Who Has Time to Micro-Manage?

Control.  It’s all about control.  Or is it about trust?

For control, we mean it in a neutral way, neither positive nor negative. Because, depending on the entrepreneur and/or business owner, the definition of control changes.

Many of us have worked in environments where you’re micro-managed. We understand it, but we don’t have to like it.

Whether it’s the boss’ issue with control from a positive perspective (wanting the business to succeed) or a negative perspective (lack of trust by the boss), the question more and more people are asking is, “why can’t you teach me what I need to do…or train me…or trust me…and then, leave me alone?”

It’s also about trust. The more trust you have in someone, the more you’re likely to delegate and let people do their job so you can do your’s.

How do you know if you’re micro-managing?

We’d love to hear your feedback after you read this excellent article we found on INC.COM about micro-managing.

Please email us your feedback at curious@auroraconsulting.biz

CLICK HERE for the link to the Inc.com article.

 

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It’s Not Your Bankers Fault

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If your credit score is low and your financing request isn’t approved,  it’s not the Banker’s fault when she delivers the bad news of a loan denial to you.

Your Banker wants to be your friend, your “go-to” financial resource to help you build your business.  But there are are areas out of the Banker’s control, not the least of which is your credit history and subsequent credit scores.

Certainly you should be aware of your credit score…with the caution that, as a consumer, you cannot access the true credit scores used in financial services-related decisions.  This score is otherwise known as the “FICO CLASSIC” and all the credit monitoring services in the world cannot provide you with access to this score.  Thus there can be wide variances between the scores you find online and the “true” score your Banker will pull when you apply for credit financing.  In our experience at Aurora Consulting, we’ve seen variances in either direction, positive and negative, as much as 100 points in the scores.

But if you have very low scores, chances are very good that you are aware of your credit history circumstances.  That is, scores less than 620, and certainly any scores that are in the 500’s.  Many consumers with scores at 620 and above, where they’re not hitting the high-700’s or even the 800’s, tend to believe they have “bad” credit. This is not always the case, and often that kind of score range, down to 620, will qualify for business credit financing.

But if you are fairly certain, even with the incorrect consumer-access scores, that you have credit circumstances that are pushing your scores down below 620, you need to be aware and to disclose that to your Banker.

And you should be specific with your Banker about those circumstances.  For example, “I’m currently delinquent on the mortgage on my other house,” or, “I have several small collection accounts from three years ago that I have not yet paid off.”  If you’re clear and honest with your Banker about your potential credit history, it helps to manage those expectations, both yours and hers, when presenting a financing request application.

At Aurora Consulting, our process with each client includes a credit report that we run at the very outset of our relationship with the client. Because we’re working on behalf of the client, we have a different perspective on the credit review process.  And we actually have successfully placed loans with credit scores in the 500’s.   The options in that range can be limited. But there are options.  And, like with your Banker, we find it very helpful when the client is clear with us upfront about concerns for their credit history and scores.

Finally, being aware of your credit status is important for you personally and professionally to be aware of how you are managing your money and your bill-paying as you grow your business. When the Banker denies a loan request due to low credit scores, the issue is the lack of awareness of this money-management, not the Bank’s lending protocols.

You can find out more about the “Myths Of Credit Repair” by downloading our free white paper.

WATCH OUR VIDEO HERE.

Bankers and Artists

background abstract art with gold dollar sign in center“When bankers get together for dinner, they discuss Art.
When artists get together for dinner, they discuss Money.”
~ Oscar Wilde

Bankers have the money, control the money, determine where the money will go and who will get it.  In the vernacular, those decisions are called “loan approvals.”  Do Banks skew to the conservative when making lending decisions?  Depends on the Bank, but overall, the answer is probably “YES.”  Sure, riskier credit scenarios can find a home, along with commensurate difficult terms including higher interest rate and other factors.

That leaves the Artists, or, you, the Business Owner, out in the cold and wondering about how to obtain the capital you need to grow your business.

At Aurora Consulting, we believe the path to success for your business credit financing request lies in three factors.

