10 Tips to Bottom Line Up Management
By Rich Russakoff and Mary Goodman

Bottom Line Up management is common sense but not often common practice. For Stage 1 Entrepreneurs, many of these tips will be new and compelling. For the more seasoned Entrepreneurs, we hope they will provide the impetus to remain connected and to check that their systems are current, effective, and complied with. We’ve selected these tips through the filter of WIN – What’s Important Now!

1.    CEO: think of it as an acronym for Cash, Equity, & Operations. It’s the CEO’s job to make sure the company has enough cash to meet its obligations, build equity, and maximize profits through operational efficiency and excellence.

2.    Scrutinize your large &/or past due receivables. Are there any accounts deceivable? Even if the economy has little or no impact on your business, some of your customers may not be as lucky. We doubt that Circuit City or Mervyns were completely current with their vendors and suppliers when they closed their doors.

3.    Create Profit focus through Margin Focus. Just as sales are the leading indicator of revenue, gross margins are the leading indicator of profitability. You get the behavior you exhibit, expect, tolerate, and reward.

4.    Identify profit drivers, not just revenue drivers. Incorporate the profit drivers into bonus and commission structures.

5.    If looking for bank loans, consider smaller, community business banks. They may be more aggressive and accommodating. They’re under less regulatory scrutiny right now and therefore may have fewer constraints.

6.    To reduce debt, follow these three steps: 1) Get cash flow positive. 2) Don’t add to debt – keep current on payables. 3) Prioritize by balance size. Pay as much as possible to the smallest balance, when that’s paid off, roll that payment amount into the next smallest balance, then roll both those payment amounts into the next, etc.

7.    Waste erodes profit. Know the impact that it has on your bottom line. If you have a 10% profit margin, for every $1000 in wasted expenses, you have to generate $10,000 in additional sales just to break even. And if you are operating on a 5% profit margin you need $20,000.

8.    Set targets and ranges by P&L expense line. We like to display them similarly to the way blood work is displayed from the lab. It’s bolded and highlighted if it’s outside of range. This creates a smoke alarm. Sometimes, there are reasons for it. Other times, it’s a red flag that needs investigation and/or intervention.

9.    Go deeper with your customers. Identify your niche and dig as deep as you can. This is imperative to survive and thrive in a retracting economy. Just like trees in a storm, those that grow wide and shallow will be uprooted while those with deep roots will continue to stand.

10.    Connect to the customer. Talk to them, and not just to sell, service, or solve a problem. Use specific and disciplined dialogue: What can we do to make it easier for you to business with us? What can we do to create a better buying experience for you? What other problems do you have? It stands to reason that if you’re trying to create solutions you should talk to the people with the problem.

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By Richard L. Russakoff
rich@bottomlineconsultants.com
November 17, 2008

In February Starbucks reached the conclusion that the consistency and quality of their product/experience was slipping. As a result they made the decision to close all 7,100 stores throughout the world and hold a three-hour training session beginning at 5:30 local time. This reinforced Starbuck commitment to two of their guiding principle,
1. Everything Matters
2. Surprise and delight.
In July Starbucks announced their plan to close 5% of their U.S. stores and 75% of their Australian stores. These were locations and locales the company deemed to be unprofitable. They acted decisively and made one big move. They knew they would take heat from Wall Street and they did. Wall Street stated in essence, that Starbucks was no longer the fair-haired child who could do no wrong. Well in fact what they did was right. They were ahead of the curve regarding the economic meltdown. They made a sound business decision to cut their losses sooner rather than later.
They embraced an important Bottom Line Up rule, that when you control your money, you control your future.
At a time when being in a strong cash position is vital to every company, Starbucks is offering through Costco five $20 dollar gift cards for $80 dollars. The sales of these cards even at discounted rates and the fee to Costco will help strengthen Starbucks cash position. They certainly have the margins in their products to make the offer. Whatever success the promotion generations will be cash upfront sitting in the bank.
I believe these are three actions that Starbucks took that will continue to make them great.
Follow the lead of a great company focus on:
Revitalizing your staff to create a great customer experience
Eliminating unnecessary operations that are draining your cash
Creating ways to generate upfront cash
You too can follow a star to the bucks.

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Bottom Line Up Contsultants www.bottomlineupenterprises.com
November 16, 2008

Face reality as it is, not as it was or as you wish it to be, change before you have to, and allocate resources based upon return, not upon need; theses are the three overriding principles of strategic leadership that guided Jack Welch, the legendary former CEO of General Electric.

