Archive for the 'Cashflow - Credit - Collections' Category

The facts on small business and banks

Published
by
Jim Blasingame
on October 24, 2011
in Banking - Investors - Capital, Cashflow - Credit - Collections and Finance - Accounting - Taxes
. 0 Comments

Listening to pundits and politicians, you’d think banks were intentionally hurting small businesses and the economy. When a Senator or “Talking Head” says, “This economy needs banks to start lending to small businesses again,” you might think they know what they’re talking about. They don’t.

The NFIB Small Business Optimism Index is the gold standard of small business surveys. If you track the monthly results of Dr. Bill Dunkelberg’s work on his Index, as I have on my radio program for more than a decade, you will see that throughout the entire period since the Great Recession began in 2008, more than 90% of small business owners have consistently reported that their “credit needs are being met.”

It’s true that the big banks curtailed lending while getting their own balance sheets under control. But out here on Main Street USA, if your small business qualifies for credit and wants it, you can get it from either an independent community bank or credit union, if not from one of the national banks. The problem is not credit availability; it’s demand. Like everybody else on Planet Earth, small businesses are deleveraging.

We wanted to know a bit more about the banking relationships of small business owners, so recently, on our website and weekly e-newsletter, we asked this question: “What type of bank do you do business with?” Here’s what we learned:

Our respondents who do business with a “large regional or national bank,” were barely more than those who said they trade with a “local community bank,” coming in at 38% and 36%, respectively. The third option of our poll, “a local credit union” – which are increasingly proving their relevance to small businesses – was chosen by 15% of our sample. And finally, a little more than one-in-ten said they needed a bank.

A week later, in a companion poll, we asked our small business audience: “Are you happy with your current banking relationship?” Seven out of ten said yes and 17% said no. And the group who said they “would change banks if they could,” came in at 13%.

The results of our unscientific online polls are backed up by the findings of several highly regarded surveys, like Dunkelberg’s NFIB Index: Main Street small businesses are dealing with many challenges in this not-so-great recovery, but access to credit is not one of them.

Uncertainty is suppressing small business loan demand, not banks.

I talked more about banking relationships recently on The Small Business Advocate Show. Click here to listen or download my conversation on how happy small businesses are with their banks.

For more great SBA content, click HERE!

Is barter right for your small business?

Published
by
Jim Blasingame
on August 15, 2011
in Cashflow - Credit - Collections and Management Fundamentals
. 0 Comments

In his landmark 1776 book, Wealth of Nations, Adam Smith called money one of the three great inventions, including the written word and mathematics. Money has helped businesses grow more efficiently, markets expand more dynamically and nations trade more effectively.

But there is something still in use in the marketplace today that humans used for millennia before money: barter. Indeed, barter birthed the marketplace.

In simple terms, barter is the direct and mutual exchange of goods and/or services between two parties. The Latin term, quid pro quo, “something for something,” is the original definition of barter. Think of the frontier doctor who took a chicken and a sack of potatoes for delivering a baby.

Over the past hundred years or so, a combination of the ubiquity of money and the growth of financial tools and resources has relegated barter to the marketplace minor leagues. Nevertheless, barter is still being conducted, primarily between businesses that know each other and have a mutual need for what the other offers. For example, a printer barters a brochure job for food from a local restaurant. Or a lawyer accepts personal and/or real assets from a client in barter for legal representation.

Small business should look for barter opportunities. For example, with too much inventory and too little cash, barter can be part of a survival strategy in a bad economy. Slow-turning goods become the equivalent of cash to pay for something that in a better economy would have been covered by the cash flow and profits from customer sales. Plus, there are tax advantages with barter, but also tax reporting requirements. So consult a tax professional before bartering.

As handy as barter can be, it does have three inherent challenges that money was invented to address:

  1. Party familiarity

  2. Timing

  3. Relative value

But a few entrepreneurs have created something to overcome these limitations in much the same way that money does, while keeping the advantages of barter. They’re called barter networks or exchanges.

A barter network becomes the nexus between parties by offering services that address the challenges mentioned, including:

  1. barter credits that can be used any time in exchange for

  2. a variety of goods and services from a catalog the networks has aggregated from and for its members.

Before using a barter network, remember you may be exchanging assets today for future redemption. So conduct the due diligence to make sure the barter network has experience and a good track record.

Consider barter in your economic recovery plans.

On my small business radio program, The Small Business Advocate Show, I interviewed Steve Bolles, founder and president of Merchants Barter Exchange. In this interview, Steve talked about some of the reasons that barter could be just the right tool for small businesses experiencing cash flow challenges or other issues in this recovering economy. Plus, we talked about some of the details that are required to pull off a successful barter, including through a barter network and, of course, the tax details. Take a few minutes to listen to this conversation and, as always, be sure to leave your own thoughts. Listen Live! Download, Too!

For more great SBA content, click HERE!

Working capital loans & independent community banks

Published
by
Jim Blasingame
on March 24, 2011
in Banking - Investors - Capital and Cashflow - Credit - Collections
. 0 Comments

Results of the The Small Business Advocate Poll from March 14:

The Question: As you grow your business over the next year, it’s likely that you’ll need a working capital loan to augment operating cash flows. If so, which of these options are you more likely to choose?

