Friday, October 30, 2015

Loan declines are tough on everyone

Loan approvals are fun, aren't they?  You get to give the good news to your borrower that the loan was approved and he or she is going to realize their dream of owning or expanding their own business.

It is a great feeling to share the news.  When we hear our clients get approved, we want to high five a big "YES", and it does not even matter the size of the loan.

What about those that are declined?

It is tough to deliver the bad news that a business owner may face a tough stretch.
Or that he may not be able to expand until he pays down some debt.
Or the business may miss out on an opportunity and end up closing.
Or the entrepreneur may need to put plans on hold to gain some traction or other investment.

As business advisors, we share in your disappointment when a loan is declined. Our clients are usually pretty bummed out and in some cases, upset because they had invested so much time and energy into a loan application only to have it turned down.

Here is an interesting read on reasons businesses are turned down for loans.

While we know that all loans are not created equal and that some loans should not be approved, here are three things that might help in preparing your borrowers for the loan process:

1. Explain the loan process and timeline. 

We spend a lot of time educating our clients as to what a bank will expect and preparing them to apply for a loan.  In numerous cases, our clients do not realize how long a loan will take.  It is very helpful if you inform them what to expect, how the process works and especially how long an approval or denial will take.

To a borrower, the only thing more discouraging than a decline is to hear nothing at all.

2. Be realistic.  

Before the borrower applies and it is clear there is not enough capital or collateral, be up front and inform them what the bank expects.

I had a client that had received four declines when she first arrived.  She was trying to buy a franchise for around $200,000 and only had about $2,000 to contribute and no business experience. She was surprised when I explained that the declines were likely due to not having enough cash contribution and no business experience.  In this case, she did not understand the terminology that was noted in the decline letter.

If they get a quick denial, they may be unhappy, but will be thankful to you for saving them time in the long run.

3. Encourage without being overly optimistic.

Customer relationship management is vital to your bank. It is difficult to not share in a client's enthusiasm or want to cheer them on as they apply.  Some borrowers misinterpret encouragement for approval.  An honest and timely decline is good customer relations.

We have observed that our clients that have had a lot of positive reinforcement such as, "This is a great idea", "This looks like a slam dunk" are hit harder by a decline than those in which the banker was up front and cautious.

Every loan is not a good fit for every bank

Recently I had a client get approved for a loan to buy a business that he had been managing for six years.  The owner wanted to sell to him and I helped him with some cash flow projections.  He was a little shy on his cash contribution, and yet the bank was able to work with him and the seller on an alternative solution.  He finally got the details ironed out, but he said, "I'm just struggling with how a small business can ever get started with so much money needed down."

Economic conditions, business experience, cash and many other variables can impact a loan decision. We can all help by providing ongoing education and expectations about what it takes to start, run and expand a small business.

Forecast for Halloween: Rainy with a side of opportunity for retailers

Here's the latest from IBISWorld on this years' Halloween sales forecast.  While down 4.1% from the record sales in 2014, this year retailers are expected to pull in over $7 billion in holiday sales of costumes, candy, decorations and other fun items.

Trick or treat!  Enjoy this infographic from IBISWorld. Read the press release.


Thursday, October 29, 2015

Four reasons mobile is not a trend anymore

Mobile isn't really that important, is it? Yes. Yes it is. End of post.  

Kidding aside, for the last three years one of the hottest trends in small business (any type, not just internet companies) and social media has been the importance of mobile. Whether it is having a website that is mobile responsive, or realizing that your customers are using mobile devices, mobile is kind of a big deal.  

Mobile is not a trend anymore. It is a complete transformation in the way we interact socially, engage with customers and conduct business.

Opinions vary, but here are my top four reasons mobile should not be ignored.

When did you last search on Page 2?

1. Search Results

Now it hits your website in the search engine. Websites that are not mobile responsive or optimized for mobile devices show up farther down on mobile searches. 

