Pat Cowan, B2B CFO®

It’s official! The 138th running of the Kentucky Derby is in the books and it’s “I’ll Have Another” by 1 1/2 lengths. I normally go to a family Derby party in lieu of spending the afternoon with 165,000 of my closest friends at the track. This year I did neither since I was in Las Vegas for the B2B CFO partners meeting. It was a great meeting with some awesome speakers.

For all of my partners, who, knowing that I was from Louisville, KY, asked for my advice on betting the race. Oops!!!
Nope. I did not have “I’ll Have Another”! If fact I didn’t have  “some other”, “none-other” or any “other” horse that finished the race the same day. Now, I won’t embarass the horses by mentioning any names but they were easy to spot. My horses were the ones riding the jockeys!

However, this blog is not about the result. In fact, this blog like Derby itself is not so much about the race as it is about the tradions surrounding the social event of the year. You see, the Derby is all about tradition. Some of the traditions, like wearing a spectacular hat, are as old as the race itself. Others, I am sure, were started this year. The Derby is about parties, it is about events, and yes, of course it is about horses. But mostly it is about tradition.

Each year the Derby, as well as the events surrounding it, is attending by Bluebloods, Truebloods, Youngbloods, and “Celebribloods”. Ok, I made up the last one but you get the drift. There is room for everyone. Ok, 165,000 may be pushing the limit but you get my drift. Everyone is welcome as long as they respect the traditions of their neighbors. The visual guide at the bottom of the page has some interesting facts about the derby. I hope you enjoy it.

Now, this is a business blog, generally anyway, and I would be remiss is I did not at least touch on how this relates to business. Tradition. Businesses have them too. Especially family businesses.  One of the speakers at the conference was Lee Brower. Lee spoke to us about traditions, insuring the wealth and legacy survive gernerations. Lee’s company, Empowered Wealth (http://empoweredwealth.com), helps you “live life deliberately”.  As Lee says in “the Brower Quadrant” : “What you have is not about doing more with less, but doing more with more in all areas of your life”.  I encourage to visit the website. Traditions help to define companies and families. They may be formal or informal. They also convey a message to employees, vendors, customers and the family members. What do your company’s traditions convey? Do they convey a message that you are proud of? If they don’t convey a message you are proud of, CHANGE THEM!!!

As always, thank you for your interest and enjoy the ride!

This Visual Ride was provided by Derby Industries, LLC.

The Most Exciting Two Minutes In Infographics

In my life I have heard many people talk about what it is to live the American Dream. We tie it to home ownership, or wealth, or any number of material things. You name it and we can “American Dream” it. We talk about it like it is a promise. It is not. It is a commitment. It is a sense of community and a sense of belonging. It is a struggle like non-other I know. It is hard work. If you want to know what the American Dream is about just look to the people of Kentucky and Indiana that are going through the recovery after an incredibly devastating storm. If you want to look further back, look to the Gulf Coast (two recent catastrophies), or recent  San Francisco earthquake, or way back to the Great Chicago fire.  What these  places have in common is that the communities all around the affected area jumped in to help their neighbors in times of great need. The FIRST responders in a disaster are not the Fire Departments, the Police, FEMA or any other government agency. They are your neighbors. The others will come and I am thankful that they do but it is likely that your neighbor will be there first. You may not even know them but they WILL be there just the same. The people that are picking up the pieces in towns like Henryville, IN., Marysville, In., New Pekin, IN and West Liberty, KY and many other communities are living the American Dream. It is hardship and struggle. It is family and community. It is the knowledge that you will not face these struggles alone. It has always been that way. These survivors are now living the life of pioneers and rebuilding their lives and communities much the way the earliest settlers built their communities. And we, as Amercans who share the dream that is America, will help them. This IS the American Dream. 

Some have said the dream is dead. I think not.