These principles serve as an essential blueprint for any company in the furniture industry to continue to grow in these changing times.

A strategic leader’s focus must be on building a team of competent managers to execute the leader’s vision. The strategic leader’s number one role is to clarify the company’s overall goals and clearly define and articulate its direction.

So how do you go about determining reality as Jack Welch defines it? It must start with an honest assessment of your company’s strengths and weaknesses tied to an awareness of changes in the marketplace. This should begin with a critical evaluation of where you are spending your time.

As a strategic planner and CEO Coach specializing in high-growth entrepreneurial companies, I have had the opportunity to work with a number of furniture manufacturers and importers. Most are so buried in day to day operations that they can’t see the big picture, causing their company to miss opportunities and, in some cases, to go from high-growth to going out of business. As the leader of a company, if you are spending the majority of your time involved in daily operations, making every key decision and buried in the details, you will never have the time or energy to see the forest for the trees.

By far the most successful company I have worked with in this industry is Four Hands, a furniture importer based in Austin, Texas. Four Hands has received many industry awards as well as national and local recognition as one of America’s fastest growing privately held companies. Their international client base includes many of the top 100 furniture retailers in the world.

In order to ensure alignment throughout the organization, Brett Hatton, the company’s CEO and founder, holds strategic retreats on a quarterly and annual basis with his management team. At these sessions the agenda always includes:

· A review of their budget
· Financial results
· Projections by each department

In addition, each department head also reports on whether they have met the objectives established since the last strategic session. This exercise helps them clearly identify the achievements and disappointments of the preceding quarter or year.

This leads to what I consider the most important part of the agenda which is to identify the company’s brutal facts. What drives this is a SWOT analysis. By systematically assessing the company’s strengths, weaknesses, opportunities and threats, they determine their brutal facts, and create the focus for the upcoming quarter.

The term brutal facts was introduced to the business community in Jim Collin’s classic book, Good to Great. It is considered by many business owners and experts, to be the most important and indispensable business book written in the past two decades. It is a MUST read for any business owner.

One of the major themes of Collin’s book is that “you absolutely cannot make a series of good decisions without first confronting the brutal facts.” His research for the book clearly demonstrated that great companies continually refined their path to greatness by acting on the brutal facts of reality. In 1999, while experiencing spectacular growth, Four Hands identified three brutal facts that demanded action. Continued growth along with the ability to meet the capacity of demand would require:

· More Inventory
· More People
· More Capital

The Company decided to take a hard look at is business model, which was the traditional model for furniture importers and wholesalers at their stage of growth. Hatton concluded that without a drastic change in the model, they were on a course that required a significant cash infusion without an appreciable return on investment. In addition, he did not see increased profit margins to justify the risk, work and effort.

Four Hands did not have the necessary infrastructure or cash to continue to bring inventory from the country of origin into its warehouse in Austin, unpack it, hold inventory while it was waiting for other merchandise to complete an order, put orders together, repack and ship small ($250 to $1000) purchase orders.

As a result of their soul searching, Hatton and his management team decided to turn their business model upside down. A major decision was made to raise the price for minimum orders. In addition, the company began targeting its sales and marketing efforts to the top 100 furniture retailers who were appropriate candidates for the company’s designs.

After considerable number-crunching, Four Hands determined that it could make higher margins and offer outstanding savings to their targeted customer profile through a container-direct program. Under this program clients could buy a broad selection of merchandise that could be shipped directly from the country of origin to a client’s warehouse or distribution center.

This minimized the amount of merchandise Four Hands had to stock and stabilized the number of the people necessary for receiving, shipping and handling in Austin. In order to accomplish this, additional systems and training was required on virtually every front. Customers needed to understand the benefits of the program and how it enabled them to achieve enhanced margins, greater profitability and the ability to offer special events and sales when containers landed.

Before that could happen, the sales team needed to buy into the program and be comfortable explaining these benefits to their customers. It was equally important for them to become comfortable saying no to current and prospective customers who could not meet the new minimums. The program’s success also demanded new tracking systems.

Facing the brutal facts for Four Hands at their stage of growth in 1999 enabled them to simplify their business model at a critical time. By focusing on implementing their new model, Four Hands continued to grow and prosper and did not fall victim to the inevitable cash demands of their old model.

