Bankers like projections! Are they self righteous?

Business financial projections

I need to make a confession.  In the late 70’s I went to a commercial lending school in Norman, Oklahoma.  We spent two weeks doing case studies and other technical studies on the business of lending to businesses.  Among them was a study on cash flow analysis.  As a CPA I was one of the few who really understood the computations of the changes in the balance sheet and earning effect on cash flow statements.  I was surprised because I soon found out that bankers regularly ask for this information when considering new loans or changes to existing ones.

Later in my first job on the lending line I discovered an RMA form that businesses could use for estimating their cash flow for lines of credit or debt repayments.  The irony was that very few lenders knew how to prepare this form either, which was a simple version of a cash flow statement.  I soon learned the real kicker; many bankers (me too) used to request cash flow statements and projections as a way to get rid of loan requests they didn’t want to deal with!  It was the “bum’s rush”!  If you want to call it self righteous behavior you may; but it is the real world.

Then in the 90’s the PC’s came along and with them spreadsheet capabilities such as lotus and excel made these analyses more possible.  By the late 90’s and forward, bankers began asking for these reports along with business and personal financial statements to analyze loan requests.  Many bankers still could not do them themselves, but demanded them of their customers and prospects.

After leaving the bank I began to work with businesses to secure financing for them.  Projections were always key to getting loans; either for turnarounds, new businesses, or renewals of existing lines of credit.  In this time I learned another thing; many controllers also didn’t know how to do these projections!  The real problem is that they didn’t want to admit it in front of their boss and we ended up wasting some time before we brought in folks who knew how to do them in a proper, understandable format.

Today they are a critical part of any financing request for any business loan request.  When I work with a new client I always ask if they know how to do them, and ask more questions to make sure they really do know how to do them.  If I learn they don’t, I bring in someone who does and can do them quickly and accurately.

Many owners still do not think projections are important because of all the variables of their business operations.  When they do get projections done for them I am very careful to be sure they understand how they were put together as well as the key things that have to happen in order for them to meet their numbers and be successful.  My best clients catch on quickly after having it explained to them by someone “on their side” and the ending result is usually that they get the money they are asking for.

Can we be more successful if we are other’s centered?

I have often heard that our goal should be to take care of #1, meaning ourselves.  I believe it is important to be conscious about our well being but also have come to believe that we do better in life if it isn’t totally “about me”.

The best example of this is how good consultative sales people.  They are skilled listeners and spend a lot of time learning about the customer’s issues and problems before presenting how they can help solve them.  When they put the customer first the customer starts to trust them and knows the solutions being proposed have their best interest in mind, not the sellers.

It is also true in jobs.  In my first job I thought it was about me, what I could learn and how much I could get paid.  I think I had an entitlement mentality of what a college degree should give me, but it didn’t last long.  In my next job, I learned that if I put my employer (customer) first I could learn what their needs were and gained promotions and salary increases when I found solutions for them.  On the other hand, if we wait for our employer to do something for us we can wait a long time for any furtherance of our careers.  This often results in job dissatisfaction, anger, worry and sometimes loss of jobs  that defeat our ultimate goal of pursuing peace in our lives.  This is also true for supervisors.  If they coach and train their subordinates properly they can improve their productivity and build people for more value to their organization.  If they can produce winners they will also win.

Most of our money problems can also be traced to the “I” centered mentality.  Many things we buy just create more wants of more things.  Then greed grows from insatiable needs to satisfy ourselves with things we think will bring us happiness.  It isn’t just a malady of the rich; it affects all of us.

I think one trait we can develop to avoid that is to learn to give to the less fortunate.  By so doing we can learn to control the self centeredness that we all have plus see and help others less fortunate which not only makes us feel good, but also shows us how fortunate we really are.  I don’t see greed so much as a measure of income, rather a measure of giving.

Career help

I have been very fortunate in my career and have had to overcome some obstacles to do so.  I am at the stage where I want to give back to others where I can.  I am open to emails, networking ideas or meeting face to face if it is feasible.  I have done a lot of this and am willing to do more assuming I continue to have the time to do it.  I have lots of good contacts to share as well as lots of experience in different fields.

I would appreciate it if anyone bought my book on the subject, but it wouldn’t be necessary to get any help I can give.

I agree with Obama on some things anyway!

Obama recently gave some advice:  if you are saving to send your children to college you should probably stay out of Las Vegas… or something like that.

Predictably he got criticized, by Las Vegas for hurting their business and people on the right who don’t think he should be telling folks what to do.  And, if he does, he should practice the frugality he preaches to others with our money.

Well, maybe it wasn’t his place to say that, but I agree with him.

So I will help him out as no one can go after me:  If you are saving money to send your children to college don’t fritter it away in Las Vegas.  Unless you can well afford it.

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