Pause and Refocus

I clearly remember back in 2014 when I started my new journey to become a business coach and consultant I was excited, nervous, and a little unsure about the best way to start. I jumped in and then stopped. What happened? I had the opportunity to acquire a company and it made too much sense to pass up. Instead of jumping into coaching and consulting I dove into an acquisition and then the post-close transition. I’ve been through a few of these and absolutely love the challenges associated with these transitions. I had the opportunity to work with a great team of people at HPS Process Service & Investigations and I continue to be thrilled with the level of service they provide. They’ve been doing it for over 30 years and really know their stuff!

About six months after my first attempt to jump in  I was ready for my second attempt. This time I decided to focus on one industry and mainly focus on the consulting side. A lot of time and energy was spent on creating fantastic programs to help companies transform into something new. The only problem? The industry wasn’t ready to buy what I was selling. Someone very wise told me “It’s not very fun to go to a dance when no one will dance with you.” So true! At that point I decided to take a pause and focus more on my two existing companies HPS and Get Smarter Prep and spend more time with my kids. While this happened I would ponder on what I wanted to do next.

One of the best things about coaching is providing clarity on next steps to others. Sometimes, with a little reflection, you can get your own clarity. Sometimes it takes a lot of reflection. I realized that I was at the same place I started back in 2014, ready to jump in and work on business coaching and consulting. I am less nervous, not unsure about the best way to start, and very excited. Will I get diverted by a new opportunity? Maybe. But that’s the best part of life – living it!

Don’t Let the Unknown Stop Your Strategy

Over the past few months I’ve had the opportunity to talk with a wide variety of participants in the financial services industry. Most of the time the conversations would touch on the impending publication of a regulatory agency’s proposed rules for the small dollar credit industry. We would talk about what the rules might look like, when the rules would be published and when they would become effective. Frequently we would speculate on the impact the rules would have on consumers and the providers in the industry. As you can see, the common theme in these discussions was speculation. We would gather snippets from presentations at conferences or information from published interviews, but there has been very little clarification provided by the government agency to help the industry prepare. Whether this exact situation applies to you or you are being stalled by some other type of pending outcome with multiple scenarios, the following process can help.

Why is this important?

The lack of information is important because it is stopping some from creating and acting on a strategy for their organization. There are many owners and executives delaying creating or modifying their existing strategy because of this huge regulatory unknown. Whether it is because they don’t want to waste time creating a strategy that turns out to be wrong or they don’t have the available resources to effectively work on a strategy because their best people are now focused on compliance instead of growth, a majority are not working on an effective strategy. This is concerning because there are other significant disruptors, beyond regulatory, in the market that need to be addressed. Changing customer demographics, quickly evolving technologies, and the influx of capital to new competition is creating a challenging environment that requires action to stay competitive.

How do you create a strategy for the unknown?

The first thing you should do is identify where your organization is right now. What are your current strengths and weaknesses? What areas of the organization need help? How is competition affecting you? I highly recommend that you get very granular on this with the review of your people, departments, financial status, products, competition, etc.

If there are areas of your organization that are going to be affected by the proposed rules, I would suggest looking at 2 or 3 scenarios for your strategy. At a minimum, I would look at a best-case and worst-case scenario. You would need to decide, but I can see where you might consider the rules not becoming effective at all as the best-case scenario and the rules coming out as previously defined as the worst-case. If you wanted to add a third scenario, you could create a middle-of-the-road scenario that falls somewhere between the best and worst. Once you have your scenarios, you would follow a decision tree type logic to determine your strategy options.

How does this help?

Granted, creating a strategy that is dependent on different possible outcomes is not ideal, but it will potentially give you important clarity in a few areas that will allow you to act now. For instance, if you determine that you want to add a new loan product in your branches to help diversify revenue, you could start the licensing and product definition process. The earlier you get your application in the licensing queue the better in some states. The other example would be if you wanted to introduce data analytics to your lending decisions, this would be beneficial to your existing way of doing business and if/when the new rules are applied. Getting this discipline effectively integrated into your organization takes time and effort. If you determine that you want to offer your customers an omnichannel approach to strengthen relationships, there is some lead time to create that solution. The bottom line is that this approach allows you to act.

How do I start?

