The Top 10 Things I Bring to the Table as a Business Strategist
By Sheila Spangler

1. Identify Strengths and Mitigate Weaknesses of your Company.

a. I can spot financial, management or marketing weaknesses in your company and can provide suggestions to mitigate them. 

i. If your profits are down and you’re blaming the “economy”, I’ll be able to tell you after a  thorough analysis of your business if that truly is the case.

b. I can point out a company’s strengths and what that means to other interested parties should that be buyers, bankers, investors, shareholders, etc.

i. Sometimes owners take things for granted about their business.  Things that may seem “old hat” to you, can be seen as a huge benefit to a new owner. 

ii. I know how to present your business in a light that highlights those hidden opportunities and undiscovered wealth.

iii. This means a better value to you when you sell.

iv. More value equals more money in your pocket.

2. Profits drive the value of your business. 

a. Your business must make money in order to be of interest to a savvy buyer, investor or banker.

b. To make a profit, your business needs continually growing or steady sales greater than expenses. 

c. In many cases, the biggest hole in an owner’s bucket of earnings is caused by not knowing the answers to the following questions and implementing the action steps if you do know the answers:

i. Why do people choose your business over your competitors?

ii. What business are you really in? (this one may surprise you)

iii. Who is your target market?

iv. What is the average lifetime value of your ideal customer?

v. How much should you spend to get a new customer?

vi. What kind of marketing and advertising should you be doing?

vii. How can you determine what marketing is working and what isn’t?

d. I can teach you how to find the answers to those questions.

e. I can build the means to attract sales and profits through good times and bad. 

f. I show you how to build the value of your business so you can sell your company for the price you want when you are ready.

3. Financial analysis skills. 

a. I can read and interpret your business financial statements.

b. Within just a few minutes, I will understand the basics of your financial situation. 

c. I know how to ask the right questions to get the right answers. 

i. Many times business owners have an innate sense of how their business is performing but are unable to fully explain it in a way that a buyer, banker, or investor needs to hear it.

d. I can relate those answers into easily understood terms for other parties (buyer, banker, investor, employees, etc.).

4. Banking and finance expertise. 

a. I was a business lender and vice president in commercial banking for over 20 years

b. I know what bankers need to understand about your business transaction or your business’s financial situation.

c.  I know that bankers don’t always say what they mean.

i. Most bankers don’t like turning down your loan request.

ii. They’ll tell you what you want to hear and then not call you back and hope that you’ll just “go away”.

iii. I can hear what they don’t say and eliminate wasted time and hours of frustration waiting for a banker’s decision. 

d. I’ll do the analysis on your business before we go to the bank and ask for money.

i. This way all problems can be identified and fixed before you go “hat-in-hand” to the banker.

ii. It is never a good idea to go to the bank and say “how much can I borrow?” or “how much can I sell my business for?”

iii. By identifying any problems and building on your strengths, I can tell you the likelihood of getting the funding you want for the situation you’re in.

5. Fearless Negotiator. 

a. There is generally a need to have professional advisors such as CPA’s or attorneys  involved in business transactions. This is necessary for your protection in legal and tax matters.

b. However, there are times when the same CPA’s and attorneys become out of control with their advice causing all sorts of havoc for you,  your potential buyer, investor or banker.

c. Because CPA’s and attorneys have advanced degrees, many times people will back off and not question them about things they don’t understand.

d. For example, think about when you go to the doctor and he tells you that you must take a certain drug or that you have a horrible sounding disease.  Sometimes, folks are so nervous about offending the “professional” that they are too intimidated to ask all the questions.  And if they do ask the questions, the answers aren’t understood because the “professional” talks in his or her language and not in yours.

e. When you are my client, I nip the occurrence of “professionalitis” in the bud. 

f. Remember: all professionals are people just like you and me.  They get up in the morning, brush their teeth and put their pants on.  They really don’t have a white robe and angel wings. 

g. I am not shy about questioning what needs to be questioned to protect your interests.

h. I do this so you don’t have to.  You want and need to remain in a neutral position not only to preserve your relationship with your advisors but to ease your stress level.