 Like many of you I watched the events of Friday night play out on the local and national news outlets.  For about an hour we watched the news in our basement and listened, and occasionally watched, as the golf ball and tennis ball sized hail pelted the house and deck above us.  And we prayed for those in harms way. We had minor hail damage but nothing compared to the devastation that was unleashed on so many communities in the path of these storms. 

I have lived in Kentucky (the Louisville area to be more specific) for a relatively short time.  I have seen Ice Storms, Wind Storms, Floods;  and now a Tornado outbreak that is not just unusual for this time of year, it is unusual for any time of year.  Normally, the tornado season doesn’t start until spring time and Tornado’s of this magnitude (EF 3 and EF 4) are not common for this area. There is nothing that I can add to describe the devastation that has happened to so many communities that hasn’t been shown on TV.  If fact,I find no words to describe what I have seen on TV.  My nephew was driving back from Detroit to Elizabethtown, KY and I-65 was closed. The GPS routed him through Marysville, IN. which was one of the hardest hit areas. He took pictures as he went by. He was at a loss for words to describe what he saw but there was incredible sadness.  I have not been to the areas hardest hit and I urge everyone to stay away unless you are supposed to be there.  This is not a time for curiosity it is a time for generousity. You will be there when it counts. You always have been America.  This isn’t about governments, or politics or any of the other nonsense we get caught up in as a society. This is about neighbors helping neighbors.

I wanted, no needed to write this as an answer to those who would point to all that is wrong in this country and say that the America that our parents and grandparents knew is no more, that it’s greatest days are over.  Yes there are problems but there are communities, neighbors and strangers alike that are right now working to rebuild their part of the American Dream. But it is not the place they put their “stuff” that is their dream. It is the community where that place exists that is what they will be rebuilding. 

 Of course, the good lord willing, most of you will never have to overcome a catastrophy like this in your lives. But if you do, perhaps you will be lucky enough to have neighbors like those of West Liberty, KY, who, in spite of the fact the town was literally wiped of the map, were reaching out help each other. As survivor resident Dale Oakley was quoted in the Louisville Courier-Journal: ” this town can come back. The face of it will never be the same. But it will still be West Liberty”.  Well said Mr. Oakley. America Dead? I think not!

Or perhaps you will have a neighbor as courageous  as Jason Miller. When he saw his neighbors the Babcocks in peril, rushed to offer his neighbors a place in his home.  He was blown across the road before he made it.  He suffered multiple fractures. Two year old Angel Babcock survived, the rest of the Babcock family did not.  Little Angel Babcock is in serious condition fighting for her life.  Her Grandparents are at her side in Kosair Childrens Hospital.  It was her neighbors who found her. If you want to support her efforts, and those of the doctors who are fighting for her go to: helpkosairchildrenshospital.com.  The support will be there for her. At a time like this we need a miracle and you will fight to give her one. 

Update: it is with great sadness that I report to you, that subsequent to posting this article,  little Angel Babcock has passed. She now rests with her parents and brothers. My condolences to the family

America Dead? I think not. 

The last group of people that I want to talk about are the Meteorologists, Storm Chasers, Spotters, etc. of both the the local and the national media. Yes, we all like to make fun of the fact that they “seem” to be wrong so much of the time. The truth of the matter is: if it had not been for the early, very early, warnings they provided , the death toll could have been hundreds. Many of them put themselves in harms way to spot the storms. They warned us early of the potential, the kept us warned as the storms developed and they told us where the storms were tracking. They warned and we listened. They saved many lives on Friday.  Today, and for a least a little while, I will not make jokes. They put themselve in harms way for the sake of their neighbors and people that do not know. We will never know many of them. Their jobs? Some of them are paid. Others are volunteers.  All of them could have stayed a safe distance away. They didn’t.

America Dead? I think Not.

We are in the middle of a political climate that is devisive, caustic and downright shameful at times. We think it is OK to call people names, insult their intelligence, etc. because the “talking heads” of the media do.  So as you decry the idiocy of  someone’s opinion remember that they may be the one pulling your butt of the rubble and helping you rebuild. And they will regardless of whether or not you are the same political party, religous affiliation or race. They always have. They always will. Be respectful.