Creating a strategic plan takes effort and commitment from key personnel in the organization, especially senior leadership. You have to balance the work everyone is doing for the present and your investment in the future. An important part of strategic planning is getting an unbiased perspective on the organization’s current situation and its ability to achieve future goals. For this reason, organizations benefit from bringing in an outside expert to help facilitate the process. This person will not have the organization’s historical biases to cloud their judgement or the desire to protect their turf. In fact, the right person can ask tough, clarifying questions that will benefit the process and organization. The other benefit of using an outside party is that it will tie up less of your critical resources – allowing your key personnel to continue working on critical projects. Whether you go through this process with internal or external resources, the most important thing is to start!

If you would like to discuss how to create a strategic plan in further detail or would like some assistance taking that first step, please don’t hesitate to contact me.  I am here to help you!



Half Empty or Half Full? Who Cares!

I constantly see the sayings “Is your cup half empty” or “Is your cup half full”. There are many variations to these, all with the purpose of determining whether you are optimistic or pessimistic. While I think that, as a leader, it is important to know how you naturally perceive things, it is just as important to take the next step and ask the question “Why isn’t the cup full and what are we going to do to fill it back up?”

Why perception is important?

As a leader, you need to understand how you and each of your team members perceive things. If you are naturally pessimistic and you surround yourself with like-minded individuals, you are probably going to see your environment in a less-than-positive manner. The same if you are naturally optimistic. I want to stress that I firmly believe you should embrace who you are. If you are naturally pessimistic or optimistic, understand that and work with it. Create a team that balances your natural perception.

You’ve observed, now act!

How many times does your organization encounter a difficult situation and then nothing happens? I see situations like this frequently and too many times there is a lack of action because the team is too focused on why they are in the situation. They spend a lot of time working through the cup half empty / cup half full debate. While it is important to understand the situation, once you have defined it you need to create your strategy. Then act!

It’s overflowing!

The next time you encounter a difficult situation, I encourage you to not spend too much time defining the situation and spend more time on planning how to move forward and fill the glass back up. Rally your team around creating a strategy to not only fill up your cup, but make it overflow – then you will need a bigger cup! Then you can have a heated debate with your team on whether your new cup is half empty or half full!

Getting stuck in these situations is a very common problem for businesses of all sizes. Sometimes, a new perspective helps get things started. Please contact me if you would like a confidential, no obligation conversation about your cup.



Leadership – Is Magic Your Strategy?

I saw this cartoon and chuckled to myself. I instantly thought of multiple situations where this brand of leadership occurred. A group of leaders sitting around their conference table trying to fix a difficult situation or turn the company around without any solid solutions on how to fix it. I often wondered if anyone actually thought or wished that something would just magically happen to fix their problem. Is hoping for magic to happen the same as hoping that time will allow a difficult situation to resolve itself? Is that what the ostrich is thinking as it sticks its head deeper and deeper into the dirt? I guess if things happen to create a difficult situation, is it so unreasonable to sit back and let things “unhappen”? Yes, it is unreasonable.

Employees Count On You

No matter how big or small your company is, if you have one or more employees, you have a duty to do what is best for the future of the company. Employees generally take a leap of faith when they join your team. More than likely, they are looking for something beyond just a paycheck – especially the newer generations. They are looking to be part of something growing or moving in a positive direction. If their leadership team is sitting around the table hoping for something magical to happen, how committed do you think employees are to that team? On top of that, employees have expectations that their leadership team will have the capacity to work out solutions for these difficult situations or connect with outside experts that do have the expertise. Here’s a little insight – employees don’t mind if solutions don’t work every time. They mind when there are no solutions.

Customers Count On You

Your customers use your services and/or products because they provide value. They want to keep a relationship with you as long as you are providing positive value. As a customer, it is much easier to keep going to the same company than finding a new company. If customers gets a sense that your company is not capable of solving problems or adapting to difficult changes, they will quickly translate that to thinking your company is not innovative and will not keep up with the trends. They may not jump ship immediately, but be assured they are looking to do so.

Competition Loves This

How do you think a competitor reacts when they hear a leadership team in their industry is hoping for magic? Some may celebrate; knowing that they soon may get more customers coming their way. Others may focus on how they can be opportunistic and take advantage of this situation. How many competitors, do you think, will reach out to the struggling company and offer some free assistance?