Four Hand’s brutal facts at the beginning of 2001 were as brutal as the company ever faced. A major threat emerged when it appeared likely that India, Four Hands primary manufacturing source, and Pakistan, two nuclear powers, were on the brink of war.

To further emphasize the potential for disaster, a member of the Four Hands management team was in Rajasthan during a nuclear test by India designed to get Pakistan’s attention, though miles away, he felt the ground shake beneath him as the nuclear test began. Whether it got Pakistan’s attention or not, it codified a major brutal fact for Four Hands; India at war would certainly impact on whether carpenters would be drafted, factories would remain open and the country would be able to ship from its ports. Even a short halt to production could cripple cash flow, and a longer one could force clients to fill their floor with merchandise from other manufacturers.
Four Hands assessed their brutal facts and broke them down into three numbers.

1, 2, 3:
One country producing about 70% of the company’s product line

Two customers generating over 50% of revenues
Three manufacturers producing the majority of their product line Hatton took immediate action. He attended trade shows throughout the world in order to identify new sources, manufacturers and product lines from other countries. He also greatly enhanced sales and marketing efforts. The goal was to go deeper with greater penetration into current and targeted accounts. The results of Hatton identifying, and more importantly acting, on these brutal facts led to a stronger, more exciting and more diverse product line and company.

Over the years, Four Hands has confronted many other brutal facts that required difficult decisions and action. They included:

· Finding a way to make the Austin warehouse more profitable or eliminate it
· The need for real-time financial data and analysis
· Discarding a software system the company had invested heavily in for a new, user-friendly system
· Teaching and utilizing a methodology that has enabled the company to meet the daily, weekly, and monthly challenges of communications in an international organization

Companies rarely falter because they lack information. Most of the companies I have worked with in the furniture industry had virtually identical access to good information. The key to identifying brutal facts lies not in better information, but in turning information into information that cannot be ignored.

At each critical stage of growth, Four Hands has reinvented itself. The company realized early on that what took them to one level of growth would not take them to the next. A company’s mantra should be to “face the danger” every day and deal with those dangers first. Great leaders, strategic leaders, FACE THE DANGER. They realize that only through a thorough examination and assessment of the brutal facts are they capable of making the right decisions. Regardless of how successful a company has been in their past, ignoring today’s’ or the futures’ brutal facts will lead to disastrous results.

In the words of Jim Collins, “breakthrough results come about by a series of good decisions, diligently executed and accumulated one on top of another. On the really big choices, companies must often throw all of its resources into the task of converting its entire system.”

Strategic leaders are comfortable accepting ambiguity and uncertainty and understand that they will never have all the information they would like to make decisions. A rapidly changing world deals ruthlessly with those that don’t change. Strategic leaders don’t fix the past they create the future. Reiterating Jack Welch, “they face reality as it is, not as they would like it to be”.

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Richard L. Russakoff rich@bottomlineconsultants.com
November 17, 2008

My goal is to share with you and encourage you to implement an approach to management that will, over time, make managing people one of your favorite and most rewarding challenges and skills as a business owner.

In his book, The Official Guide to Success, Tom Hopkins states that unless you are willing to delegate, you can’t create much. The most successful business owners I have worked worth over the years have mastered the art of both delegating and managing people.

By learning how to successfully delegate large amounts of authority and responsibilities, they have gained invaluable time to focus on their own most productive and highest return talents.

Many business owners tell me that they would love to let go and delegate, but when ever they do, they are disappointed by the performance of their personnel, as well as by alack of follow through and intelligent decision making on the part of the people they leave in charge.

I believe there are two Great Management Principals to success. They are:

1. You get more of the behaviors you reward; and
2. What gets measured, gets done.

My goal is to share with you and encourage you to implement an approach to management that will, over time, make managing people one of your favorite and most rewarding challenges and skills as a business owner.

In addition, it will increase the level of performance you can expect from the people who are fortunate enough to be part of your organization. And, yes, you will be able to delegate and sleep soundly.

Establish a “Can Do” Culture
The primary purpose of a business is to achieve results. Our focus as managers must be to reward the results we want. Ichak Adizes writes in Corporate Lifecycles, “Management theory is preoccupied with management by results, by objectives. My focus is on management for results, for objectives and by process.” If you follow the approach I am recommending, you will get the results that meet your objectives by following and ultimately embracing the process.

