EO congratulates 10 Members that made the Saudi Fast Growth 100 List, Tips for focusing on customer needs and cultural contacts, and Marketing to end customers using video podcasting.

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Tips for Strengthening your competitive advantage by improving back end operations from EO Chicago Member Will Scott, John Macinnes from EO Calgary helps his customers go green, employee training with Jeffrey Gitomer, and tips for managing stress from EO LAC Regional Conference speaker Gaby Cora.

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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
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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