Unfortunately, unless you are a professional magician, magic is not going to solve your problems. If you are in a leadership role at an organization, there are times when you are going to need to make some extremely difficult decisions to handle extremely difficult situations. Hoping things work out all by themselves is actually a decision – usually a bad one.

If your group is having a hard time finding a workable solution you have three options: change the makeup of the group, expand the group, or bring in some outside expertise to help facilitate the group. All three of these are better options than hoping for magic.


Buying A Business – Part Two

In Buying A Business – Part One, I gave an overview on identifying the type of business you want to buy, searching for available businesses, and then a not-so-subtle tip that it will take time and hard work to actually close on the business you are pursuing. There are a few more areas in the process that I’ll cover in this post. As a reminder, these posts are not meant to be an all-inclusive primer on buying a business, but a high-level overview on some of my learnings as I’ve gone through the process multiple times.

Circle The Wagons

As soon as you start the process of buying a business, you should begin to identify your trusted advisers and vendors. Here is a short list of some of the most important connections for you to make. Each transaction is different, so you will want to evaluate your situation and identify any others you may need.

Accountant   An accountant is a great person to review your opportunities. They have seen many successful and unsuccessful business over the years and are well-equipped to give you advice on the financial health of the business. Also, you should decide if you are you going to do your own bookkeeping? If not, you will need to identify who is going to do it. If you are, it’s still a great idea to have a trusted financial adviser in your corner to help review your efforts and possibly prepare your necessary tax submissions. This is a critical area for the long-term success of your venture and is not an area to take shortcuts or try to save a few dollars.

Attorney   A strong deal lawyer is worth their weight in gold, especially if you can find one that will protect your interests without flooding your deal in paperwork. One of your decisions could be whether you want to go with a big or small firm. The benefits of a large firm are they can throw a lot of resources at a deal and make things happen quickly, which you will pay for. The benefits of a small firm is possibly a lower bill and personalized service. There are pros and cons to both options and I’ve seen success using both. The best advice I can give you is to get referrals from trusted advisers and go with the lawyer you connect with and understands what you are trying to achieve.

Financing   How are you financing your deal? Are you considering an SBA loan, a conventional loan, or other alternatives for your deal? There are many options for deal financing. Some will make more sense than others, depending on your financial situation, deal size, and type of business you are acquiring. Like other areas, the more homework you do ahead of time, the better. The worst time to start looking for financing is after you have made an offer. I highly encourage you to do a lot of homework in this area as soon as you start looking for a business. Until you know what financing you have available you will not know what price range to look at or what to offer. The other thing to keep in mind is that financing should not be a cookie cutter approach – financing a deal can be an art and use a lot of imagination and creativity.

These are just a few of the important connections you should make when you start your search. Depending on the type of business you buy you may need other resources like Information Technology, Marketing, Banking, etc. These will be valuable resources even after you close on your business.

Bow To Your Partner

You’ve found the business that meets all the parameters you previously established and you want to move forward. Now comes what I call “The Dance”. Depending on your personality, this could be the part of the process that really gets your adrenaline pumping or elevates your stress level. Usually you will be given the opportunity to meet with the Seller and ask them questions about the business. This is a great opportunity to learn about that specific business, but an even better opportunity to learn more about the Seller. Why are they selling? What type of deal structure do they prefer? What does their ideal Buyer look like? If there are multiple offers, what will they base their decision on? Don’t be afraid to ask specific questions about a deal. If it’s a question they don’t want to answer, they or their Broker will say so. If you are polite and genuinely interested, a lot of times they will give you some critical information. The key objective of this meeting is to give you enough information to decide whether you want to continue to pursue the opportunity or not. The secondary objective is to give you key information that will help you draft an offer that gives you a higher chance of acceptance, if you want to go down that road. Like other aspects of buying an acquisition, there is a little bit of an art to these meetings. If you do your homework and prepare quality questions for the meeting, you will do great.

Once you have decided to pursue the opportunity, you will need to submit a formal offer to the Seller. You will need to determine what price you want to offer and the broad terms of the deal. Depending on the Seller, the size of the deal, and a few other factors, you will probably present the Seller with a Letter of Intent or something similar. Each opportunity is different and your approach may need to be different for each one. If you are responding to a business that has been listed by an Aggregator or Broker, you will probably be competing with a few qualified buyers. You may go back and forth a few times or you may, but hopefully you will come to an initial agreement that allows you to move forward towards the actual purchase.