The first factor is the choice of Lender.  Different Lenders have different tolerances for risk.  And, different Banks have different perspectives to find a profitable return for their Depositors’ money. Any given Bank may create lending opportunities due to a strategic decision to lend more in certain credit profile areas.  In both these types of Banks/Lenders, though the credit risk may scare away a more conservative Bank, the terms of the loan don’t have to be onerous.

We believe the second, and maybe the most important factor in credit financing success is in presentation.  We recently watched the Will Smith movie “Hitch” where he plays a coach of sorts to lovelorn men seeking to get out of their own way to find success in love.  Much of the advice “Hitch” gives has to do with presentation, the manner in which a man listens to a woman, the way he honors her presence, and more.

We think that the Loan Application and the manner in which it is presented to a Lender is the fundamental key to success, combined with the other two success factors.  That’s why we strive to ask all the same zillion questions an Underwriter may ask, why we collect so much documentation up front from our clients, and why we carefully package our loan requests to present to Lenders.

The final factor for success in credit financing is the positivity of “The Close.”   Obstacles pop up along the way in every financing transaction.  Our aim is to overcome obstacles with positive attitudes and a sharp focus on getting to the closing.  We use positive language, we seek out positive solutions; we refuse to be waylaid by negative emotions, words, challenges.  This is our Closing Attitude at Aurora Consulting.

Bringing these three success factors together is what we do at Aurora Consulting.  It’s no secret to any experienced financial professional, but it certainly feels like it’s our own secret recipe for credit financing success.

Pages from a Salvador Dali notebook including doodles and calculations of income and expenses, the artist thinking about Money.  
Pages from a Salvador Dali notebook including doodles and calculations of income and expenses, the artist thinking about Money.

Whether you are an entrepreneurial “Artist” seeking to bring your vision for success to life with business credit financing, or a Business Owner searching for the best solution for your working capital needs, let us at Aurora Consulting be your concierge to guide your financing needs to the right conclusion, the one where the Bankers embrace your “art” and release the money to fund your continuing business success story.

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The Scorsese Way

Martin Scorsese has had a long and storied career in cinema.  The legend he has created is that of the Director using his extensive knowledge of film to enhance his cinematic creations. As a Director, he pushed the boundaries of macabre crime drama.

Along the way, according to this latest biographical feature in the New York Times, Mr. Scorsese developed his own way of working within, or rather, without, the “Hollywood machine.”  In particular, Mr. Scorsese created a separate path for financing his films using independent financiers and eschewing the financial support from the studios.

Frustrated with the unrealistic pressures of working within the confines of the studio system, he came to believe that Hollywood studios had become his “mortal enemies.”

As he says in the NYTimes piece, “It’s like being in a bunker and you’re firing out in all directions…you begin to realize you’re not speaking the same language anymore, so you can’t make pictures anymore.”

The latest development in the “Scorsese Way” of making his movies is his partnership with Netflix, the streaming service that is about as far from the Hollywood studio system as you can get in the early 21st Century.

We think the key element of this aspect of Martin Scorsese’s story is the financing component.  In short, those folks with the money–Hollywood Studios–brought unrealistic expectations, exerted extraordinary pressures, and ultimately hampered one of the greatest cinematic talents of the past 100 years from achieving his true potential.

We see this time and again with Small and Middle Market Businesses too.

If your business marches in the “big leagues” that is, with gross revenues exceeding $3Billion annually, then Bankers are the friendliest bunch of people on the planet. But if your business is in the Middle–$10 Million up to $3 Billion in revenue—or worse, a Small Business (below the $10M mark), you’ll find Bankers are not so friendly.  

To define friendly, let’s refer to our description above of the Hollywood Studio system’s treatment of the incredibly talented and successful Martin Scorsese.  In the NYTimes piece he discusses the unrealistic pressures from studio executives (the folks with the money) to shorten movie running times, and other extraordinary requirements for his films, “The last two weeks of editing…‘The Aviator’…I said if this is the way you have to make films then I’m not going to do it anymore.”

Imagine that.  Imagine the cultural and entertainment loss sustained when a talent as large and ambitious as Mr. Scorsese decides he’s had enough because the people with the money keep telling him what to do.