6. Communication Skills. 

a. I understand the importance of building rapport in order to facilitate any negotiation. 

b. I am a Neuro-Linguistics Practitioner.  This means that I have intensely studied the meaning of body language and words in human interactions. 

i. Most communication is non-verbal meaning that what isn’t said carries more weight than the words used.

ii. For example, have you ever had someone make a cutting remark to you and then say “just kidding”?  Chances are very good that they are not kidding.

c. I listen carefully to words, how they’re used and pay attention to the non-verbal signals to determine if there are still issues to be uncovered and dealt with.

d. What does this mean to you? 

i. In a negotiation with a buyer, banker, investor, vendor, or employee, I can advise you on issues that still may be lurking under the surface that need to be handled. 

ii. True communication is judged by the response you get from the other party.  In other words, if someone doesn’t understand what you said, its your job to make sure that they do…..for the sake of your business.

7. Integrity –

a. There is no hidden agenda with me.

i. I will only take you on as a client if your business is saleable, or if it can become saleable.

b. I’ll tell you the reality of your situation.

i. I’ll let you know in clear language the current state of your business. 

ii. If your business needs a “tune-up” before you can sell at the price you want, I’ll let you know right away.

iii. I won’t  tell you what you want to hear just to get your business.

iv. I’ll do the right thing even if it means I don’t get your business.

v. Having a good reputation is my greatest asset.

c. I am always open to your feedback good or bad – just be straight with me.

d. I’d rather hear your opinion from you than from a third party. 

e. If I make a mistake, I’ll tell you and fix it.

8. Just Do It 

a. When you hire me to do a job, I do it .

b.  I make sure that there are no unanswered questions or concerns.

c. When you are my client, I am available to you. 

d. I won’t take your money and disappear.

e. I’ll give you periodic updates and recommendations.

9. Attention to detail –

a. I’ll explain things in a clear easy to understand manner.

i. For example, I interpret complex financial or legal documents and put it in layman’s terms so it is easily understood.

ii. I’ll point out the issues that could occur if you do or don’t so something.

b. I have no fear of asking questions to make sure difficult situations are understood.

i. When your CPA or attorney gives you advice and you’re not sure what they said and even less certain about what they mean, I get to the bottom of it and explain it so it is clear.

c. I know that the “devil is in the details”. 

i. And when you are dealing with financial matters, this is rule one.

10. Leadership.

a. Everyone has an agenda and generally its not about you. 

b. When you hire me, my agenda is you and I keep everyone on track (CPA, attorney, banker, insurance agent, etc). 

c. I keep them moving in the same direction to accomplish the goal (exit strategy, sale, purchase, recapitalization, etc.)

d. I coach you through the process of building the value of your company so you can get what you want.

Answer:

The general answer is “it depends”. The following factors are used by lenders to determine whether your business venture can be financed.

• type of business and industry (retail, manufacturing, service, etc.)
• the business owner’s directly related business experience,
• the amount of cash equity available to contribute to the business venture,
• the amount and type of collateral available to secure the loan and,
• the overall condition of the business owner’s personal credit.

Over the years, I have heard stories from business owners regarding the difficulty they experienced in obtaining financing. I believe the reason for this, generally, falls into one or two categories. One, the lender was not experienced or did not desire to process these types of loans. Or two, the business owner didn’t have the time or resources necessary to generate a well presented loan package and business plan. Lenders are busy. If you are prepared and have a well presented financing package, the chances of getting a quick answer in your favor is greatly increased!

The more experience, cash equity, and strong collateral you can bring to the transaction, the more likely it will be to have your loan approved. You should have a good idea of how much funding will be needed prior to visiting with a lender. It is never a good idea to ask a lender “how much can I get?” This tells the lender that you haven’t done your homework and won’t serve you well in getting a loan approved.