The Homestretch

The Seller accepted your offer. Now it’s just a matter of picking a closing date and getting the keys, right? No. You’ve still got a lot of work ahead of you. There are major things to do beyond just picking a closing date. Here are a few of the major things you will need to do to get to the closing date.

Due Diligence   You will need to perform some due diligence on the Seller’s business prior to closing. Depending on your financing, they may require some proof of this. At a minimum, you will want to do this for your own benefit. You will want to verify the validity or existence of key items that the Seller represented to you. This could include reviewing the Seller’s prior years’ tax returns to verify revenue and expenses. It could also include reviewing existing customer contracts to verify that they can be transferred or assigned to your new entity. A thorough due diligence process is vital to closing the deal and assuring you the business you are buying is worth the amount you are paying.

Finalize Financing   Your financing partner should be working closely with you at this point to make sure you are gathering the right information they need to approve your funds and make sure everything is proceeding in a timely fashion. I highly recommend communicating often with your financing partner to make sure everyone is on the same page during this whole process. You don’t want any last-minute surprises or delays that could derail your deal. Generally, these partners have a lot of these transactions under the belt and will be a huge asset to you completing the deal.

Closing Documents   While you are doing due diligence and working on your financing, you should also be working on all of the closing legal documents. In addition the the sales agreement, you may also need consulting, non-compete, and lease agreements. Whether the Seller’s attorney or your attorney is drafting these documents, you will want to thoroughly review them to make sure they encompass everything you want and need to transition the business.  If the Seller’s attorney is preparing them, you will want your own attorney to give them a thorough review. Don’t be afraid to ask for changes if you need them. This is another area that may cost some money, but you should not try to cut corners.

The process of buying a business takes a lot of flexibility, patience, and endurance.  You will be juggling a lot of different balls at the same time, but it can be one of the most gratifying and exhilarating things you go through. In my next post I will cover the important things that should happen after you take possession of your new business. That’s right – there is more work to do! In the meantime, if you have any questions or want more details about my experiences buying businesses, don’t hesitate to contact me.


Buying A Business – Part One

Over the last few years I have had the pleasure of going through two different searches to find and purchase a business. I’m not sure which was more exciting to me – the hunt or closing on the deal. I learned a lot from both searches and wanted to share my experiences, in case you are considering something similar.

What Do You Want To Be When You Grow Up?

For me, one of the hardest things about buying a business was trying to identify which type of business I wanted. Since I grew up in service-oriented companies, I naturally gravitated towards them. Beyond that, I wasn’t sure what I wanted. I went through the SIC directory to see if any specific type caught my eye, but it really didn’t help much, except to identify some industries that I wanted to stay away from. After a lot of time and headaches, I decided that not knowing exactly what I wanted was not a bad thing. Actually, for me, being open-minded helped me buy two of my businesses.

Release The Hounds

Finding the right business to buy is a combination of skill, persistence, and sometimes luck. Once you have narrowed down what you are (or are not) looking for, the really hard work begins. The first thing you should understand about “the search” is that you will probably have a lot of competition. Depending on the market you are searching, many times there are more buyers and sellers. It’s important for you to understand this dynamic in your market. If there are a lot of pursuers for a business, many times you will have to pay a premium for the business or be creative with your offer. If you know people who have recently bought a business in your market, ask them how the process went and what the competition was like. The more informed you are about your market, the better your chances. Here are a few options on how to find available businesses.

List Aggregators

An example of a list aggregator is BizBuySell. They provide lists of companies available for sale that you can filter by location, type, etc. If you register, you can also get updates emailed to you. I would sign up for these lists whether you are seriously looking or just thinking about starting a search. You should definitely understand that this is a volume game and that you and a gazillion others will be looking at the same information. However, there is a plethora of great information on these websites. Once you find an industry you are interested in, you can look at different locations outside your market and see how they are priced. This is helpful insight for you when you are contemplating offers.