To make matters more competitive, Google has also changed the number of displayed search results from six to three.

Case in point. I recently conducted a website review for a client and the website is not mobile optimized.  

Search from desktop: site ranks #6. 
Search from mobile phone. Site ranked #19 and was on page #2. (Ouch!)

2.  Customer experience.

Attention spans are shorter. Customers want to engage. Customers want a "an experience". Consumers will research online prior to making a purchase.  Online reviews like Yelp, TripAdvisor and Google local are studied prior to making a purchase. 

Kissmetrics has a great Infographic that shows how loading time can affect abandonment, user experience and ultimately, bottom line.  Customers are seeking a live action experience.  

I read recently that restaurants are experiencing longer table turns.  It is common now for patrons to first "check in" to a restaurant so their friends can see where they are.  They are texting and delay looking at a menu.  They could be tweeting about what to order.  Then when the food arrives, it is time for a selfie (probably not the first one) or group photo. And on and on.  

Small businesses cannot compete on price.  Customer engagement will be a game changer.

Customer experience also means that shoppers are able to 
quickly search, find and buy online.

3.  Knowing your customers' mobile habits.

Here are some startling statistics from the Pew Research Center about smartphone owners:
  • 64% of American adults now own a smartphone of some kind, up from 35% in the spring of 2011.
  • 68% use their phone to share pictures, videos or commentary about events happening in their community.
  • 46% of smartphone owners say they "Couldn't live without"
  • 97% used text messaging at least once over a one-week period
  • 85% of young adults ages 19-29 own smartphones.

Users are more comfortable purchasing on mobile devices than ever before. Previously, a consumer would research items or services online, then purchase on a desktop.  This has increased steadily and users will now research and purchase on a mobile device, in some cases a different device.

4.  Personalization

You may not recognize the topic as personalization, but anyone that has signed up for a free white paper, shopped online for shoes or left items in a shopping cart has been the recipient of this.  Personalization is another name for customer intelligence, marketing intelligence, segmentation and is relevant whether or not we are discussing mobile. Personalized messaging or targeted ads used to seem a little creepy, but now consumers are getting used to it.

Some examples:
  • Text push notifications - reminders for appointments.
  • Personalized emails with a discount on an item you were shopping for, "You left this in your cart, still interested?"
  • Text alerts for flash sales or special offers.

Email still works for customer engagement

Email is not obsolete and can be an effective marketing tool. Email has long ranked as one of the most common activities that users take part in online since the desktop/laptop era, and it continues to play a prominent role in the mobile era as well. 

If you compare email and Facebook ad effectiveness for 1000 customers:

An e-newsletter typically sees about 12-19% open rate = 120 to 190 views.

For a regular business Facebook post (not sponsored posts), about 2% of your followers see your posts = 20 views.

What can a small business do to keep up?

Statistics aside, if your website or marketing materials are not optimized for mobile, it would be a good idea to re-evaluate your marketing efforts and advertising budget to consider a website upgrade.  A website should be viewed as an ongoing marketing expense, not just a one-time expense. Here are 10 more reasons to look into a mobile site. 

For starters, business owners can talk with its current web designer or seek a new web firm. There are many options available.  Some websites are so out-of-date that it is cheaper to have a new mobile site created than to upgrade a current antiquated site.  Start by getting three quotes and learning what questions to ask. 

As customer engagement becomes more important, a positive user experience can pay off in the long run.  If your customers are using mobile devices, can you better serve them?Does the cost of not upgrading a website outweigh the risk to losing customers? What's the value of a lifetime, satisfied customer to your business?

Overwhelmed? Call your business advisor to get help prioritizing.  The timing is perfect to budget for 2016.

Thursday, October 15, 2015

Longview business stays locked in with family

Daughter inherits business; improves systems, finds own style

By Hope Belli Tinney, Washington SBDC

LONGVIEW, Wash. – When Tabitha Beneke’s father died in 2012 and she inherited his locksmith business, the three long-time employees of Keys Plus faced several possible scenarios, none of them pretty.

