Tag Archives: Ty Kiisel

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3 Reasons the Bank Says No

If your application for a small business loan has been denied, you are not alone. In fact, only about 10 percent of the small business borrowers who apply at the bank leave with a loan. Although the bank may give you a song and dance about why you were denied, it usually boils down to some very basic things:

You haven’t been in business long enough: Most banks don’t want to lend to companies that are in the first year or two of business. The success rates of a business that is over two years old are much higher and your banker, by his or her very nature is highly risk averse. They usually won’t take a risk on a very young company. You should also know that they will likely use your company tax returns to determine how long you’ve been in business. With that in mind, even if you don’t have much to report, file your returns starting with the first year to establish your company’s age right from the start.

Your personal credit is bad: Even if you’re trying to establish credit as a business, especially in the beginning, your personal credit and your business credit are pretty much joined at the hip. In fact, unless you have stellar business credit, you’re likely going to have to agree to a personal guarantee. In other words, you will need to cover the debt personally if your business fails to honor the debt. I recently heard from a small business borrower who defaulted on a very large business loan. The commercial property used as collateral had devalued over the last couple of years to the point where seizing it would only repay 50-60 percent of the loan balance. His attorney told him he should prepare for the worst—the bank will likely take everything he owns to repay the debt. On the other hand, if you have incredible personal credit, that sometimes frees up cash for a young business. Like it or not, maintaining your personal credit is just as important to a Main Street business as keeping a good business credit score.

You do business in a sketchy industry: By sketchy, I mean, highly volatile or erratic. Just like some banks specialize in particular types of industries, they will avoid others. The restaurant business is a good example. Because so many new restaurants fail many banks avoid lending to restaurants at all. If you do business in a highly niche or volatile industry you’ll either need to bootstrap your funding for the first few years to demonstrate that your business is viable before you’ll have any success at the bank, or try to find a bank or banker that specializes in lending to companies like yours. You might have to bank out of town (or even in another state), but building a banking relationship with a bank and banker that really understands your business is a good idea and technology, in many cases, pretty much makes bank location irrelevant anyway.

Does this mean that you’re stuck among the 90 percent that walk out of the bank empty handed? Not necessarily. There are a lot more options today for small business financing than just a few short years ago. What’s more, competition among alternative financing is making rates and other terms more and more favorable for small business owners. Of course even alternative lenders are interested in how long you’ve been in business, your personal credit, and your industry—they are simply willing to accept more risk. You should also be aware that the cost of capital could be a little higher with an alternative lender. Consider it  the cost of being a little more risky loan than what your local banker might accept.

At Lendio, we match thousands of small business owners to financing every month—some even end up with a local bank. Francis Bacon said, “Knowledge is power.” Knowing what your banker is looking for and what might be a cause for rejection makes it possible for you to demonstrate you have a plan to either mitigate his or her concerns or help you focus on an alternative funding source that might offer a better chance for success.
Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty Kiisel makes small business best practices, tips and advice accessible by weaving personal experiences, historical references and other anecdotes into relevant discussions about leading people, managing a business and what it takes to be successful. Ty also shares his passion for small business every week on Forbes.com.

Is Facebook Worth the Effort for Small Business?

I’m a big advocate of social media, including Facebook, but whether or not it’s right for your business depends largely upon what you expect it to do and the type of business you’re in. Having been active in social media in the B2B space for the last several years, I often compare what we’re doing on social media with some of my favorite brands (most of which happen to be B2C brands) and the audience we’re able to build, the engagement we’re able to experience, and the results we’re able to see pale by comparison to a strong B2C social media presence—but I’m pleased with the growth we see when compared to other B2B brands in our space.

We also regularly experiment with advertising on social media with limited to moderate success when compared to other direct marketing channels. Nevertheless, I’ve seen and read about the same marketing approaches reaping great results for consumer brands. In fact, I’ve even responded to adds that offered me products I might be interested in—and have even made purchases. But, I don’t want to be a focus group of one.

According to Erik Sherman, “Facebook marketing? A must according to many companies. Not worth the trouble to some. But most of the voices you hear are in the business-to-consumer space.” He continues, ” After all, people go onto Facebook for fun. But what if you’re trying to reach other businesses, making the seemingly reasonable argument that the users don’t stop being involved in business just because they’re taking a break?”

I have yet to be convinced that social media like Facebook is a viable direct marketing channel in the B2B space, but it’s definitely a good vehicle for promoting content. Social media has proven to be a good media for building an audience that’s interested in your industry, interested in learning, and willing to engage with you online. And, they often become some of your very best customers.

Three or four years ago I think it was Marketo’s Phil Fernandez who suggested that people who engaged with their social media before entering the sales process were better informed and prepared to make a purchase than those who didn’t. He suggested that it was time to stop thinking about the sales cycle and start thinking about the revenue cycle. He suggested that social media was a great vehicle for planting seeds that eventually became prospects and entered the sales funnel. He also argues that the traditional linear approach to marketing handing off a lead to sales and sales closing the deal doesn’t seem to work as well as when marketers continue to nurture, educate, and inform all throughout the revenue cycle.