If you are serious about buying a business, you should absolutely reach out to the brokers in your market. Before you send your first email or make your first call, reach out to your network and find out who the best brokers are in town. You might also find out who you should shy away from. Once you have your short list, reach out to each of them and take the time to introduce yourself and begin developing a relationship. I highly recommend you meet them in person. I’ve always believed that you can build a relationship stronger and faster if you meet in person. Each brokerage will have a slightly different approach to working with clients. Some may offer to help you perform your search – for a fee. While I have not gone with this approach, I know others who have had great success with it. This is a decision you will need to make based on what you are looking for, how fast you want to find your business, and your budget.


If you are in a position to share the news that you are searching for a business, by all means do so. Leverage the network you have built over the years to help you find the business of your dreams. You may be surprised and find the business of your dreams through your network. I would leverage your connections and even look at groups on LinkedIn to identify opportunities. Think of searching for a business like fishing. The bigger the net, the more fish you will catch, and hopefully find one that is a keeper.

Law Of Large Numbers

I hate to be the one to tell you this, but it may take longer than a few days to find the business of your dreams. I’m also sorry to tell you that you may bid on the business of your dreams and lose – multiple times. I will tell you that if you are persistent, you will find more than one of these golden opportunities. I don’t know how many dream businesses I lost or even walked away from (actually, I do), but I picked myself up and kept working hard. Eventually, it paid off.

In my next post I will discuss what happens once your offer is accepted. The fun of due diligence and contract negotiations begins. You also will need to start developing key relationships with your trusted advisers. These are the critical people that will help you finalize your transaction and get you started on the right foot.

If you are thinking about starting the exciting adventure of buying a business, or in the middle of a search and would like to get some valuable feedback on the process, don’t hesitate to contact me. I would be happy to share my successes and failures with you.


Power Of The Group

I have been a member of a peer group for over seven years and I can say that making the decision to join was one of the best decisions I have ever made. The benefits I have received from the groups I have belonged to have been instrumental in my personal growth and success. I know this sounds like it may be an overly dramatic statement, but I firmly believe that I would not be where I am today without these experiences and my groups pushing me.

Peer groups or mastermind groups, as they are also called, have been around for a long time. I’m going to describe my group, but it is important to understand there are many different variations that are equally successful. I would define our group as being medium in size with eight members. You can go a little smaller, but if you get too small (4-5 members) you may have issues with having enough members show up to have a quality meeting. You can count on having 1-2 people having a conflict and not being able to attend. I believe you need at least 4 members in attendance to have a quality meeting. There are some groups that are much larger (16-18 members), which can work effectively, but you need to weigh size of the group against the amount of time you are meeting and what you are trying to accomplish. If you have too many members, some may not have time to participate and that is one of the critical parts of the group – everyone participates. We meet monthly for three hours, which is just about the perfect frequency and amount of time for our size.

Our monthly meetings are broken up into three sections:

  • Social – we take a little time to have open discussions about current events or other general topics
  • Updates – each member gives a very brief update on how things are going in their business and personal lives
  • Process Issues – members can bring up a pressing issue that they need help with

You may have perked up when you saw that we talk about our personal lives. We absolutely do this. We recognized early that our business and personal lives are intertwined and one affects the other. I should mention that we each signed a non-disclosure agreement and what is said in the group, stays in the group. While there is a great amount of trust built up over time, this agreement helps new members in the group feel comfortable sharing information. My favorite part of our meetings is when we process issues. This is where you see the power of a peer group happening. The member gives you an overview of their situation, what the issue is, and what they are looking for in a solution. The rest of the group gets to ask clarifying questions to make sure they fully understand the situation. Then, each of the members give a possible solution to resolve the issue or at least move it in the right direction. Think about this for a second. If you had the opportunity to present one of your most difficult challenges to a group and get multiple solutions to consider, how would that improve your chances to succeed? When you see it in action it is incredibly powerful.

There are other important aspects of our group that I think are critical to its success. I mentioned earlier that everyone participates. Whether you have an issue to present or you are giving solutions to a member’s issue, each member is expected to be completely engaged.  It is not uncommon to walk out of a 3-hour meeting feeling exhilarated and drained at the same time. We challenge each other. We create an atmosphere of trust, which allows us to confront each other when we think a member may be taking “the easy way out”. We hold each other accountable. If you bring up an issue and you receive multiple solutions or action steps from the other members, we are going to expect that you do something and we are going to ask you about it at the next meeting. If you know you are going to have to report on your progress, the chances of something happening are much higher.