 So all the communities will pick up, they will rebuild and countless people that they may never know will help.  Donations will come in the form of money food, shelter and clothing. These are needed so pitch in as much as you can.  They will never know you but they will thank you.  I know you will be there for them because that is the America of my parents and my grandparents.

Amerca Dead? I think not.

This is my opinion. I like to know yours.

It’s official. Spring has definitely sprung!!! As I was trimming, mowing and getting beds ready for flowers and vegetables it dawned on me that this is exactly what we do as business owners. Think I lost my mind? Perhaps, but bear with me.

Ten reasons why your business is like a garden.

Hey Louisville Business Owner, this is a chance get recognized. Let’s bring one of these “national” awards back to Kentucky!! You have suffered through a miserable economy and we would like to recognize your accomplishments. Maybe you can be one of the Smart 25 Award winners. Read on:

B2B CFO Announces the Call for Nominations and Event Sponsors for the Inaugural

“Smart 25 Awards”

Nominations for the Inaugural “Smart 25 Awards” are being accepted through March 20, 2012

B2B CFO, the nation’s largest CFO services firm, is accepting nominations for the first annual “Smart 25 Awards” through March 20, 2012. The award program recognizes outstanding companies and individuals for driving smart business growth in one of the toughest economies.  

Honorees and finalists will be celebrated during the awards ceremony on May 4^th, 2012, at the Aria Resort in Las Vegas, Nevada, during B2B CFO’s annual National Partners Conference.

The Smart 25 Awards were launched to coincide with B2B CFO’s silver anniversary and recognize the critical components of best business practices that create jobs and improve the economy.  Open to all growth-oriented privately-held businesses from around the United States, the awards honor companies and leaders for their significant accomplishments.

Award categories include:

•  Fastest Growing in Sales – presented to companies that demonstrate strong sales growth over a period of three years 2009-2011.

 •  Top Job Creators – presented to companies that created most jobs over a period of three years 2009-2011. 

 •  Largest Loan Secured – presented to companies that managed to secure the largest loan (single or cumulative) during a three-year period 2009-2011.

  
•  Best Working Capital Increase – presented to companies that demonstrate the healthiest growth in their working capital.

“Businesses are thriving despite these tough economic conditions and the Smart 25 Awards is our opportunity to celebrate and showcase their accomplishments,” said Jerry L. Mills, founder and CEO of B2B CFO. “These awards recognize the smartest business practices and provide a platform for national exposure. So we encourage the business community from around the nation get involved and get recognized for the great impact they are making in our economy every day.”

Company nominations and self-nominations are accepted. Up to five finalists will be chosen for each category by a selection committee comprised of distinguished representatives from the media and financial community.  
 
The inaugural Smart 25 Awards will be presented at the B2B CFO National Partners Conference which brings together Partners and Service Providers from around the country.  More than 300 attendees are anticipated to participate.

“2012 marks a very big year for B2B CFO,” added Mills. “It’s our company’s 25^th anniversary and we cannot think of a better way to celebrate then by launching an awards program that recognizes other successful businesses.”   

Conference sponsors include Morgan Stanley Smith Barney, SAP, and Intuit among many others.

Over the last couple of months there has been some pretty exciting news on the job front in the Louisville, KY area. Although, a press release does not necessarily mean that the jobs will actually arrive, it is reason for a little hope

Among the announcements is the possibility that Zappos will be locating a facility in Bullitt County. The Zappos facility is purportedly planned to employ 5,000. These are new jobs to the area and not replacements. Of course this will happen over time and may take several years to come to fruition. This could also give a big boost to the other distribution and support businesses in the area.

The other companies in the job news lately have been UPS, Ford and Humana among others. Is this a sign that the economy overall is improving or simply good work by our representatives in bringing the jobs. Probably a little of both but it is too early to blow the trumpet in either case. It is something to be a little upbeat about but remember: if there is to be a long lasting improvement in the jobless rate in will come from the small business community.