Many managers and/or business owners fall into the trap of playing a “cop” as “the best way” to eliminate nonproductive or even counterproductive behavior. I have found that it is much more effective to be a “coach” to your employees. The best way to accomplish this is to identify and reward the behaviors that you do want, while encouraging your staff to aspire to even higher levels of performance. As a coach, you
want to “catch ‘em doing something good” and let them know how much you appreciate their good work.

Psychologists have found that positive reinforcement is by far the strongest method of achieving and maintaining positive behavior change. Punishment tends to breed paranoia and bad morale in the workplace, while negative reinforcement and lack of attention–to either good or bad performance–tell employees that the manager places a very low value on them and their performance.

This principal of positive reinforcement is what makes coaching work, and it is the reason that you get more of the behaviors you reward.

Good behavior is too precious to be taken for granted. As coaches, we want our employees to be positively clear on the results we want and the behaviors that produce them.

Establishing clear, measurable goals helps people see and appreciate their success. What gets measured not only gets done, but measurement also lets us see results in “black and white,” and, more importantly, how successful our results really are.

The first step is to identify the very best (or ideal) characteristics of employees in a given position. I have put together two charts that list all of the characteristics identified. These charts can serve as a means of establishing clear criteria on which to measure the current performance standard of each employee.

In order to ensure they are clear, it is important that we define or “benchmark” each one of these characteristics.

For example, we identified “creativity” as an important characteristic of a front room employee. Measuring creativity can be extremely subjective, and coaching it is an even greater challenge. The good news is once you define what you mean by creativity, over time it can be identified, taught, and encouraged.

A front room staff member can improve his or her creativity by experience, not just native ability. I asked a frame shop owner to describe the behaviors he’s seen in his most creative people, and he shared the following:

First, they have the communication skills to understand what a client is trying to achieve, and then add to that their own ideas, which have been learned from past experience (ideas that would apply to the situation at hand). This effort results in something even more exciting than what the client could ever have imagined on his or her own.

* They show a willingness to try new ideas and expand on them.
* He recommends that you give each front room person an assignment to be creative and let them “go to town on it. Give someone a chance to show their skills and show their stuff.”
*

Go through the many characteristics on each sheet and do two things:

* As there are too many characteristics on the initial lists to really focus on all of them, determine the key characteristics that you would use to measure and reward your staff.
* Determine a list of the characteristics you feel are most important, with your description of each, for a specific job in your business.

Now let’s talk about how to use the forms and become a coach.

* Explain to each employee, on an individual basis, your definition of each characteristic.
* Then ask them to measure their opinion of their performance level in each category on a scale of 1-10, with ten being the highest. Their measurements should reflect how they compare with the consistently “best” performers. If they think they are the best in a category, they should give themselves a “10.”
* Ask them to be as honest as possible.
* You should rate them as well.
* Ask other key employees/peers who work with them to also rate them using the same criteria. (Use your discretion to weed out any peer ratings with obvious bias.)
* The purpose of you and your staff’s evaluations is to give a total perspective of the various perceptions of their performance, skills, and attitude levels at the time of the review.
* In most cases, you will find that people will be far more critical of themselves in their reviews than you or their peers will be. If not, the other reviews will serve as a reality check.
* If their self-reviews are realistic, then our focus should be on the role of coach, asking them how we can help them improve in each of these areas.
* Offer to provide them whatever resources you can to assist in their improvement in each category.
* Praise them for what they are doing well and ask them to make a commitment to improve in areas where they are weak.
* Your goal should be to inspire, encourage, and create opportunities for your staff to grow. Make sure they understand that you are committed to helping them stretch and grow as people.

I believe these reviews should occur at least once a month initially. The problem with annual reviews is that a year is far too long to wait to tell someone where they stand. We all want to know where we stand every day.

This approach enables you to establish a completely different type of relationship with employees. It requires you to think of yourself as a mentor and to reward continuous improvement with encouragement and strokes. That, along with knowing where employees stand, is what is known as “psychic income.” Studies have shown that psychic income is far more valuable and motivating to employees than cash. Your additional reward programs should be based on their continuous improvement and the results of their actions.

Being a coach also involves providing the right rewards for your employees and taking a sincere interest in them, both on and off the job. A coach recognizes that “life happens” outside the work environment and is there for his or her people when they have problems.