As you can tell, peer groups are something I am very passionate about. I would not trade the bonds and relationships I have created with my group’s members. I firmly believe that by being involved in a well-constructed peer group you will greatly enhance your level of success.  And if you are stuck in your current situation, a peer group is one of the best ways to get movement. If you want to hear more about my experiences with peer groups or would like to create or join an existing group, please contact me. I am here to help you.

“The whole is greater than the sum of its parts.” Aristotle

Business Mobility – How Do I Start?

Recently I noticed, while talking strategy with business owners, most are trying to figure out what they need to do to prepare for the future. These conversations can generally be divided into three groups. The first group of owners know they need to do something to make their business better, but don’t know what their first step should be. The second group kind of knows what they need to do, but are so overwhelmed by the amount of change required, they just don’t know how to take that first step. There is one other group, we’ll call them the “lucky” group, that thinks things are fine the way they currently are and don’t need to make any changes. We’ll wish the “lucky” group continued success and focus on the first two groups.

If you know you need to make changes, but are having problems with that first step, what do you do?

The first thing you need to do is be aware that you are not alone.  This is a common problem almost all successful business owners encounter.  It’s part of growing a sustainable, adaptable business in the midst of a quickly evolving market.

There are five steps to achieving what I am going to call Business Mobility. My simple definition of Business Mobility is: moving your business from its current position to another. A simple definition and concept, but sometimes hard to achieve. If you have read any of my previous blogs, you will notice that I tend to repeat these next steps. I believe they are the foundation for positive change in an organization.

Clarify your existing situation

Take time and do a thorough review of all aspects of your business. Understand your company, customers, competition, and the current operating environment. I highly encourage you to do this exercise in a collaborative fashion. Include others in the process so you can incorporate their ideas and opinions. Many times, knowing your current situation better will give you clarity on what your next steps should be. In situations like these, completing a SWOTT analysis is very helpful.

Define where you want to go

Now that you have a better understanding of your current situation, what do you want to achieve? What is your vision for your company? It’s reasonable at this point to be a little fuzzy in your vision. This is another tripping point for some. Many like to have everything well-defined before they proceed. You may find that if you wait to get that much detail before you start, you will have given a head start to your competitors. One thing that may help with this process is a gap analysis to determine how far off you are from where you need to be. This type of analysis could be useful to prioritize what areas should be approached first.

Identify action steps

Now that you fully understand your current situation and have a concept of where you want to go, it is time to create the steps needed to get there. This is a difficult area where some people and, subsequently, companies become paralyzed. In these situations I find the quote “When eating an elephant take one bite at a time.”, by Creighton Abrams enlightening. The best way to handle a large project is to break it up into small, manageable pieces.  Even better, share these pieces with others. Like all other steps, it is important to collaborate during this step.  This keeps your action items realistic and it gets buy-in from your team.  If you are stuck trying to figure out what your next step is, ask your team this question, “What can we do in the next one-two weeks to make progress on this?”

Create a timeline

Once you have identified your first couple of action steps, define when you want these steps completed. These will be important milestones for you to gauge your progress and to understand if you are on the right track. I encourage you to keep the time between milestones pretty short.  Somewhere between one to four weeks is generally reasonable.  If you go out longer than a month before you check your progress, you are entering risky territory.  At the same time, you need to give your team enough time to actually make progress.  There is an art to this because the reality is you will probably have multiple action steps going on at the same time with different due dates. I encourage you to establish scheduled, structured progress meetings.  I would have these at least monthly, and potentially even weekly.  They don’t have to be long and shouldn’t be too long – quality is more important than quantity.

Be Accountable

One of the best ways to ensure your success is to have a partner that will hold you accountable for progress and give you feedback.  Leaders frequently provide guidance to their team and hold them to a set of standards. They do this because it creates a better team, but who is doing this for the leader? Who does the leader go to for feedback, guidance or explore new ideas? How effective is it when the leader is only accountable to themselves? There are multiple options to address this.  As the leader you can:

  •             Work with a peer in your organization, if one is available,
  •             Find a mentor that is able to work with you, or
  •             Engage a qualified business coach

Each person is different and every option might not be the best or even possible for everyone. The goal is to find someone you trust and respect that will provide value to you and your organization. This is someone who will be candid and willing to have difficult conversations with you. Their ultimate goal should be the same as yours – do what is best for you and your organization.  Remember, best does not equal easiest. By adding accountability to the action steps equation, you greatly improve the chances of success.