We blogged recently about “Don’t Tell Me How To Make My Pizza” about a similar story about an ambitious and creative young business owner.  He’s created a unique new type of sourdough pizza.  As he grows his business, he needs capital.  But he chose to bring in equity investors instead of engaging with us at Aurora Consulting to find quality credit financing.  You can be sure that sometime in the near future his equity “partners” seeking higher returns on their investments, will insist on changes to that unique pizza recipe.  Martin Scorsese all over again.

It’s the New Year and we’re committed here at Aurora Consulting to financing solutions for your business success story.  We believe in access to credit.  We’ll work diligently and enthusiastically to find the best credit financing solutions for your business.  

Take a page out of the Martin Scorsese playbook (except the part where they dump the bodies!), and find your own “Scorsese Way” to finance your working capital needs while preserving your vision of how your business should run and grow.

Download our DOCUMENTS CHECKLIST here.

The Lender Reviews Everything

When you apply for financing and your tax returns and/or personal financial statement shows that you have interests in other businesses or property, the lender will want to review the financials on those other businesses.

When it comes down to it, the Lender has the right to ask for this information.

The question from our client is often, “Why is this germane to my financing request for my business?  That other business has nothing to do with the business I’m financing.”

While this may be true, remember that you’re asking the lender to assess the risk of lending money to you and to your business (the one on the application), and if there are negative aspects to your other businesses that affect the financial health of this business, the lender wants to assess that risk.

The good news is that you can control the narrative to an extent. Describe what the other business is via a summary statement and how it interacts with the business you are financing.  Especially with regards to debt.

There’s nothing wrong with full disclosure.  Get it out of the way upfront. Don’t wait for the Lender to ask for it.

Understand why the Lender wants that information instead of fighting the request.

The Lender has the right to ask these questions.  Pushing back is okay, as long as you do so in a gentle fashion.  In the end, it’s about achieving your goal of obtaining the financing you need to grow your business with the least muss and fuss as possible.

Download your “HOMEWORK”! You’ll thank us later.

Stop worrying about what's required when pursuing a business loan for your small business. This list will indicate what a lender, bank, SBA, etc. will want to know about you and your small business if you're looking for a business loan. These are prudent documents that help tell your small business story. Without them, it's difficult for lenders to assess you as a risk when it comes to lending your small business money. This is NOT SPECIFIC to the SBA EIDL loan.

It Can Happen That Fast

We’re famous here at Aurora Consulting for the phrase, “Growth sneaks up on you!”  We’ve written a blog about it and have done a few videos where this notion comes into focus as the reason we are doing the video in the first place.

Even the best-prepared, most-organized, super-efficient Business Owner can find themselves with a new client who’s blowing up the revenue to extraordinary levels, or new orders for products and services that far exceed previous orders and expectations.

We like to say, “One Vehicle leads to 20 Vehicles.”
It can happen that fast.

We believe in your business success story.  You are putting in the effort every single day to grow your revenue and live the business life of your dreams.  That’s why we also believe that your financial services relationships today are so vital to your business growth tomorrow.

Begin with your Banker relationship.  It’s not enough that you know your Business Banker’s cell number; she has to answer it when you need her.   It’s not enough that she promises to get it done; RESULTS are the only thing worth talking about.   

Both these items are great metrics to help you understand if your Business Banker puts as much value in your relationship as you do.   If your Banker is meeting these basic standards, then you’re in good hands.  If not, then you should reconsider your banking relationships.

Along the lines of your relationships is thinking about future credit financing. We heartily recommend you invest some time at least once a year, if not more often, to sit down with your Business Banker and review your business’ financials.  You want to know if you are positioning yourself in the most favorable way possible to apply and be approved for credit financing when you need to grow from ONE vehicle to 20 vehicles.

Some Business Owners fear exposing their financials to their Banker.  Maybe the fear surrounds the Banker questioning the Bank’s commitment to your relationship.   We have found the opposite to be true for one reason.  

Your Banker’s commitment to you is driven by the motivation to maintain and grow your banking relationships with the Bank.  When we say relationships, we mean bank accounts.  Bankers are driven to grow depository relationships.  That’s their goal.  And once they have your business, they want to grow it and make sure you stay with them.