For example, a CEO in South Dakota has a fund put aside to help employees who develop financial difficulties caused by illness or other tragedies. This genuine show of concern touches and motivates all of their employees. The employees know they are seen as being much more than just a part of the bottom line. A genuine personal interest in people builds the bonds of trust necessary for good teamwork. This is the one key characteristic of every successful manager I’ve worked
with.

In his book, The Greatest Management Principle, Michael LeBoeuf, Ph.D.,
recommends the following:

Your own behavior is the best way to teach people what you expect from them. You must walk your talk and lead by example in order to engender respect and loyalty in your staff. As Henry Gibson said, “A thousand words will not leave as deep an impression as one deed.”

* Don’t overlook complimenting the quiet, dependable people in your organization who demonstrate their commitment to your business by:
* Being rarely, if ever, absent.
* Working well under pressure.
* Being willing to give a second effort whenever the team needs it.
* Being able to be trusted to work just as hard in your (or in others’) absence.
* Consistently turning out high quality work on time.
* Helping others to do their jobs better.
* Producing more answers than problems.
* Regularly striving to improve their work.
* Fostering cooperation.
* Building morale.
* Good coaches expect their people to do what is required of them, and they hold them accountable for their behavior. Chronic complainers without legitimate grounds should be ignored (not reinforced). Don’t waste your time with game players.
* Focus your behavior on expecting and rewarding the behavior you want from others.

Conclusion
Coaching is an ongoing process, and with a little practice and patience, the techniques outlined above will become an easy, valuable part of your employee management process.

The Talmud says that believers never question and cynics never believe anything. Give this approach a chance, and you will become a believer.

Begin the process by creating time to let your employees know what they are doing well and to encourage them to do even better.

Pointing out errors that need correction is an essential part of management, but give criticism by praising the worker and criticizing the work. You can begin criticism by praising some of the person’s good points to avoid putting the person on the defensive from the start. After your praise, shift the focus to what needs to go right or to preventing things from going wrong in the future. (In order for this style to be most effective, however, praise must not always be followed by criticism or your staff will always be waiting for the other shoe to drop!)

Recently, a client I work with called her office while she was on vacation and was told second hand that a project she had asked to be completed on the Monday she left was not actually finished until Friday. She was furious and ready to leave her vacation a day early in order to confront the situation. When she called me and asked for my advice, I told her four things:

* Finish her vacation and enjoy her time off.
* Find out all the facts of the situation before she criticized the person in question.
* Identify 10 things this person did right while she was away.
* Remember that she is a coach, not a cop. Rather than punishing the person, it turned out to be far more positive–and effective–for my client to take advantage of what she discovered to be a simple mistake in judgement. She turned it into a learning experience so that the employee could learn and grow, while not being afraid to make future decisions while the owner is away. This is how the delegation process works best. An important caveat is to clearly define the behaviors you want, preferably in terms that can be measured. This will be the subject of a subsequent article.

Good luck, and good coaching!

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Richard L. Russakoff rich@bottomlineconsultants.com
December 16, 2008
Exceptional loan officers can, and will, take business away from someone. These individuals share essential characteristics that make it possible for them to easily prevail over their competitors.

In my consulting practice, Bottom Line Consultants, I work with CEOs across the country assisting them in the process of obtaining bank financing. Together, we be complete the loan package, and then meet with eight to ten loan officers to determine which bank is the best one for my client. As a result, I have the opportunity to work with a minimum of fifty different loan officers representing various banks across the country each year. This has given me a unique opportunity to study how differently loan officers represent their banks and interface with business owners.

As a result, I am able to observe firsthand the best (and worst) characteristics of loan officers from the standpoint of the business owner. In this article, you will learn the nine essential characteristics of

successful loan officers that set them apart from their competition. In addition, you will learn how to avoid the mistakes other bankers have made that have lost and cost them business. You will have the opportunity to test yourself against the best in the industry at the end of this article.

Characteristic #1: There is a world of business that’s yours for the asking. In my conversations with CEOs, they take it as a compliment when a banker personally contacts them and asks for their business.

A call from a banker will generate the interest of a business owner like no other telephone solicitation. A statement like:

“My name is – and I am a loan officer/customer liaison rep for Main Street Bank. If your schedule permits, I’d welcome the opportunity to meet you and learn more about your business. You may find that our services for small and medium-sized companies can be customized for (name their company) to help you run your business smoother and more efficiently.” …will almost always lead to a better than ever opportunity for you to become your prospect’s new loan officer.

