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Are You Banker Ready?

August 11, 2015

Is there a difference between meeting with a bank and a banker?

You’d better believe it; there is a huge difference! A bank is an institution, brick and mortar; even a staid set of rules and provisions that bank employees apply to the general public. Quite different than dealing with a banker, who is a person which is capable of creating a relationship. A banker is not just a set of rules but a living breathing person; one who has the ability to cast judgement upon you in either a favorable or unfavorable manner depending upon the circumstances. Banking rules have tightened over the last several years. Today we need to operate with a set of standards that makes them want to do business with us.

In the past, before I was enlightened, I had made the mistake of telling clients that they should be bank ready at all times. In fact what I actually meant was that a business, family or an individual would benefit from always being Banker Ready. Being banker ready has several components which will be detailed below, but most importantly is the relationship is established in advance. Just as in personal/non-business relationships to be “known” means someone understands who you are and what you stand for, your character, how you do business or simply operate. Hopefully in this type of a true relationship there would even be an understanding of your hopes and dreams that you desire for your family or business.

Being banker ready allows you to expand your business or personal wealth building through the use of other people’s money. Using the leverage that banks provide has the ability to create wealth much faster than someone who works to continually save in order to invest. Therefore, one who is always banker ready has the potential to act quickly when an opportunity is presented. That doesn’t mean that I encourage acting in a hastened manner, but being prudent doesn’t mean being slow.

Here are 5 facets to being Banker Ready.

Be Organized –

Recall the idea that a banker has the human capability to cast judgement? Being organized allows you to provide accurate documentation in a timely manner. If a banker asks for documents and it takes several weeks to gather them; likely they are out of date or incomplete the banker will not believe that you are on top of your business dealings.

Proper Accounting –

There is a difference between accounting and tax returns. Proper accounting means that you have month in and month out an accurate set of books.

Including:

  • Cash Flow Analysis
  • Profit and Loss Statements
  • Spending Plan/Budget
  • Merchant Service Receipts

Proper Tax Returns –

This means that you have accurately filed returns. Depreciation schedules that are accurate, ideally with Cost Segregation Studies included. An important fact in this step is to show that you are profitable. Remember this is the proof that you will be able to repay the banker should they loan you money for your investment/business project or home.

Full Economic Value of Insurance –

Remember that a banker is grading each deal on being mutually beneficial. However, the primary concern of the banker is that they get repaid even if you were to die or become disabled. Maintaining maximum levels of life insurance and disability income replacement insurance allows the investor to collateralize a portion of the insurance to the bank which ensures the bank gets made whole, but most importantly your family also doesn’t suffer bankruptcy or additional loss in the event of death or disability. I have seen a number of deals go south, even prior to getting started, when this wasn’t in place ahead of time.

Relationship –

This means to take an intentional approach to creating a business or even personal friendship with a banker prior to needing their services. Drop in a local bank, get a referral from a colleague (best) all best when done in advance. Each year or quarter you should proactively update your records that the bank keeps on file. Provide them in advance! Include a Personal Financial Statement at a minimum along with any of the banks required documents. This will be a WOW Factor that assures you the best deal/rates when it is time to get a loan or credit line.

These are five tips that will ensure that you are ready to take action when the need arises for a good banker relationship.

Are there others that you practice? Please tweet, connect on Facebook or LinkedIn with any other ideas.

 

An iconic venue familiar to many Atlantans appears to be moving. Smiths Olde Bar, known for hosting great bands, has been ordered to vacate their premises due to the building being placed on the market to sell. This highlights a conversation that many small business owners often choose to ignore. Leasing space vs Owning their property.

Owning the property that your business utilizes can be a great win for your personal wealth building and tax management.

A familiar dilemma that faces many start up businesses is knowing where to place their business and exactly how much space they will need. I certainly recognize the challenge here. Once these items have been ironed out; I encourage a business owner to begin taking steps to own the property that they inhabit. If you have never been through this process before I would encourage you to work with a well healed business consultant/ financial professional to help guide you through the process.

Considerations:

  • How to Own the Property – Likely in a Limited Liability Corporation (LLC) for asset protection
  • Consider a Cost Segregation Study – This allows you to properly manage the depreciation on the property. Creating potentially significant tax savings.
  • Pay Yourself Rent – Another way to create tax advantages within your business.
  • Avoid Paying Someone Else Rent! – This is a big one. Most importantly you maintain control over your business. Watch The Smiths Olde Bar Story.
  • Retirement Planning – This property could become an income stream that funds your retirement, whether you own the business or not during that time of your life.
  • Estate Planning – Owning Real Estate has advantages when you consider techniques to manage and mitigate Estate Taxes.

Business Owners, I encourage you to address the issue of your business and the real estate that it inhabits. Whether you are currently in a position to own or not, begin taking the proper steps today. You will be glad that you did!

Please follow Todd Burkhalter and Drive Planning for ideas like this and many others which will enhance your personal net worth and your business’ value.