I’m convinced that social media and content marketing play an incredibly valuable role within the revenue cycle. With that in mind, I believe social media is worth the effort for small business—I’m just not convinced that it makes sense to advertise there.


Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business best practices, tips and advice accessible by weaving personal experiences, historical references and other anecdotes into relevant discussions about leading people, managing a business and what it takes to be successful. Ty writes about small business for Lendio.

Economy

Six Tips for Hiring Right

I think the hiring process is broken.

Over the last few years, we’ve let resume scrapers, personality tests, and other technology take too big a role in how we process resumes, interview candidates, and hire new people. Successful candidates today write their resume and cover letters to keywords and search terms to hopefully help them float to the top of the hundreds of resumes they are up against to fill a single job opening.

I know the technology goal is to help Human Resource and hiring managers weed out those applicants who wouldn’t be a good fit for their organizations. And, although it may have streamlined the process of determining who should move forward through the interview process, I think in many instances it’s pushed the wrong people through.

I’ve been at Lendio since spring. I’m here because a former colleague knew my capabilities and was in a position to tell me about a possible role for me when I asked about it. He was also in a position to speak for me when it came time to make a decision about whether or not to hire me. Although I had a very successful track record where I was when I started to think about making this change, I can’t help but wonder if I would have received any serious consideration had I been an unknown commodity.

I have other friends who haven’t been so lucky.

Although this isn’t intended to be an advertisement for my friend Geoff, there will likely be some who think it is. I’m putting his name to the story because it’s real and it’s happening right now.

Geoff Crane is a project management friend I’ve known and worked with virtually over the last several years. Not too long ago, he determined that he needed to finish his education to better his career, so he went back to school. Since graduating, the pickings have been pretty slim—despite a 22+ years long successful career and a recent degree. So not long ago he offered a $25,000 finders fee to anyone who could help him find a job. Again, I’m not interested in the finder’s fee nor is this an advertisement for a job (nevertheless, I’m sure he’d talk to you if you’re interested). But it’s a great example of what a broken system has forced a highly skilled and talented professional to do to find a job.

Unfortunately, aside from getting some airtime on his local TV station, a couple of articles in the news, and some interesting PR, he’s still looking for a job.

I recently read an article written by Evernote CEO Phil Libin on how they hire and keep their best talent. Although most of it is real common sense (and doesn’t rely on a resume scraper), I think it bears repeating here. Here’s the list:

  1. Recommendations from close friends (or just hiring close friends) is the best way to start: I currently work with a number of colleagues and friends I’ve worked with before. Many of them where here before I was. They knew what I was capable of, and knew how we would work together. The logic of this is pretty straightforward. Evernote offers what Libin describes as a “generous bonus” if they end up hiring someone referred by an employee.
  2. Hire people smarter than you (or at least smarter about their particular job than you are): Several years ago, when I was leading the creative team at Response (a local ad agency), we made it a point to seek out the right talent. If we didn’t find a good fit, we wouldn’t hire. We thought it was more important to hire the right people and wouldn’t settle for the best person of those who had applied. It often meant waiting, but as a result, we got to work with some incredibly talented people.
  3. Make them write: Although I had never thought of this, I intend to do this in the future. Libin argues that you can fake it in person, but your real personality is revealed pretty quickly when asked to write a few paragraphs. This is great advice.
  4. Make sure they talk sense: The ability to communicate and collaborate is so important, this should be a no-brainer. Regardless of the technical prowess a potential candidate might have, if they can’t communicate with you or their colleagues, they aren’t going to be the right fit. It reminds me of my high school trigonometry teacher, he was brilliant—he just wasn’t very good at sharing his brilliance with me. I soon abandoned math never to return (thank heavens for calculators).
  5. Be generous with benefits that help the team get stuff done: Assume your people want to do a good job and give them the tools they’ll need to do it. This might sometimes mean buying lunch, being flexible with work schedules, or any number of other things. You know your people and what they need to get the job done.
  6. Don’t hire anyone you’re not willing to also fire: This is a tough one. Nobody likes to be the guy to drop the bomb and tell somebody they’re fired. Particularly if you’ve hired a close friend as suggested in #1, but sometimes one bad player can quickly ruin morale, end collaboration, destroy productivity, and even cripple an organization. Most people don’t show up to work with an “I wanna suck today” attitude, but if they aren’t willing or are unable to learn the skills they need to make a good fit, it’s better to act swiftly—much like ripping off a Band-Aid, you know it’s gonna hurt for a little while. But it’s much better than suffering through a bad hire that’s going to have long-term negative consequences.

My grandmother used to say, “Well begun is half done.” I think that’s true of hiring people too. Hire the right people and you’re half done, hiring the wrong people and you’re in trouble. What are you doing to ensure that you hire the right people—and then keep them?

 

As a Main Street business evangelist and marketing veteran with more than 25 years in the trenches, Ty Kiisel writes about leading people and small-business issues for Lendio (www.lendio.com).