, thus it was a bit worrisome.  Walking into our twin’s room I saw why my wife was not extremely happy (understatement), and I think I may have even gone purple with rage when I saw what she was screaming about. My oldest daughter (never done this before) had decided to draw with a marker all over the new furniture which we had bought a week ago. With my blood boiling I went in search for my daughter, and found her in her room. This is when thankfully my control set in.  I was able to calm myself down before I did anything I would regret, and remember a few lessons I have learnt over the years.

Lessons Remembered:

·         People do ‘stupid things’ all the time ---count to 10 before reacting

·         Calm yourself prior to deciding how you are going to deal with the situation

·         Mistakes are made ---It is not the end of the world

·         Mistakes can be fixed

·         Make sure lessons are learnt, thus preventing the same mistakes repeating themselves

·         Follow through with the lesson (it may need to be reinforced)

·         Conversations are better than being spoken ‘at’.

·         When ‘teaching or giving someone advice’ let them get to the answer and do not just give it to them.

·         Make sure to put everything into perspective and take a step back

Later in the evening our daughter asked my wife, “Do you want to live in a crying house or fine house?” “If you want to live in a fine house then stop yelling.”  After being taken back a little by this question, it reminded us that as a human being you control the situation and environment that you would like to live and work in.

If my wife and I had carried on screaming and did not take a step back, the lessons learnt may have been none. 

Thankfully peace is back in our home. After doing some research online and a lot of scrubbing we were able to get the marker off the furniture. My daughter has learnt a lesson, our twins have learnt a lesson and I’ve been reminded of many lessons learnt.

“Raising children uses every bit of your being – your heart, your time, your patience, your foresight, your intuition to protect them, and you have to use all of this while trying to figure out how to discipline them.” Nicole Ari Parker

Business Loans -4 M's and 5 C's

I have been asked  many times what lenders look at when receiving a loan request (e.g. line of credit, equipment loan, owner occupied real estate etc.) for a for profit business*

My goal here is to provide information that offers some guidance on a few of the facets that are generally taken into consideration  when a loan request is received.

Please not the ‘M’s and the ‘C’s’ do overlap.

The 4 M’s:

Money, Management, Markets and Materials are all important risk factors that are taken into consideration.

·         Money: Financial Analysis (ratios, historical performance etc.), Guarantors, Financial Preparation (e.g. audited, reviewed, company prepared ) - I have provided some ratios below.

·         Management: Ownership Structure, Succession Plan, Management Strengths, Weaknesses etc.

·         Markets: Industry the business operates, size, competitors, entry to market, customer concentration etc.

·         Materials: What is the collateral, costs, length manufacturing process, condition of inventory etc.

The 5 C’s:

·         Character/ Credit Score: What type of person are you. What is the general impression you make when people meet you?

·         Conditions: What affects the industry, segment, overall market

·         Capacity: What is your ability to repay the loan

·         Capital: The money you have personally invested in the business. This is an indication how much you have to risk if the business had to fail.

·         Collateral: What will be securing the loan (what is the quality)

 Financial Consideration:

 Balance Sheet:

·         Current Ratio (liquidity CA/CL) >=1.2 This is an indication of your company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations.

·         Leverage (net worth TL/TE) <= 3.0. The degree the business is utilizing borrowed money. Companies that are highly leveraged may be at risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find new lenders in the future.

 Income Statement:

·         Sales – what is the trend

·         Gross Profit Margin trend  (sales – cost of goods sold)

·         Net Profit Margin trend

·         Net income

·         Earnings before income & Depreciation (EBIDA) = NI + Dep + interest +- one time event

 Calculation:

·         Debt Service Coverage (DSCR) EBIDA/ total debt service >= 1.25. This is a measure of the business revenue to cover the cost of its loan payments. It is calculated by dividing the net operating income by the total debt service. (looking to generate 25 % more revenue that is required to cover the debt  payments)

Please take note that there are many additional factors taken into consideration besides what I have listed. The information is for guidance purposes only and to help you put together a good loan package for your lender. It will hopefully help you prepare for some of the questions that you now know that will be asked.  It does not guarantee a loan approval or a decline if you do not meet some of the criteria listed in the financial consideration.

Knowing the five ‘C’s, 4’ ‘M’s  and financial considerations is a good start in preparing yourself for a small business and lower middle market loan request.

 “To be prepared is half the victory.” Miguel de Cervantes

Good Luck.

 * There is different criteria when looking at a for profit business and non for profit and if you use an SBA program