Beneke, who lived 2,000 miles away and had no experience with locks or with running a small business, could simply close the business. She could look for a buyer, leaving the workers in limbo for months, and, not finding a buyer, close the business.

She could find a buyer who, looking to cut expenses, would fire one or all of the employees. Or she could keep the business, become an absentee owner, and make her workers’ lives miserable.

Remarkably, she kept the business and none of that happened. Three years later, she has added two new employees and the three employees she inherited are still present and thriving.

Employee confidence

Keys Plus employees
“She makes us feel valued,” said Jeri Humbyrd, office manager for 10 years. Rather than micromanage their work from afar, Humbyrd said, Beneke has encouraged them to be more independent and take initiative. Having that “freedom to flourish” has resulted in a more dynamic – and profitable – business, Humbyrd said.

Humbyrd and Tim Brown, a master locksmith and employee at Keys Plus Locksmiths ( for 16 years, are so confident of their continued employment that they recently decided to start a family and buy a home together.

"This shop supports that family,” Beneke said recently. “That is huge to me. I love that I can help somebody’s life like that.”

Advising benefits passed down

She said Jerry Petrick, a certified business advisor with the Washington Small Business Development Center, has been key in not only keeping her father’s business afloat, but moving it forward. And the ripple effects of his expert small business advising are felt by her and her staff.

The Washington SBDC ( provides expert advising to small business owners who want to start, grow or transition a business. It receives support from the U.S. Small Business Administration and Washington State University and other institutions of higher education and economic development.

WSU has been the statewide host for the SBDC for more than 35 years. SBDC advising is provided at no cost to the client and is completely confidential.

“We are having a really great year,” Beneke said this fall. “We just keep doing better and better, but this year it’s been significant.”

Finding her own way

Humbyrd said getting updated business systems in place has freed up more time to focus on anticipating and meeting the needs of customers, including stocking a diverse inventory of classic and emerging technology.

Moving from struggling to sustainable is indeed significant, and it hasn’t been easy.

Beneke had never worked in her father’s business and knew next to nothing about how it operated when her father passed. The economy was still bad and seasoned business owners were struggling.

“At the time I got that shop, businesses were closing one after the other,” she said. She briefly considered closing Keys Plus or trying to sell, but then she began meeting with Petrick, who gave her hope that she could figure it out and make it work on her terms.

“I’m not much like my dad and I don’t do things his way,” she said, but with Petrick’s help she was able to implement changes over time that improved efficiency, improved the bottom line and improved employee morale. “I’m still surprised that my way is working,” she said.

Growing partnership

Beneke, who has a background in human resources, enjoys that aspect of the job, but she also has  taken on responsibility for implementing business systems and controls, handling social media and marketing and overseeing budget controls, all of which she can do from her home in Bloomington, Ill.

She also talks regularly with Petrick. As a first-time small business owner without a partner, she said, having access to a confidential business advisor is huge.

“He keeps me on my toes,” she said. “It’s almost like he holds me accountable for doing my job.”

In the first year or two they talked regularly, Beneke said, but now their meetings are less frequent, maybe three times a year.

“I send him quarterly reports and he always comes back with some great, challenging questions about where we are going,” she said.

Family inspiration

“It’s harder than I ever thought it would be,” she said, but seeing the business grow and her employees thrive is immensely satisfying – so satisfying that her 14-year-old daughter, Madison, has noticed and caught the small business entrepreneur bug.

When she and her classmates were asked what they wanted to do when they grew up, Madison answered proudly, “I am going to own a business one day.”

When she does, the SBDC will be there to help her along the way.

