This is the title of a recent blog entry from James Surowiecki's blog on The New Yorker. He poses an interesting notion that banks will be doing better than ever with rates so low - Wells Fargo average interest cost in Q408 was 1.44% - and spreads so high.
The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.
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Article published – March 9, 2009
BUILDING A BUSINESS: Planning, pre-emptive explanation will help you with your bank
“Plans are nothing; planning is everything.” – Dwight D. Eisenhower
In the last column we discussed a few core principles about building a sustainable banking relationship. “No surprises” and “preparation” are two of the essential elements.
Now we move to planning. This is a broad subject with many variations, so we’ll focus on cash flow forecasting as an invaluable component of that process. While it provides an important tool for your banker, it must also be an indispensable part of your planning arsenal. Gen. Eisenhower’s comment focuses on the process rather than the result to emphasize that unexpected events and new information always make a difference.
Nonetheless, forecasting remains an elusive objective for many business owners. Most of the objections I hear are comments like, “I have no idea what our sales will be” or, “Who knows what will happen tomorrow let alone the rest of this year” or, “Our industry is in such a state of flux that no one knows what might happen.”
While these “Double V” economic times (big volatility and little visibility) make it more difficult than ever to predict and forecast performance, your bank will be remarkably unimpressed by these excuses. (more…)
"You Oughta Plea in Pictures" is a solid reminder that pictures tell the story. It emphasizes the value of pictures and diagrams when illustrating important financial points rather than a plethora of spreadsheets that obscure the fundamental issues. There are some interesting, and rather famous, examples of how this has…
The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.
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Article published – February 23, 2009
BUILDING A BUSINESS: Ideas for your business you can take to the bank
“Money is better than poverty if only for financial reasons.” – Woody Allen
I’ve received a lot of questions lately about banking issues and the “rules of the road” for dealing with your bank in a troubled economy. All of us are facing an economy that I refer to as the “Double V” – an insidious environment comprised of big volatility and little visibility. These twin engines will predominate for the foreseeable future.
This week’s column will start with Banking 101 as we make our way toward more subtle concepts. Unquestionably, this process is more artful than scientific, and while there are mechanical tasks and financial metrics that apply, managing your banking relationship requires both judgment and discretion.
• No Surprises. It’s no surprise that “No Surprises” is at the top of the list. (more…)
The NY Times recently published an interview with Bob Seiwert, a senior vice president for the Center for Commercial Lending and Business Banking at the American Bankers Association, a trade group in Washington. Transparency. Full Disclosure. Risk Management. These are a few of the items on his checklist of key…
You may not need another metric to measure your business but CFO Magazine recently described an interesting new metric called "free cash flow growth profile" as a measure of measuring the amount of discretionary cash available. In this context, "discretionary" means "no strings attached". While you could calculate that benchmark…
It’s truly stunning that the Senate today failed to pass an assistance program for the auto industry.
I’ve tried not to be too vociferous about all of this, and I’ve written before about being in favor of a bridge loan to the automakers despite the railing of my capitalist friends, but this decision is truly mind-boggling!
It’s unarguable that our economy is extremely fragile. I think it’s equally clear . . . crystal . . . that it cannot withstand the catastrophic results of a failure within our largest manufacturing sector, which arguably supports 2.5 – 3 million jobs, without great harm to the economy in all of its incarnations . . . unemployment, consumer spending, etc.
The Senate has shown again how out of touch they are . . . (more…)
Business Week recently published a summary of some of the challenges facing companies seeking venture capital. Most of the advice is pretty common, and I think, applies to obtaining capital of any kind. In short, demonstrate a realistic value proposition, plan for positive cash flow and show a sustainable, lean…
Isn't it fun to watch our regulators talk about the availability of business lending? CFO magazine may not have observed that their recent article, TARP Won't Spread Loans for Months, Chief Suggests, has no good news about the several additional months before some of this credit becomes available. In the…