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

Siblings: An Early crash course in business lessons

I am fortunate enough (I see it now-not so much then) to have grown up with three brothers. Looking back my childhood taught me many valuable lessons. Counting our fries to make sure we all had the same amount, to being beaten up my one brother and then seeing my other brother beat him up for beating me up, and one of my brothers flying 10 hours to watch me play a sports game has all taught me valuable lessons for business.

Here is my top 10:

(Please add in the comment section what having a sibling has taught you)

• You do not always get what you want, sometimes you have to fight for it(“to have the first shower-thus making sure you have hot water”) - Business is competitive you need to ‘fight’ for your wins
• It’s good to have friends (“ I know my siblings will always be there if needed”) – In business a good network of people will generally keep you busy. Treat everyone as you would like to be treated.
• Sometimes you have to take a backseat (“siblings may get recognized for their achievements before you”) - In business work with your specialists, and have faith in them to take the lead. Recognize their achievements.
• You get beaten up (no explanation required) – In business you are not going to win every deal or please your manager every day. Make sure you  ‘grow’ and don't make the same mistake over and over.
• You need to share (“tennis racket, car, football etc.”) –The ‘play box’ is big, try not to step on your 'toes'.
• How to negotiate (“can I borrow that”) – You continuously are negotiating in business deals. Learn to give and take.
• Team Work (“how to get one over the folks”) - In business you often need to work as a team to win a new deal or to help an existing client.
• Patience (“waiting to play with the new toy”) – Deals take time to be put together and need patience.Managing staff you are going to need to have  a lot patience.
• Leadership (“playing together often a sibling would lead”) – when presenting or working with a current client make sure everyone knows who is going to take the lead.
• Conflict Resolution (“lost count on the number of arguments had with my brothers –generally though we finally came to a resolution, we may have needed some help from our mom”) –In business you are going to have conflicts, how you proceed with these conflicts and find the resolution could dictate how well you do in business. You may need a outside voice of reason.

 Lesson from a mom:

Two brothers were having a mammoth fight by the pool while their mom was talking to her friend in the kitchen. Excusing herself from the room she calmly walked out to her son’s (they did not notice her) and pushed them both into the pool. She then walked back into the house and continued her conversation, while the two brothers stood in the pool dumbfounded. 

 “If you want to do really important things in life and big things in life, you can’t do anything by yourself. And your best teams are your friends and your siblings” –Deepak Chopra

Presentation Tips

In life and in work we are continuously on a ‘stage’ giving ‘presentations’. Some people are better in presenting themselves or their message than others.

When Barack Obama came on the scene few people knew who he was, yet he beat his fellow Democrat Hillary Clinton (a person most people new) to the privilege of running for the presidency. Why?

During the debates, TV appearances, and speeches whomever you spoke to (Democratic or Republican, Hillary supporter or Obama supporter) everyone would say the same thing, “He speaks extremely well. He gives a great speech!”  One of the reasons for Obamas initial success I believe was how he is presented himself, and spoke to an audience.

I recently had the privilege to go through a course in giving formal presentations. An added caveat was it was small group of four participants and a presenter.  As such, we were able to discuss each subject in depth, and get a lot of additional feedback from the presenter who had been doing this for over 25 years. 

During the course I took notes on what stood out to me. I hope some of these ‘tips’ will help you in your future presentations:

3 Key Questions to Ask Yourself:

“What is the point?”
“So What, Who Cares?” (Benefits)
“Why is it material to me, the customer?”

Six Critical Skills for Effective Presentations:

Presence -- Ability to convey confidence and energy. Gain credibility and attention (e.g. sitting or standing, eye contact, project your voice)
Relating- connect with your audience, ability to create rapport (e.g. thank everyone, mirror clients’ body language)
Questioning- anticipate and prepare for questions that may be asked
Listening- being able to pick up on words the audiences are using. Create a 70/30 dialogue
Positioning-tell story from your clients point of view
Checking – get clients input (be spontaneous)

Miscellaneous:
Give information in blocks of 3 (anymore and your message will be lost)
Visuals: Make sure it is uncluttered. “Less is more”.
Divide the audience age by 2 and that should be the font size (presenting a power point)
Handout Leave Behinds: Only give once presentation is done, otherwise the audience will be leafing through them while you are presenting
Ask twice if anyone would like to add to the agenda
Make sure you have your message: “What is your goal”
When asked a question, breath in for 2 seconds, breath out for 2 seconds prior to answering (this will prevent you rushing your answer)
Ask questions on top of questions.
Hand positioning is very important

“There is no such thing as presentation talent, it is called Presentation Skills”
 David JP Phillips

I hope some of the tips will be helpful. Please include in the comment section what works for you.

Creating an A (+) Team

 

My most recent conversation with my mentee was regarding how to get the best out of the team he leads/manages.  Below is the list we came up with.  Please add in the comments what you believe makes a leader/ manager successful.

• Be a leader/ manager not just someone who ‘barks’ out orders. (leaders are people who inspire people in achieving and giving their best)
• Guide people in their daily job and career (e.g. during your one on one’s, discuss their careers and how you are able assist them)
• Ask don’t tell your staff what to do (e.g. Please and thank you go a long way)
• Show them you care (e.g. When our new build branch opened, many members of our team had not signed up for their 401k. I spoke to each team member individually who had not signed up and explained the company match and benefits. Our branch had 100 % participation )
• Get staff feedback (e.g. what they like, don’t like, what they would improve upon and how)
• Empower your staff to make decisions
• Provide Continues Feedback (e.g. reviews should have no surprises)
• Make it fun (a staff that is not happy is a staff that fails)
• Make sure everyone learns from each other (e.g. have a staff member who is excelling in a specific area speak to the team for 10 -15 min on what they are doing to be successful)
• Create leaders in your team. (e.g. get them to lead/ manage a specific project)

As in Sports, it is not always the team with the best players that wins, but the one that is well organized and has strong leadership.

“Every successful individual knows that his or her achievement depends on a community of persons working together.”
Paul Ryan