Over the years cold calls from loan officers have successfully resulted in several of my clients changing their bank. Most of these companies had not considered making a change until they were cold-called by lenders.

One highly successful owner of a twenty million dollar company shared with me how impressed he was that a banker had taken the initiative to call him and then visit him at his office. His first thought after the call was, “Why hasn’t my banker ever called me or visited my office?” In this case, a perfect stranger had a competitive advantage over his former banker.

Being proactive on your part is your best strategy in taking business away from your competition. The secret is learning and applying basic telephone and coldcalling skills.

Characteristic # 2: Make the time to join or set up a referral network. “Cold calls” can become “warm calls” through networking, asking others for referrals, and personally promoting your services. Take the initiative to ask current bank customers and other professionals to refer you to prospective clients. Brett Kaplowitz, a Vice President of Potomac Valley Bank and a master at this approach, says, “There is nothing like the power of a recommendation by a peer to open a door for you.” Virtually all of Brett’s new business comes from referrals. “Given that one of the five C’s of credit is character, a recommendation from a peer can go a long way to establishing good character.” The secret to getting referrals is to ASK for them. Brett believes, “Referrals should be quid pro quo.” He suggests that you work with people you are comfortable making referrals to, as well as getting referrals from. If you are receiving a reference from an accountant, you will want to refer people to him or her as well.

Speaking of character, when dealing with your client, you must have your client’s best interests at heart. This implies that you will recommend to your client only professionals who will serve them in the most ethical and effective manner, and they will recommend you to their clients for the same reason.

Referrals can also come from attorneys, vendors, and friends from associations. Brett adds that when calling on a referred prospect, you can say, “I promised John I would call you this week and share with you how we can help you grow your business.”

Brett also suggests that you take business cards everywhere. Tell people what you do. Maximize your opportunities to present yourself in a favorable way. Whether you are calling on the phone or meeting someone in the course of your daily activities, make the encounter work for you. Have a 20-30 second verbal commercial that tells who you are, where you work, a brief explanation of why you are calling or how you can help them, and be sure to close with a quick tag line. ASK for the opportunity to win their business or get a referral by saying, “You may not need a bank right now, but could you tell me of someone who may be looking to change banks?”

Characteristic #3: Create customer loyalty by visiting prospects and clients at their place of business and by exceeding their expectations. Loyalty comes from trust. Trust comes from bonding. It is very difficult for a business owner to bond with a banker whose desk forms a barrier while confronting numerous interruptions such as the banker’s phone constantly ringing.

Great communicators understand the importance of connecting by making prospects and customers comfortable. A visit to a prospect or customer’s operation puts them at ease. It also gives you greater insight into their business and makes it easier for the business owner to explain his or her business, while simultaneously connecting with you.

J. Brannin Prideaux, Vice President of Compass Bank in Austin, Texas, took the time to spend half a day with one of my clients, Four Hands, by participating in a strategic planning retreat that I was facilitating. Prideaux’s insights were enormously valuable, and in this role, he created a true sense that he was not only his loan officer, but also a strategic partner.

Prideaux learned about Four Hands through his extensive network. Four Hands’ bookkeeping service told another loan officer from Compass Bank about their needs. The banker told Prideaux and a meeting with Four Hands was arranged. Brett Hatton, Four Hands’ owner, was delighted that a banker was coming to visit him. The visit enabled Four Hands, an importer of furniture and accessories from India, to show Prideaux things that could never be explained. “Unless you are looking at my products, you can’t really understand my business,” Hatton said. His previous banker had been invited to his warehouse on a monthly basis and never once took the time to see the operation.

Prideaux created a loan package tailored specifically to Four Hands’ needs. Without Prideaux’s help, Hatton would never have known an option such as the cash flow manager account existed. With the program Compass Bank set up, access to capital will grow as Four Hands and their receivables grow. Compass gave Hatton confidence that they could and would continue to meet Four Hands’ growing needs.

“Prideaux became involved in the business in a very real way.” He and his staff came to Four Hands’ warehouse for a tour. Prideaux understands the needs of a high growth company and understands what they are up against. “We are grateful that he threw the box away and took the time to tailor a program to meet our unique needs,” Hatton said.