Business owners, it is not too late to grab the reigns of your companies and and drive them to the future. Reassess your strategy to take full advantage of the uptick in job creation. Will you be on the sideline again? Revisit your goals for your business and get your strategies ready!!!

This is my opinion… tell me yours!!!

According to the New York Times you might want to consider doing so today . On October 26, The New York Times published an article titled, “When Should a Small Business Hire a Finance Chief?” This piece deals primarily with growing businesses and some of the major issues they confront. I recommend this article as a good summary of the complex range of issues that all small businesses face.

 The article defines a number of tipping points that confront companies as they grow. But the primary issue was summarized by one business owner, who said: “I needed to hire someone who could function as my business partner and allow me to step away from the books so I could manage other aspects of my business.”

 Among the challenges that organizations face, the Times identified the following:

• Financial Analysis, Accounting, and Budgets, Forecasts
• Insurance
• Banking
• Lending and Securing Financing
• Real Estate
• Health Insurance
• Accounts Receivables
• Legal
• Dealing with Investors
• Due Diligence in preparing for an acquisition or preparing to be acquired.

I would add cash flow and working capital management, as well as human resources and IT management, to the list. And the CFO is critical to exit planning.

 Can’t Afford or Don’t Need a Full Time CFO? Hire One Part Time

 As the Times points out, “no matter how small, any company can benefit from having a finance chief to help organize its finances and track its performance.” But a full time CFO usually commands a six figure salary plus benefits. The solution, say the Times, is to hire a part-time CFO. It is sort of like a time-share condo: you get the high quality seasoned finance leader you need for a fraction of the cost of a full time CFO.

 Read the article from The New York Times

This is just brief post about the closure of the Sherman-Minton Bridge between Kentucky and Indiana. Anyone who has been on the Kennedy Bridge lately knows that it is at best an inconvenience to maneuver back around to the businesses in and around New Albany, IN. Indiana has awarded the contract to repair the bridge to a firm here in Louisville for approximately $20 million.

The scheduled reopen date is March 2, 2012. I have a question. How is it, that Minnesota built an entire replacement bridge over the Mississippi after the collapse in just under a year (yes, it did cost a lot more) but it is going to take 6 months to “repair” and reopen the Sherman-Minton Bridge? I am not a structural engineer but… are you kidding me? On a positive note a decision was made on what to do within a month after the Bridge was deemed unsafe and closed by Indiana  Governor Mitch Daniels.

I have made the trip around to New Albany via the Kennedy Bridge and in non-rush hour traffic it only took about 10-15 minutes longer than normal to get there going I65 to I265. If you have places that you like to dine and shop across the river keep going.  They will be glad to see you.

This is what I think. What do you think? I’d like to know?

Are you BOSSY?

Over the past few years I have noticed that as the years added up so did the extra pounds. As you can imagine, in my attempts to not become eligible for the Biggest Loser Show, I keep an eye on the latest diet trends.

I heard about one from a prospective client the other day. He had lost about 50 pounds on the diet. We talked over lunch about his business and his new found diet. I sat there amazed as he described the steps to his diet which is called the Business Owners Stressful Situation Diet (known as BOSS). Ok, I made up the name but I couldn’t really print what he called it. This diet is sweeping through the business community. Everywhere we turn we can find owners being BOSSY. Here’s how it works:

1)      You have to be a business owner (Ok, one form of the diet works on senior managers too)

2)      There is no planning involved. Literally.

3)      Sales are falling

4)      Margins keep getting worse

5)      Your business does not have adequate cash flow to meet its obligations

6)      The business owner (FINDER) increases the amount of time doing activities that should be done by others (MINDERS and GRINDERS). The definitions for these can be found in the Danger Zone or ask a B2B CFO partner.

7)      The harder you work on these activities the more BOSSY you get

PRESTO – you lose weight – while your business loses money. Awesome!