Unless you are a member of the “lucky” group, preparing for the future and constantly adapting your business will be an ongoing necessity.  Those that accept this and take the necessary steps to become proficient at handling it will have the highest probability of continued success. Your first step is right in front of you – take it!

If you would like to discuss these steps in further detail or would like some assistance taking that first step, please don’t hesitate to contact me.  I am here to help you!


Consumer Lending Revolution

The more I look at what is happening with consumer lending today, the more I believe we are in the midst of a true revolution. This is not a slow evolution, although some of these changes have been happening over the past few years, this is a substantial change in the lending environment. In my opinion, there are three main areas driving this consumer lending revolution:

Regulatory Changes

  • The CFPB’s proposal for changes in small dollar credit will have a dramatic impact on short and longer term loans. No matter what the final rules say, you can be assured they will dramatically change consumer’s access to credit and lender’s approach to offering credit.  Good or bad, it will be a significant change.
  • The Department of Justice’s “Operation Chokepoint” initiative to pressure financial institutions to cut off access to “risky” businesses illustrates the federal government’s willingness to take an unorthodox approach to affect their change – even as it negatively impacts law-abiding business owners.

Technology & Data

  • There is increasing consumer comfort with initiating financial transactions outside of a branch. While there is still a group of consumers that prefers a face-to-face experience, that group is shrinking. Smartphones are now mainstream and this will continue to drive transactions from the storefront to a mobile device. Not only do you need to be online, your site needs to be responsive and very user-friendly.
  • More companies are implementing data analytics to improve their marketing efforts, risk management, and product offerings. In fact, there will soon be a time when consumers expect an offering that is tailored specifically to them.

Consumer Habits

  • Soon the Millennials will outnumber the Baby Boomers.  According to Nielsen, Millennials and Baby Boomers each number approximately 77 million in population.
  • Also according to Nielsen, over 70% of the U.S. population owns a smartphone with the Millennial segment owning over 85%
  • Barkley reports that Millennials expect to be able to interact with brands on social media and gather product information from their social circles before making a decision

Currently, there is a lot of focus on the impending regulatory changes, but we shouldn’t overlook the impact that technology and consumer habit changes are having on the landscape. By themselves, the Millennials are forcing businesses to rework how they look at customer interaction. Companies that don’t recognize their buying power will have a hard time catching up.

How is your organization handling this revolution? Here are four steps for your organization to complete to effectively prepare for this revolution.

Understand your current situation

  • Do a thorough analysis of how the proposed CFPB rules will financially affect each of your branches.  You may have to look at multiple scenarios, but take the time to fully understand what may happen. Something will happen and it will be dramatic.
  • Review all of your current processes and systems to understand how they could handle the changes in technology and consumer habits.  How adaptable are they?
  • Do you have the best resources available to help you? Whether it is your organization’s team or your vendor relationships, do you have the best team to handle this revolution?  How adaptable and willing to change are they? How up-to-speed are they on these three areas?
  • Grab your smartphone and pull up your customer-facing website.  Is this the experience that will attract consumers in the future? How are you currently interacting with your customers on social media? Are you providing the experience Millennials expect? If not, they will go to someone that does.

Identify all of your options and gaps

  • What changes or additions to your current product mix can you make to improve it? Are there products you can add to attract more customers? How will your existing pool of customers respond to a new product? You should model how this will affect your financial results. Revisit opportunities you may have turned down in the past. They may look more attractive to your customers now.
  • Poll your current customers to learn what they would like to see from you. Poll customers that recently left to find out why.
  • Look at your team and determine who will have the passion and capacity to champion your organization to the next level. Identify any gaps you may have to handle this transformation.
  • Are you using data to make marketing decisions or helping with your risk management?
  • Examine all of your vendor relationships to help position you for the future. Are their positions missing? Do you have a solution for gathering and analyzing data? Sometimes you need to rent expertise.

Understand your timeline

  • This revolution is happening now. If you wait, you should understand that others are not.
  • How long does it take to add functionality to your current systems? If you want to add a new product, how long will it take?
  • If you are not online (desktop or mobile), how long will it take?
  • How long would it take to add a new product and make it work correctly? If you need to get licensed in a state for a new product, that by itself may take multiple months. If you are thinking of adding a longer-term installment loan, it may take 6-18 months to test and make changes to the program to keep losses within your tolerance level.
  • The short answer is you need to start now!