Reviewing your financials with your Banker can only further the Bank’s confidence in you and your business.  And it may provide you with cogent advice and knowledge that will help you prepare for that moment when you need 19 more vehicles.

At Aurora Consulting, we are Brokers. We work for you, not for the Bank.  And we know the tolerances that Lenders have for financing businesses on a growth trajectory.  

We understand the Underwriting guidelines and how your business financials fit into those “boxes” at different Banking institutions. We’re happy to review your financials too and prepare you for the eventuality you’ll need credit financing for more vehicles.

Your Banker Doesn’t Make the Decision

Ever heard of too many chefs in the kitchen? You know how it goes. There’s a bit of chaos, too many people involved in making decisions.

In a perfect world you’d get your credit decision very quickly. From your Banker.  You have all your relationships there, with your Banker.  You believe they know everything about you and your business there is to know because of those relationships.  And you’ve been a loyal customer for many years.

So when you find yourself growing your business and suddenly needing working capital to fuel that growth, your first instinct is to contact your Banker.  Because of the relationships. And, knowing the value of your relationships you truly believe your Banker can give your financing request prompt consideration and a quick decision, yes, or no, on the application you’ve submitted. In the banking lingo it’s called a “credit decision.”

A decision based on the entire credit profile—income, cash flow, business plans, credit, debt, etc.—to either approve your financing request or to deny your request. After all, your time is very valuable and your business is growing; you don’t have time to waste if a credit decision isn’t going to go your way.

But there’s an entire system at the bank where it’s out of the hands of your Banker to make that quick credit decision.  There are Underwriters and processing staff involved to review your credit profile, to compile notes and compare everything against the Bank’s guidelines for lending.

And still you wonder, “What about my relationship?”  Yes, your Banker is your go-to person who have been so valuable to you as you’ve grown your business to this point, guiding you with the right accounts and products.  So, why can’t your Banker give your loan request the once-over and tell you, honestly, and based on your longstanding relationship and the bank’s guidelines, if the request will result in a “Yes” or a “No?”

The answer is simple.  Your Banker is not permitted to make credit decisions.  Any of them. Your Banker wants to help you, wants to maintain the worthiness of your relationships.  But your Banker’s hands are tied because she is not permitted to make credit-decisions on behalf of the Bank.

Your Loan Application must go through the system.  Later, if the system fails you or doesn’t meet your expectations, even if you are approved for the financing, you may want to blame your Banker and ask, “Why couldn’t they tell me this from the beginning and not waste my time?”  

Because they can’t, that’s why. Telling you from the beginning qualifies as a credit decision, and that’s out of their hands.

Unreleased UCC Liens

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Watch out for unreleased UCC Liens; they can slow down your financing request.

Whatever your Business Credit financing request, when you borrow money to grow your business, whether as a loan or a line of credit, the lender will file a UCC lien against your business. That lien protects the lender’s interest in your business in the event of default.

After the loan is paid, the lender is required to file a release of that UCC lien.  What businesses often discover, much later on, is that the Lender never cleared the lien. And, often as not, the business discovers this UCC lien lurking in the background only when they’ve applied for a new round of credit financing.  The new lending process is held up until the old UCC lien is released by the previous lender.

Growth sneaks up on you and you find yourself in need of working capital.  You need to apply for new financing and your lender gets you approved and they’re ready to close and they do a search and discover the unreleased UCC lien.

The worst part of this process, worse than slowing down access to your new round of working capital financing, is what you discover when you call the old Lender.  We’ve seen it with clients at Aurora Consulting.  The previous Lender says, “Oh, this happens all the time… You just have to call and let us know, and we’ll release it.”

Shocked? Yes, you should be.  This should be part of the lending process as routine as any other, but it’s not.

You can protect your business’s future need for working capital by taking some simple steps.  You can conduct active UCC lien searches on your business. Contact your local County Clerk’s office or Department of State website and conduct an search.   You can create a relationship with a local title company, and probably for a very reasonable fee that title company can do a fast, thorough UCC search any time you need it.