As with any diet there can be side effects. As we continued to discuss the diet it became clearer that this is not a diet you want to be on. Nobody wants to be known as a BOSSY owner. The side effects are pretty severe and include:

A)     Loss of quality family time. Your family just doesn’t want to be around you when you are BOSSY

B)      The diet spreads to all the family. You may notice your spouse being more BOSSY than usual

C)      Lack of sleep –stay up at night thinking of ways to not be BOSSY

D)     Bill collectors start calling –they are immune to BOSSY because of the SNARKY diet (Sometimes confused with the BOSS diet)

E)      The taxing authorities start calling and even place liens on your business assets. They like beating up BOSSY owners

F)      Bankers and other lenders avoid you. They don’t want to be BOSSED around

G)     Employees have to leave because you are too BOSSY

H)     Thoughts quickly turn to the death of the business by the owner walking or even running away. The only Exit Plan is to escape any way possible. The owner doesn’t want to be BOSSY anymore.

I)        This diet can be quite addictive. It is difficult and sometimes nearly impossible to stop this diet. Just when you think that you have beaten the trend it pulls you back in. Some owners can’t avoid being BOSSY

Trust me when I tell you that no one likes being around a BOSSY person. If you or a business owner you know are BOSSY, get help. Call a B2B CFO^®partner. We work with BOSSY owners all the time. The business owner I mentioned at the beginning is very bright. He knows there are much better ways to lose weight than being BOSSY.

The Good, the Bad and the Ugly

The Good

1,800 - Ford announced that it was taking applications for 1,800 jobs for a new production line at one of its Louisville Ford plants. Some news reports have this number going as 2,900 by 2014.

120 - the number of Jobs Coventry Healthcare announced it would bring to Louisville due the relocation of the Coventry Healthcare corporate office to Louisville.

37.5 Million – the estimated cost of the latest construction project approved at U of L. The recreation facility project will be paid for mainly by gifts and student fees.

55.5 – the new mileage allowance for business mileage. IRS has increased the mileage allowance to 55.5 cents effective beginning July 1^st.

The Bad

18,000 – the number of jobs created nationally in June according to the Bureau of Labor Statistics

9.7 – the percentage of people out of work in Louisville as of May 2011 (the last date reported by BLS).

81- the percentage of small businesses that do not plan on hiring over the next year. In an article in the Louisville Business First, Kent Hoover (BusinessFirstofLouisville.com, khoover@bizjournals.com) writes that these numbers are at a “recession-like reading”.

-5% -the decline in Louisville  new home permits in May. The housing market continues to struggle and returned to flat after a 1^st quarter blip. There was decline in most major indicators in the second quarter (Listing, Sales, Median Price, etc.).  According to the National Association of Home Builders total housing permits declined by 5% for May 2011 when compared to May 2010.

The Ugly

8-2  – the expected date of default if the debt ceiling is not raised. The way that this has been handled has virtually brought the country to a standstill. The small business owner has lost confidence in the government’s ability to get any meaningful work accomplished that will have a POSITIVE impact on their businesses while at the same time being absolutely certain that whatever action is taken will have a NEGATIVE impact on their business. The resolution of this issue is likely to have the biggest impact on the Louisville and US economy for the foreseeable future. Stay tuned in.

70,000 – the number of high-skill jobs in the US we will not be able to fill by 2020. The US Chamber of Commerce estimates that there will be 123,000 High-skill, High-wage jobs in the US by 2020. They also estimate that, if nothing changes, there will only be enough skilled workers to fill 53,000 of those jobs.  

These are the items that I selected but I would like to know what you think are the Good, Bad and Ugly things that are affecting your business in Louisville or the surrounding areas. Leave me a comment.

What is your Bank thinking?

Let’s start with the following scenario: It has been nine months since you last renewed your line of credit with the bank. You have made all of your payments and met all of the banks covenants. You think that it is easier to stay with your bank so there is no need to talk to other bankers.  You think that renewing your loan is just a formality. So you don’t much worry about it. But what does your bank think?  You might just want to rethink what you think.