Create your plan and start

  • Don’t wait for absolute clarity on everything to start. Regulations, technology, & customer behaviors are changing – some very quickly. You need to create a plan and begin working towards your strategic solution to handle this revolution.
  • At a minimum, you should do a complete review of your entire organization. You will find opportunities to make improvements and get a better understanding of what you need to do to come out a winner.
  • There are experts that are ready to help you work through this process. You can get a fresh, unbiased perspective on your business and assist you in identifying the resources you need to succeed.

I think it is fitting to wrap this up with two quotes from Sun Tzu that are very appropriate:

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” 

“In the midst of chaos, there is also opportunity”

I would love the opportunity to discuss this more with you and identify areas that our group can assist you. Please don’t wait to work on these four steps.

How Are You Responding To THE RULES?

It’s been almost two weeks since the CFPB released its proposed rules that will cover short-term and longer-term credit products. It’s been hard for me to have a conversation with anyone in the industry without a majority of the conversation being dominated by THE RULES. This makes sense for several reasons:  they have been anticipated for a long time, they are extremely complicated to understand, they may restrict viable financial solutions to consumers in need, and they may radically change the way the industry does business. Granted, when I use the word “may”, it’s only because THE RULES are not final, yet. In my humble opinion, the proposed rules will become effective, and no matter what modifications, if any, are made due to the small business review panel, the final rules will be dramatic and transform the industry.

There is conjecture that the effective date of THE RULES will not be until 2017, which has given some breathing room to some. While that effective date may make sense, postponing action, even if the rules are not final, may be harmful to your operation. There may be some benefits in seeing the finished version of THE RULES to create a plan, but there are definitely benefits in taking some actions now. I’m going to touch on a couple of areas that you should consider as you create your strategy for the future.

Evaluate The Proposed Rules

You should spend some time, as much as necessary, to fully understand the proposed rules. Then, examine how they will affect your existing product mix and profits in the state(s) you operate. I’ve been reviewing and analyzing the rules since they were published and one of best things I have done is to discuss the rules with others to make sure what I am interpreting is similar to what they are interpreting. I suggest having at least one or two additional sets of eyes to review the rules and then get together to discuss what you think. Not only will this lead to clarity, it might also start a productive brainstorming session. Even though THE RULES are not final, it doesn’t hurt to look at several scenarios to determine what your business may look like in 2017.

Evaluate Available Products

Are you currently offering all of the available products in your state? When was the last time you reviewed your competition to see if they have discovered something new? I’m not suggesting that you rush out and add every single product to your mix immediately, but you should have a comprehensive list of available options for you to consider. For each product that you consider, you should model the profit potential, the likelihood of your existing customer base accepting this product, and, importantly, how long it will take to implement this product and work out all of the bugs. If you add a 12-month installment loan as a new product, it is going to take more than a few months to make sure your model works. If you add a product that requires you to change your marketing approach, that may also take some time.  That 2017 time horizon isn’t that far away anymore, is it?

What should you NOT do now?

I’ve given you just a couple of things to do, but there are also some things you should not do. First of all, don’t stop providing excellent customer service. Outstanding customer service is the trademark of the industry. You provide customers a needed service that they truly appreciate. Their demand for your products and services has not diminished because of THE RULES. Next, don’t stop becoming lean and efficient in every aspect of your business. Part of this process should include a review of your systems to see if they can accommodate aspects of the proposed rules. Does your loan management system have a built-in CRM? How well does it handle installment loans? Do you have the ability to collect email addresses from your customers and then schedule email campaigns to them? Finally, don’t wait too long to start understanding and acting on the impact of THE RULES.  Granted, with a long time horizon and potentially grim prospects, it would be easier to wait and see, but as a successful business owner, is that the behavior that got you to where you are today?

The next two years are going to be challenging, there is no doubt.  This is an opportune time to establish strategic partnerships with those that can help you navigate this terrain. Whether it is a consultant with a needed expertise or a business coach to help you gain clarity on your future strategy, we are here to help you succeed.  Don’t wait to take your first step.