Lending to startup businesses generally occurs when financial institutions utilize the Small Business Administration loan guarantee. The SBA loan guaranty provides an additional layer of protection to encourage that lender to approve a loan for a new business or for an existing business with a new owner.

A well thought-out and professionally presented business plan is the business owner’s roadmap to success. This is often an area that is overlooked by potential business owners when seeking startup financing. In my opinion, once your plan is developed, it starts to take on a life of its own. Your plan should include an analysis of key markets, customers, vendors, competitors strengths and weaknesses and a description of your niche. It is critical to determine how your business will be preferred over your competitors’. If your niche is based on the statement “I’ll provide better customer service” remember this is what all your competitors think too. Go deeper; what can you do that is unique to the marketplace?

Additionally, the business plan can be one of the most important documents to the lender; it “tells and sells” your story. Remember, business lending is not all about numbers and ratios. In my experience, there have been times when the well prepared plan was the strongest piece of information in the loan package. Don’t underestimate the power of the well thought out and well written word!

The process to obtain financing can be daunting without experienced help. The Small Business Administration Office, Small Business Development Center, and Senior Core of Retired Executives are all resources for new business owners. Check out the website www.sba.gov for access to information on how to start a business. For one-on-one help to develop and write the business plan with financial projections, assistance is also available through experienced financing consultants such as Capital Strategies.

Is there a lot of out of pocket expense?

One of the things I have learned is that starting and operating a business can cost more than your initial plan indicated. That is why it is so critical to develop a budget for estimated startup expenses. Be sure to include a line item for “contingencies”. Make this number equal to about 10% of your total startup costs. This is the catch-all area for the things you forgot to budget or didn’t know you needed.

Some out-of-pocket expense must be incurred even before you contemplate talking to a lender. If a business owner decides to hire a financing consultant to assist with preparation of the business plan, the fee depends upon the complexity of the business itself and the amount of time needed to generate the plan. An estimate would be anywhere from $2,500 to $5,000. Separate from the business plan, “loan packaging” assistance generally costs around $1,000.

Once the SBA loan is approved, there is a loan guaranty fee which is paid to the Small Business Administration. This fee is based on the size of the loan. For example, loans under $150,000 have a 2% fee. This fee is 2% of the guaranteed portion. Loans up to $150,000 are guaranteed up to 85% by the SBA. Loans over $150,000 have a 75% guarantee. Loans over $150,000 up to $700,000 have a guaranty fee of 3%. Loans over $700,000 to $1,000,000 are charged a 3.5% guaranty fee.


Do banks and other lending institutions have certain criteria they look at when deciding whether and how much to lend?

Yes. (See answer to question 1).

Are retail ventures (particularly restaurants) generally “frowned upon” in terms on initial financing?

Here again, the answer is “it depends”. However, I know from personal experience that “yes”, this is generally an industry that is considered high risk by lenders for new ventures. The more directly related experience the business owner has, the greater amount of cash equity and strong collateral available will help a restaurant transaction get approved. In other words, if you are an experienced restaurateur with the ability to put 40 to 50% cash down, and have assets to pledge as collateral, you have a stronger chance of getting the loan.

What are the common pitfalls business people fall into when putting together a business or financial plan that might be avoided?

The biggest pitfall is not doing one! The second pitfall is not doing a “SWOT” analysis (strengths, weaknesses, opportunities, and threats) on your business and on your competitors. I have seen many plans that failed to address key areas such as competition. If you don’t know who your competitors are, what they do well, what they do poorly, what products they sell at what price, how will you be successful? Competition does not always have to be exactly in your line of work.

The second biggest pitfall is not assessing and updating your plan annually once your business is operating. Things and circumstances change and so should your strategic and financial plan. This is easy to say but hard to do for most small business owners that are wearing numerous hats. Staying on target and getting rid of unnecessary items is a must do in order to experience financial success. Make time for success; you won’t regret it!