Banks are changing the way they view their customers and no matter how long you have been with the bank you may not fit in with their future plans. You didn’t do anything to warrant the treatment. I have seen this happening with some of the larger regional banks. In some cases the bank you were dealing with was gobbled up by one of these banks. In other cases the bank you were dealing with is the bank that is growing and now they are too big and they don’t need you cluttering up their loan portfolio and they politely (usually, but not always) ask you to find another bank. Don’t blame the bank. Whether you believe that Banks are under regulated or over regulated, the fact is that they ARE regulated and the have to keep a “balance”. You might just not make the cut.

 The problem is that meeting a new bank’s requirements can be difficult and may take a long time to get though the process. It may be time that you don’t have.

So what should you do? Here is my List for renewing your line of credit:

1)      Don’t assume that because you have been a good customer (current on your payments, meet the debt covenants, “know” your banker) that the bank will want to keep your business. Banks choose the customers based on things like size, type of industry, collateral type, etc.  Many banks have reviewed and changed the criteria that they use to “pick” who they want to lend to. Talk to your banker. Make sure that you still fit in with their plans. However, things can change quickly.

2)      Cultivate relationships with other banks and bankers. Remember that your relationship is with both the bank and the banker. A good relationship with your banker is critical to staying up on the trends in the bank and they can provide business referrals to you. But even if you think you have a great relationship with your banker he/she shouldn’t be the only banker that you do business with. Sometimes Bankers don’t fit in with their bank’s plans either. I have long had a policy that I would not have only one bank that I do business with for any of the companies that I have been the top financial manager for (CFO, VP, etc.). Unfortunately, banks want you to have all of your business so it is sometimes a battle to use multiple banks. In some cases, where there is a limited pool of banks that will work with you, you may have to keep your accounts at one bank. But you should start working on relationships with other bankers. Ask for referrals from friends, business acquaintances or your trusted advisors.

3)      Work with at least a couple of banks when you are renewing your line of credit or other loans. Interview them to see what factors they use to determine their ideal customer. If you are working with an advisor it is likely that they will have relationships with a number of bankers. In my case, I actually look for banks and bankers that have different lending criteria. I expect them to be respectful and knowledgeable about business and the difficulties that business owners go through. Is your banker respectful of these things? Just remember that respect is a two way street. You must also be respectful that the banker is held to a set of standards within their banks.

4)      Prepare early and get your information to the bankers on time. Make sure that your information is in a form that the banker wants.  Have things such as tax returns prepared well ahead of time so you will have them available to the bank. If they are prepared on a cash basis, consider having FS prepared on an accrual basis for the banker as well. If possible, don’t send the banker dribs and drabs of information. Send a complete package if possible. You don’t want them forming an opinion based on incomplete information. Send them enough information to tell the whole story of your business and request a meeting to fill in the blanks. Make sure that you know what questions are going to be asked and make sure you are prepared to answer those questions. If you have not complied with some of the covenants of the loan make sure you are prepared with an explanation and why you will be able to meet them in the future. If it is something you can not meet get them to wave it if possible (such as a reporting date before your normal monthend close).  

5)      Have an alternate plan if the line is declined and you cannot get another bank to take you on as a customer. If you can’t get a loan for operating funds how will your business survive? If you are unfamiliar with what alternatives may be available to you will need to work with someone who is. You may be able to find investors, alternative financing, equipment sale leasebacks, etc. but these take time and can be much costlier than ban financing.

If your business is like many other businesses, the last two years has been tough on you and your business. If you have had losses and negative cash flow it could get even tougher. The bank that you have been a customer of for all those years may not like the fact that you have struggled. You may find that they are not interested in you as a customer. But in the post “financial apocalypse” era your bank just doesn’t need a reason other than you don’t fit their demographic of the ideal customer.

Be prepared, be informed and take action early in the process. If you and your bank remain in a good working relationship then you will be in a better position to ask for better terms and conditions. You have nothing to lose by being prepared. You could lose everything if you are not.