Posts Tagged ‘relationship’

Has This Economic Recovery Left Common Sense By The Wayside?

Saturday, May 3rd, 2014

Today’s post-crisis world is sprinkled with glimmers of economic hope as we witness positive upticks in the auto, retail and construction industries. Economic confidence is on the rise and consumer spending and borrowing are increasing. While this is all good news, small business owners need to be disciplined when developing a growth strategy. In my recent Forbes post, I discuss why common sense is key when planning for future growth.  Click below to read my full post.

 

Forbes Post

Winning the Ties…

Thursday, September 23rd, 2010

In this current environment where competition is fierce, and it seems that your prospective customer may be ambivalent about whom to choose, the importance of “winning the ties” becomes paramount. With all things being equal, how does your prospective customer choose between you and the competition?

 ”Winning the ties” means creating an environment where your prospective customer feels they get greater value from their “relationship” with you and your organization just by being associated with it. When it comes down to awarding business, and everything else is equal, your greater relationship value wins the tie every time.  Greater relationship value can take many forms, but certainly being a “go to source,” or being considered a “respected advisor” will help to win the business that others consider comoditized.

 This approach of creating greater value from a relationship is generally not customer specific, but an organizational philosophy and must be a focus of the organization. Just as important, this approach must be genuine, and it must create a welcoming environment that demonstrates that your organization cares not only about the potential customer, but to all customers.

 To create greater relationship value do you “network” or instead, do you look to “build relationships?” How are you creating the visibility needed to make someone interested enough to research you and/or your company before they meet with you? What have you done to add value to your customer base besides supplying your direct products or services? Are you hunting for business, or have you created an environment where you are actually being hunted? Do you use your existing clients as ambassadors for your company? What community service initiative is your company involved with that demonstrates your commitment to not just profitability, but dedication to your roots?

 It is important that we leverage all the tools that we have in order to win business today. By creating greater relationship value with your current and potential customers, you are not only positioning your business to win the ties, but you are building the credibility of your business.  And in today’s business environment, credibility and winning the ties is what can make you and your business an industry leader. Where do you and your organization want to be?

Banking’s New Normal…

Wednesday, May 5th, 2010

Are you prepared for the “new normal” in the banking and lending environment? Our economy has seen the pendulum swing from where the majority of lending was in fact done on bank balance sheets to the recent past where more than seventy percent of all lending was done by non-bank financial companies…

With the collapse of the non-bank financial company’s ability to fund themselves; the re-intermediation of lending by traditional banks is occurring.

This will have a profound effect on your business. It will mean that banks will be able to choose which customers they want to do business with, and will not have the same competitive pressures from the non-banks…

The Regulatory Reform Legislation now on the Senate Floor will impact the financial industry more than any other legislation since the Great Depression.

In combination, these two events will change the landscape for all financial services dramatically… Individuals and companies needing financing will once again need to have a relationship with a bank.  Many of the largest banks will be placed under severe stress as they are required to choose the business they really want to be in. Increased capital needs and additional regulatory burdens will cause many banks to turn inward and evaluate the profitability of each line of business. There will certainly be a cost for all this turmoil. The largest banks have already increased the cost of doing business by reducing branches, staff, and service, and at the same time increasing fees on customer accounts. (Have you checked your bank statement lately?)

What does this all mean for the consumer or business client?

First -The customers that develop relationships with banks will have access to credit that might not be available to those who do not.

Second -Re-intermediation will return lending to bank balance sheets.

Third – The cost of credit will rise.  Without a relationship, it will be difficult to contain the rising cost of credit, or its scarcity.

Relationship banking has come roaring back into vogue… Those who believe that the status-quo is still at work will find themselves without a chair now that the music has stopped. The “Too Big to Serve” institutions will be too distracted by all this “change” to really care about their customers…

For all the community banks, this is the gift that keeps on giving…

Do you have a relationship with your bank?

Tuesday, April 13th, 2010

Relationship: A state involving mutual dealings between people or parties…

In today’s financial environment, it is important to understand if you have a relationship with your bank or are you just doing business with them on their terms… Today at most banks, there are forces at work that may negatively impact your business, and may have nothing to do with how well you are running your business…

The “Too Big to Fail” have found that they no longer need to take any risk in making loans and instead make enormous profits borrowing at near zero percent from our own government and investing those same funds into risk free Treasury securities and have indiscriminately reduced lending across all segments of business. They have now become “Too Big to Serve.”

National Banks make lending decisions based on models that typically do not account for individual achievement or success, but rather on computer generated forecasts on the profitability, or unprofitability of a sector. The same banks, who offered express loans with no documentation, are the ones who shut off credit once the economic crises ensued.

Most banks have decided to raise fees on ordinary products as their balance sheets are shrinking due to less loan demand.

In response to increased regulatory pressure, some banks have reduced lending even to worthy borrowers in asset classes that may not be popular with the regulators.

So, an important question you must ask yourself is… Do you have a relationship with your bank?

Does your bank understand your entire business?

Do you have someone that you can talk to about your needs? Right now?

Do you have a banker that you can call for advice?

Is the bank you are doing business with continuing to lend in this environment or not? Is their primary business in line with yours?

Is your bank under regulatory scrutiny? And how might that affect your business needs?

Do you feel that your bank cares about your business?

It is time to step back, and ask these simple but tough questions before your business is affected… Most will wait until there is an issue, but the smart entrepreneur will be proactive, learn about the macro forces potentially affecting their business, and create the type of relationship necessary to survive and prosper.