You can show your clients that you care by changing the relationship to a personal one. Kaplowitz cites author and Jeff Gittimer who wrote, “Customer service is worthless, customer loyalty is priceless.”

Kaplowitz believes two ways to exceed his clients’ expectations are to surprise them on their birthdays with phone calls and find out about their families and interests. “The more personal you make your relationship with your customers,” he states, “the more loyal your customers become–and loyal customers are much less likely to switch banks.”

Characteristic #4: Never make promises you can’t keep. Hatton, of Four Hands, tired of their former bank’s unfulfilled promises. “They tried to keep us in private banking to beef up their portfolio. For months promises were made that a half million dollar loan was just days away. As a result, we made plans for expansion. As months went by, the delays resulted in a difficult cash flow crunch, and we finally concluded that the bank could not deliver.”

Characteristic #5: Take the initiative and be prepared. International Software Consulting (ISC) of

Princeton, New Jersey was in the process of writing a business plan for the purpose of acquiring a seven figure loan. ISC realized they needed a bridge loan to finance an immediate short-term opportunity that could not wait until their business plan was completed. They arranged to meet with prospective banks in both New Jersey and Philadelphia, including Sandy Singleterry, Vice President of Business Banking, Summit Bank.

At the first meeting, Ms. Singleterry took the time to go to Philadelphia when she was unable to meet ISC in Princeton where her office is located. Singleterry was the only banker ISC talked to from the first round of meetings who remembered ISC’s needs after they had completed their loan package.

According to co-owner, Ananth Krishnan, “Ms. Singleterry listened, studied, and came prepared the second time. While other bankers were leafing through the pages, she quoted information from our first meeting. She was very personable, seemed to care, and talked intelligently about our numbers. Ms. Singleterry recognized she had competition and was very aggressive about keeping us informed. Her first offer was the best offer we received.” Because ISC was so impressed by her professional approach, Singleterry blew the competition away.

Characteristic #6: Always treat your client with respect. “Before our package was complete, we approached our original bank for a line of credit of $400,000,” said ISC’s Krishnan. “The loan officer could have come forward and guided us along. Instead, he made us feel like he had us where he wanted us. I was ignorant and would have been eternally grateful had he responded positively to our original request. He tried to tell me all the reasons why I could not get a line of credit, and I could not find the right words to present my case,” said Krishnan.

With the assistance of Bottom Line Consultants, ISC realized that they were a viable prospect for a business loan. After the threat of factoring their receivables, ISC was reluctantly given a bridge loan of $400,000 from their former bank. ISC also made it clear that this was just a bridge loan and that a larger request would follow when their loan package was completed. The bridge loan required an audit and even when the audit was completed, the banker questioned whether ISC reallyhad the accounts. Krishnan and his partner, Naru Narayanan, felt this was an insulting question to ask, as all the checks from ICS’s Fortune 500 clients had been deposited in their bank for the past four years. ISC had always been happy with this bank because they liked the branch manager and the tellers.

Although ISC’s former bank eventually offered them the same seven-figure loan that Summit wrote in its initial proposal, the damage had been done and ISC moved their entire banking relationship to Summit Bank. Had the loan officer been more helpful from the start, they would have kept an extremely good client with an average daily balance of over $250,000.

Characteristic #7: Listen to the client and demonstrate your interest asking intelligent questions. In 2000, Eclipse Marketing was #82 on the Inc. 500 list. In the last quarter of 1998, Eclipse began the process of shopping for the best bank to meet its growing needs. According to Miles McCracken, Sr. Vice President and CFO, “Because we were not a cookie cutter loan package, some banks didn’t take the time to understand us. They assumed they knew everything.

“Ricky Monroe of Washington Mutual called us back several times to find out more information and ask questions. No other banks did that. When Washington Mutual came in, they were aggressive. They saw our company as a good company to do business with, and they weren’t going to mess around. They came in with their best rate and their best plan right from the start.

“Monroe listened, he was always prepared, and he asked us for whatever he needed to sell his proposal to his underwriter. Monroe stuck with it. He took the time to read and understand our huge business plan. He and his boss made the local decisions, and they gave us a firm commitment. Although this was a bank with its headquarters in Washington State, they made it clear that they had both the authority and responsibility to make decisions in the Provo, Utah market.”