Or, you can follow up with a Lender once you’ve satisfied a loan, or paid off and closed a line of credit.  Request a written satisfaction notice from the Lender.  Once you receive it, follow up with the Lender within thirty days to verify they’ve filed the release on their UCC Lien.

You’ve got better things to do with your business than worry about slowing down a future financing process.  Taking some simple preventative measures today will help you promptly access working capital when your growing business needs it.

Visit our FINANCING FODDER YouTube Playlist for more info on how to manage your business loan request.

Getting Unstuck

Wall’s Ice Cream is a very popular ice cream brand in The United Kingdom.  The Wall’s logo is prominently displayed at convenience stores, groceries and restaurants and cafes all throughout England. Wall’s is apparently also famous for their “Stop me and Buy One” tricycles roaming the streets filled with ice cream treats.

I haven’t personally seen the logo there by visiting England.  No, I’ve seen the logo often when I watch my favorite British Detective mysteries.  But enough about me and my Brit-Binge.

Wall’s has been making ice cream for over 100 years, but Wall’s didn’t start out as an ice cream business.  No, Wall’s was a butcher shop!  T. Wall & Sons Ltd. was a sausage maker since 1786.  But in 1913, the owner, Thomas Wall, realized that his sausages weren’t very appealing to his customers during the warm Summer months.  He hit on the unique idea of selling ice cream during the Summer to increase sales and to save the jobs of his employees.

It didn’t hurt the bottom line, either. Now Wall’s survives over 100 years later, branded and thriving.  As an ice cream provider.

Would you make a similar choice in your business, a choice where you change your entire business model so that your employees are taken care of?

Do you have to make such a radical choice?

Maybe there is another way to demonstrate your sincere interest in the financial well-being of your employees.  In this economy of nearly full-employment, it is certainly in the best interest of businesses to hang on to valuable employees.  Time and again, successful companies have proven their success comes thanks to the people working for them, the people showing up every day eager to do their jobs and to see their employers achieve long-term success.  Surely it’s in the best interest of the employer to invest in those employees, whether that’s in small ways or in a radical way.

Like Wall’s, a company in business literally for centuries, but thriving in incredible ways for the past 100 years thanks to a small but ingenious investment on the part of its owner at the time.

Where will your business be in 100 years?

 
Visit our FINANCING FODDER YouTube Playlist for more info on how you can prepare a financing request that will knock the Lender’s socks off.

Two Most Important Documents

There are two documents that are the most important documents that you should include and have ready for immediate access whenever applying for financing.

First and foremost, your current Year-To-Date (YTD) Income Statement. At Aurora Business Consulting, we believe you should be updating your YTD Income Statement every quarter, but it couldn’t hurt to update it every month. With automated bookkeeping software, creating a quick YTD Income Statement should be easy to accomplish.

The second important document to have at the ready is a comprehensive marketing plan. We don’t mean a one or two page marketing statement.  A comprehensive marketing plan with a full assessment of your marketing action plan, including specific strategies, Situational Analysis, demographics, SWOT analysis and cost analysis and expected outcomes is the recommended document to have at the ready.

Realistically your marketing plan should already be in place as a foundational element of your business operations.  In the event you need to apply for financing, and if there are changes to your marketing plan, you need only update the plan accordingly.  Especially if the financing request involves working capital for marketing expenses, or equipment purchases for the potential increased business revenues generated by your new marketing vision.

Why a marketing plan when you’re applying for financing? You know your objectives on maintaining and growing your business; the lender wants to know your objectives also.

With these two important documents, when you present the marketing plan and the income statement promptly and efficiently, it says something about your way of conducting business. You’re sending a clear signal to the Lender about the high quality methods you use to run your business; you’re giving the Lender a sense of “comfort” about the risk assessment on your financing request.

What if your financials are weak in certain areas for the last couple of years? The Marketing Plan also could potentially overcome some objections the lender has to something that’s weak in your financials.

The marketing plan shows the way you’re going to increase revenue either by something you’re doing already or something you plan to do which is why you’re applying for working capital or equipment capital.