13% - National or large regional bank

31% - Independent community bank

22% - Credit Union

34% - “We don’t need no shtinking bank loan!”

Jim’s comment: For over a decade, I’ve been telling small business owners that their most reliable banking relationships, through thick and thin, would be one with a locally owned bank or credit union that practiced relationship banking. It’s good to see that of those who would currently consider using financial leverage, 80% would choose an option where relationships are valued more than a computer generated credit score.

Recently on The Small Business Advocate Show, Jim discussed the importance of having a relationship with an independent community bank with Gary Moore, founder of The Financial Seminary and author of several books, including Faithful Finances 101 and Spiritual Investments. It’ll only take 8 minutes to listen to what Gary has to say, he’s a pretty smart guy, and tell us your banking experiences - good and bad.

In praise of the independent community bank with Gary Moore

Your small business, your banker and economic recovery

Published
by
Jim Blasingame
on February 24, 2010
in Banking - Investors - Capital, Business planning and Cashflow - Credit - Collections
. 2 Comments

A small business is like the human body in at least two ways: To survive, it must have both nutrition - food and water - plus oxygen. For a business, nutrition is profits, and its oxygen is cash flow. And similar to the body, a business can survive for a while without the nourishment of profits but not very long without the breath of cash flow.

Arguably, the greatest reasons small businesses fail is they run out of cash. And as improbable as this may seem, even businesses with plenty of sales revenue - if cash is not collected in time - can fail. Every growing business, large or small, needs access to cash resources that can smooth out the operating cash rough spots. But for a small business, those resources are few in number, with the primary source being a loan from a bank.

If there is one thing that I have harped on for the past dozen years, it’s the importance of a small business establishing and maintaining a close working relationship with a bank. Furthermore, a decade before the financial meltdown of 2008-9, I began encouraging small businesses to make sure at least one of their bank relationships was with an independent community bank.  That advice turned out to be prophetic.

Recently, on my radio program, The Small Business Advocate Show, I talked about getting your small business ready for the coming expansion and building better banking relationships with an outstanding member of my Brain Trust, John Dini. We discussed some of the elements of growth that you should begin planning for right now, including a capitalization plan that includes a closer relationship with your banker. John is the leading Tab Boards franchisee in the U.S., President of Management Performance Network and author of 103 Tips for Better Hiring.

Take a few minutes to listen to our conversation and, as always, leave your thoughts on banking relationships and how you’re getting your business ready for the coming expansion. Listen Live! Download, Too!

What is a blog anyway and why should small business care?

Published
by
Jim Blasingame
on February 17, 2010
in Cashflow - Credit - Collections, Communication, Innovation - Creativity, Online strategy and Online technologies
. 1 Comment

A blog is the contraction for web log; it’s a 21st century way to easily and inexpensively publish your ideas online. With a blog you can connect with others who read what you wrote, have a point of view or question and begin a “thread” of comments about that topic.

By this point on the social media time continuum, many people think that defining a blog is such an elementary task that it’s tantamount to describing a computer. Those same social media elites should know that here in the real world, where Main Street small businesses live, most people actually have many un-Tweeted thoughts.  But none of the foregoing diminishes the fact that small business owners should be connecting more online with their customers, present and future, and one of the best ways to do that is through a blog.

Small business owners typically don’t appreciate how much they are world-class experts on their industry and product applications, including what not to do. They also too often don’t realize how much their customers want and need to hear that kind of information.  And what about that “I can’t write” excuse? Well, it pains me to say that their customers would rather hear from a get-to-the-point person they know than from some smart-alecy wordsmith like me.  Then there is that “I don’t have time” excuse. Once your platform is set up, blogging doesn’t take much time, it costs virtually nothing and the ROI can be enormous.

Recently, on my radio program, The Small Business Advocate Show, I talked with a long-time member of my Brain Trust, Karen Cortell Reisman. In the two segments below we talk about blogs, how they work and what the value is for a small business. Karen is President of Speak For Yourself®and a world-class expert on customer communication. Take a few minutes to listen to our discussion and, as always, leave your comments.

What is a blog, anyway?: Listen Live! Download, Too!

What would a small business blog looks like: Listen Live! Download, Too!

January 2010 Tatum survey of small business conditions

Published
by
Jim Blasingame
on January 8, 2010
in Banking - Investors - Capital, Business planning, Cashflow - Credit - Collections and Economy: National and Global
. 1 Comment

As we embark on a new year, with most of us very happy to see the last one in our rear view mirrors, what is the economic mood on Main Street?  Are recession-rattled small businesses that survived to open their doors January 1, 2010 rearing to take on the new year or are they still licking their wounds? Recently, Sam Norwood joined me on my radio program, The Small Business Advocate Show to report on the January 2010 Tatum survey of small business conditions, including sales, capital investment, capital acquisition and costs, hiring trends and other indicators. The good news is that all of Tatum’s arrows are green and pointing upward. Good news for small businesses!

Sam is Senior Partner with Tatum, LLC, and an important member of my Brain Trust. Take a few minutes to listen as Sam and I discuss not only what the Tatum survey revealed, but also how it compared to other surveys I cover and what you and I are seeing out here where the rubber meets the road.  And, as always, leave your thoughts on the direction you think the economic recovery is taking. Listen Live! Download, Too!