Loan Applications and Risks
November 27th, 2018

Small business lending for banks is high-risk even in good times.  So if you are planning to make an application for a loan, think about this.  Small businesses tend to have a higher failure rate than larger ones, often simply because they have not had enough time to build up a cushion against bad times.  So rather than try to put only a positive spin on the benefits of your application, how significant your sales growth has been etc., consider adding something on risk factors and how you plan to deal with them.  You know it’s a risk.  The bank knows it’s a risk.  All public offerings of any kind of securities have a section on risk factors because of the laws of full disclosure to protect investors, and the bigger the offering the more the risk factors listed – sometimes going on for pages. 

So if you have something addressing risk factors in your loan application, or even in a preliminary conversation, it says to the lender “I know that there are risks in this loan, but here are the ones I see and how I plan to deal with them (in order to get your loan paid back).  I’m reasonably sure that most small business lenders have hardly seen anything like this, and it might just make a difference to you getting the loan.  You have nothing to lose.  Full disclosure might make you a winner.


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Lenders and Social Media
November 20th, 2018

Are you are looking ahead to expand or buy new equipment and thinking about getting a loan for your company at some point in the future?  Do you spend much time on social media?  Use social media to grow your brand?  Use social media to take a picture of what you had for breakfast?  You may never think that your social media activity could one day have an effect on your ability to get a loan, but it might.  Lenders and credit bureaus are looking more and more at potential borrowers’ social media activity as part of their credit decisions.

I’m talking here about business credit, not personal.  There are still questions about the legality of using personal social media posts in making credit decisions, but one major credit reporting agency has already dipped its toe into the water.  If at some point in the future looking at peoples’ personal social media posts become legal for companies such as banks, it is going to open a dramatic new look into your personality online, and may be opening a very large can of worms depending on what you do when you’re online.

Getting back to your business, your business presence online could be a problem, or it could an asset. Think how many people turn to social media and other sources for things like reviews – for example, what you liked about what you had for breakfast; but they also look for companies to do business with that they can trust.  Your behavior online can be a tremendous benefit to your company and your brand.  The more positive attention you attract to your company and your products or services on social media the stronger your chances could be of a favorable opinion of your company by a lender at some point in the future.  Like it or not, your social media profile is going to become a more widespread data point in your business activities.  It is already being widely used in things like hiring decisions where, as far as I know, the legality of it has not been seriously challenged.  But it’s coming.  Where do you fit in?

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Clicks to Bricks
November 13th, 2018

The patient is still breathing.  Barely, but breathing and taking nourishment.  An interesting thing is happening in retail.  Online shopping, led of course by Amazon, has been like a slow-moving Pac-Man gobbling up retailers who operated from bricks.  Many of the bricks have crumbled; think Toys ‘R Us.  But, bubbling just below the service some bricks are making a comeback, and one of the most stunning is Amazon itself, with Amazon Books.  Untuckit has been an aggressive online and print advertiser, selling largely online.  But then as an experiment it opened a popup shop in Manhattan and suddenly profit margins started to improve and customers started buying more.  Others like Warby Parker and Bonobos are opening physical locations.

Why? Instant gratification for one.  Amazon started its rise to owning the world selling books online.  But there is something about holding a book in your hands – reading the flyleaf, the back cover (even though you can do that on Amazon), and thumbing through the pages.  There is something for a woman in many cases about trying on a pair of shoes and looking at them on her feet; in a mirror; seeing how it makes her feel; seeing what it feels like to walk around in them.  Holding up a blouse, or a shirt, or putting on a winter jacket; hard to do that online.  Tactile; human touch; sights and smells, and on and on.  You’re in a store and something else catches your eye that you would like better.  You probably wouldn’t have seen it on the website. 

But my guess is that one of the most powerful advantages of the bricks is customer service.  You can ask questions.  Do you have this in another size?  Another color?  You can return something to the store instead of boxing it up, shipping it back and waiting for the charge to be credited back to your credit card. 

There is a certain magic to good customer service.


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A Cup of Coffee
November 9th, 2018

How does the humble (before adding multiple embellishments) cup of coffee relate to your supply chain?  Start with growing and shipping the beans to a roaster.  It then must be transported to a purchaser, marketed and sold to a retailer who then prepares it and sells it to you.  There are multiple cost centers from the time the bean is harvested from the bush (cost of the land, the seed and the labor) to the time it becomes salvation for you.

There are at least three transportation nodes there – the grower to the exporter to the roaster to the buyer to the retailer.  Gas prices are going up.  The economy is booming.  Wages are going up, albeit slowly, at every stage, and the strong economy is putting upward pressure on wages.  You might not have as long a supply chain.  But in my experience one of the many things that small business owners often do not pay enough attention to is their costs.  If there are a couple of different particularly important nodes in your supply chain it might be worth keeping an eye on what is happening in that particular industry because things could be happening that could lead to increases in the costs in that particular node before it gets to you, giving you a chance to prepare if necessary.

Understanding your supply chain could make you second and third cups more enjoyable.

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