Tabitha Beneke, Keys Plus Locksmiths, 360-423-4443,
Jerry Petrick, Washington SBDC, 360-578-5449,

Tuesday, October 6, 2015

Yakima SBDC helps auto shop get loan for new building

By Hope Belli Tinney, Washington SBDC
YAKIMA, Wash. – Peek inside Auto Art and Collision Repair at closing time and it looks like the answer to a math problem: how many average-size automobiles can you fit into a 5,000-square-foot body shop?
A photo on the Facebook page ( shows a crazy quilt of cars parked bumper to bumper, with barely room to walk from one end of the shop to the other.
Irma and Mike Philp of Auto Art and Collision Repair.
“When people used to say, ‘location, location, location,’ I never believed them,” said Irma Philp, who owns the business with her husband, Mike. Now she believes. 
After years of being down a side street and around the back, the business now commands a corner lot at a four-way stop. Potential customers can’t help but notice the new building at South 18th Street and East Mead Avenue.
The move cost them nearly a month of revenue, Irma said, but revenues are up 34 percent from last year.
“It’s been spectacular,” she said, and she and Mike already are making plans for a 2,000-square-foot expansion.
“We stand back sometimes and I tell (Mike), look how far we’ve gotten,” Irma said. Mike has made this happen, she said, but he responded, “We wouldn’t be where we are without both of us.”

Taxes, loans challenge young business

Mike started doing body work in high school, Irma said, and by 2004 opened his own shop. Irma worked for a competing auto body shop but was helping him out on the side – with insurance paperwork, sending out estimates or ordering parts – while they dated.
In 2007, things got serious: “He told me, ‘Quit your job and come work with me full-time or I’m going to have to hire someone,’” Irma said. “It was super scary. I told him, ‘You want me to quit the only guaranteed income we have.’”
Not only that, but the company owed nearly $30,000 in back taxes. Slowly, Irma said, they were able to pay the back taxes, get back on solid ground and start saving for the future.
But in 2009 their landlord raised the rent significantly, which heightened their motivation to find or build their own shop. Everyone they talked to said it was impossible to get money for new construction. Instead, they tried three times to get a commercial loan for an existing property – and failed.
Then Irma learned about the no-cost advising services offered by the Washington Small Business Development Center (SBDC) – a network of more than two dozen certified business advisors working in communities across the state to help small business owners start, grow or transition a business. The Washington SBDC ( receives support from Washington State University, the U.S. Small Business Administration (SBA) and other institutions of higher education and economic development.

Loan for land, new construction

Irma began meeting regularly with SBDC certified business advisor Linda Johnson at the Yakima SBDC office. When they talked about their inability to get a loan, Irma said, Johnson went through their financial statements with them and explained what the loan officers were looking for.
“Linda was able to tell us, ‘This is where you need to be,’” Irma said, and then help them chart a step-by-step plan to get there.
One day when Irma and Mike were expressing their frustration with existing properties—either they were in a poor location or they required extensive renovation or repair—Johnson asked if they’d ever thought about building their own shop. “Mike and I just looked at each other,” Irma said.
Then they jumped at the possibility and immediately set about finding property that would give them good visibility and fit their budget.
It took time, and additional assistance from Tom DiDomenico at Evergreen Business Capital, but in August 2013 the Philps were notified their SBA loan for land and new construction had been approved.

Busy location crowns accomplishment

New location at a visible, busy corner
The new location has made a huge difference to their bottom line, Irma said. They projected a 20 percent increase in revenue, but instead saw 34 percent. Their staff had increased from one employee to two, but now they have three and are working to hire two more.
The SBA loan for new construction catapulted their incremental progress into a huge leap, and borrowing that kind of money was scary, Irma said.
But by the time the loan came through they had been working with Johnson for a few years and were confident that, with her assistance, they could rise to the challenge.
“We are 35 years old and we never imagined this is where we would be” she said. “Sometimes we just think, ‘Wow, what an accomplishment.’”
Learn more about Auto Art and Collision Repair at

Irma Philp, Auto Art and Collision Repair, 509-248-7874,
Linda Johnson, Washington SBDC in Yakima, 509-454-7612,