A loan officer from a nationally known West Coast bank created quite the opposite impression on McCracken and Brent Bingham, the company’s CEO. One of thefirst things he said was, “You know, I don’t care about your business plan. I just want to see your numbers. I don’t need to see all your pretty things here. I don’t care about your industry. I don’t want to hear it. I want to know the raw numbers, and I only have a limited amount of time to talk to you today.” He then proceeded to talk about himself for the next hour. McCracken said, “It was very negative. It was obvious he didn’t care who we were, what we did, or what Eclipse Marketing had accomplished.” Bingham’s comments after this banker left, was “This guy needs to take a course in how to win friends and influence people. There is no way I would ever do business with that bank.”

Characteristic #8: Present a positive image. Another loan officer from a nationally known bank responded to the question, “What is the bank’s decisionmaking process?” with, “I haven’t a clue. There have been so many changes in our bank recently that I don’t know which end is up.” Eclipse instantly concluded that this was an organization in decline, with poor structures. All the goodwill the loan officer had created in the meeting vanished. The bank did come back with an offer, but it took such a long time that it was well after Eclipse had accepted the Washington Mutual offer.

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The end of a year like no other is fast approaching. Many of us have begun making New Years resolutions. The most common resolution Americans make is to get rid of fat.
In this spirit, an extremely successful entrepreneur we work with invited us in to help him with his New Years resolution of eliminating the fat in his company.
Our goal was to go through his organization department by department and identify fat.
We started by establishing several ground rules
1. To be effective we needed to put ego’s aside.
2. We would work side by side with the CFO to provide us with accurate information and assist us in our evaluations.
3. We established hard criteria to determine what the ROI we need from each person and satellite office.
4. We turned off the cell phones and emails, and made it clear we were not to be disturbed for the day.
5. The final rule was that there would be no sacred cows.
Within 5 hours it was clear that we could eliminate one office and at least one to two people from every department. We eliminated people because:
their positions were redundant
their position could be consolidated
an unnecessary job was created to keep someone and there was no real return from the position
an office was eliminated because the work coul done more effectively from headquarters.
There were people who were just not pulling their weight and we could pass on their work load to others who we believed were excellent players who were under utilized

By closing the office and consolidating it we were able to calculate immediate saving in rent, utilities, labor, benefits, cell phones, equipment rentals, and travel just for starters

Within 5 hours we identified fat in the high five figure range. We then played devils advocate to determine if we were realistic and what other consequences would we face by making theses moves.

In the end we determined they were the right moves to make. Not everything could happen at once, but a plan was put in motion that will eliminate all of these “empty calories” by the end of the second quarter of 09.
We concluded that regardless of the economy, we had identified and needed to eliminate unnecessary waste, redundancy, low performers, and cost creep.
Afterwards the CEO told us it was his job to be close to the money and keep his company healthy and sustainable and wished us a Happy New Year.

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By Rich Russakoff rich@bottomlineconsultants.com

It was the week of September 15 and we were a week away from presenting a loan package for a 2 million dollar company to 8 banks.  Suddenly we found ourselves in a perfect storm. Major financial institutions were collapsing.  Fear, uncertainty, and questionable assets on the books of banks, was causing credit to dry up faster than a drop of water in the Sahara.

We decided to move forward; we were confident that we had a fundamentally sound loan, a profitable company, and a great story to tell. And we had done our homework and had a great package to present.

As we made our presentations it became clear that the larger banks we spoke with were frozen in their tracks. We were stunned when GE Capital called us and canceled the day of our appointment, saying they were not making loans for the rest of the year. I
t was the smaller banks, the community banks that focused on the small business market that were the most interested and extremely aggressive. All four of our offers came from banks that fit this profile. These loan officers’ were more than order takers. They were real players in the decision making process. In each case they only needed one other person to approve the loan.

The loans had two components. One was a line of credit tied to receivables and the other was a long-term consolidation loan collateralized by a second on a commercial property.

Every offer was contingent on an SBA guarantee for the long-term loan. It was clear that without an SBA guarantee none of these banks could make the loan.

If you are looking for business loans now or in the near future. Consider establishing relationships with smaller more aggressive banks and stay current on what programs state, local, and particularly the federal government will be offering to stimulate lending to the small business market. This is likely to be winning combination for the near future.
There is no question that new stimulus programs are on the horizon within the next year.

Now is the time to expand your network of banks and start following the money.

For more information on Bottom Line approach please review www.bottomlineconsultants.com

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