 

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E + R = O

March 10, 2015

Over the past year I have been exposed to new business ideas that have enhanced my ability to serve clients and has impacted how I go about life. Possibly my favorite new concept was learned from Jay Geier, Founder of The Scheduling Institute. Jay’s phrase Frustration Leads To Breakthrough seems simple on the surface, but when applied to business often results in new processes that create change. When you are continuously bumping into a problem that is prohibiting you from reaching your destination or full potential this thought forces you to keep searching. Searching for the breakthrough that you need to advance. This continued search also provides you hope. Hope that there is change coming; you just have to seek it out. True success can be elusive.

 

I have found a way to put apply a scientific formula to shorten the time that it takes to reach the point of breakthrough! This equation allows you to turn problem solving into a process. The process will lead you out of the problem area. So read on to learn more about what I have found.

 

Recently, Brent Saunier, CPA shared the concept of E + R = O with me that he learned through his Continuing Education Curriculum. Brent recognizing the potential application to our business and how we serve our clients asked me to further investigate the concept. I am really glad that he did; E + R = O is a game changer.

 

My research led me to a brilliant communicator, Kent Julian. Kent speaks passionately into the lives of teens and many adult leadership groups. Much of his teaching is centered around how the  E + R = O concept. Events + Response = Outcome is a formula that rescued him at an early point in his life, a point in which he now self describes himself as an “at risk youth”. Today, now years later, Kent speaks passionately about how this formula for success has impacted so many lives. Over the past month I have began to apply this formula to a multitude of circumstances in my own life. I have seen a significant impact in creating clarity within a variety of situations, thus leading to breakthroughs both personally and professionally.

 

When applying this formula to a situation begin by asking the question, What would I like to change? Most often times we are looking to change the Outcome of a situation. Whether it is your personal finances, grades, relationships etc that you are looking for that breakthrough or changed outcome, apply the equation. The changed outcome will mean more money, brighter future, greater success which is ultimately a life which is more fulfilled and advancing. If there wasn’t some change in outcome that we were searching for then it wouldn’t be deemed a problem, right?

 

 

“Insanity: doing the same thing over and over again and expecting different results.”

– Albert Einstein

Focus on Your Response

 

The one variable within any situation that we can control is always going to be “Our Response” to the occurrence or Event (E). Successful people don’t get caught up in the blame game! Blaming the weather, the economy, the government or any outside force or event that they can’t control. Remember, if you want a new outcome you must change how you respond to the events of your life.

 

Examples:

Dental Practice

 

 Example A

Dentist (A) is feeling the pinch of lower revenue. Dentist (A) has spent his entire career in his/her town, doing minimal marketing, and now there is a new dentist in town, Dentist (B), who just opened up down the street. Will it be beneficial for the Dentist (A) to blame Dentist (B) for his loss of revenue? No! Will it be beneficial to complain that they aren’t doing quality work down in Dentist (B)’s office? No!

Remember, Focus on What You Can Control! What Outcome (O) are we desiring? More Money! How do we get more money in a dental practice? More Patients. Our Response (R) has to be centered around acquiring more patients. Marketing leads to new patients, which leads to revenue. The proper Response (R) would be to create a new and engaging marketing campaign.

 

 

Example B

 

I recently met with a dental practice that was frustrated with their accountant of 30 years. They desperately want different results as it relates to their practice’ accounting and financial systems that are in place. They have paid additional taxes throughout the years that could have been avoided. Now they are faced with a decision point. Clearly they want different results, but are they willing to disrupt a relationship that has been in place for so long? and just to remain cordial?

 

Don’t allow yourself to remain with the status quo when change is needed. Face the the point of decision with all of the knowledge necessary to provide you with the confidence that you are making the right decision. Often times we overthink certain decisions which leads to making no decision; which is possibly the wrong decision. Apply the formula and determine the proper response to create the desired outcome.

 

Golf

 

If you have ever spent much time in a golf clubhouse or perhaps are married to a golfer you have heard all of the excuses in the book. The weather, my clubs are old, bad back, the greens are rough…….. and on and on it goes. One of my favorites lines from my college days of working at a Country Club came from our teaching pro, Bob Burke. Bob’s response to a golfer who was claiming that his clubs were to blame for his poor score, “It’s not the Arrows…. it’s the Indian”. Clearly, Bob’s point was indicating that the golf clubs are not to blame; it was his inability to use them correctly that attributed to the poor score. Applying our formula, we would indicate that the Event (E) is golf, the desired change is the Outcome (O) or a better score. The Response (R) for this particular golfer wasn’t to get new clubs or even to blame the old ones. The proper Response (R) is to change his/her swing. Translating that into action items means to get lessons or simply practice.

 

 

When thinking about the different facets of your life whether its health, personal finances or your practice/business finances or relationships; what area is deficient? Is there an area that by applying this formula could lead to the breakthrough that you desire?

 

I hope to hear from you on Facebook, twitter, LinkedIn or Google+ about the success stories that are created from applying the formula!

Be sure to use #DDSSuccess