As the economy continues to decline many people are wondering how bad will it get. I had a friend ask me just a few days ago if I thought we would all be waiting in line for a loaf of bread? My answer was no. I do think we have some rough times ahead but I think we are more prepared then we might have been 50 years ago. Today's crisis is bigger the reason it is bigger is because it is a global epidemic not a local epidemic. 5o years ago if China's economy failed the U.S. would feel some impacts but nothing like today. The world as we know it has become flat built upon speed and agility. Today I can get on Google Talk and have a conversation with anyone in the world real time with a touch of the keyboard. You do not have to work in the corporate office to have a corporate job and telecommuting is growing rapidly. People today are free agents and we are all looking for the next big signing bonus.
With economic growth always comes with a bubble and only the strong will survive. We will cycle through this economic times like we have in the past some with prosper others will not. I think in times like this is it even more important to surround yourself with the best people continue to learn and grow and prepare for the next growth surge.
Tuesday, December 16, 2008
Friday, November 21, 2008
Uncertain Times are Certainly Here
Uncertain times are certainly here and no one really knows what tomorrow holds. If you read any financial website or newspaper you will find the horror that is the financial markets but there are some areas that they are not talking about. The current price of gasoline is down from $4.00 to $1. 75. My family drives roughly 700 miles a week this means we are saving on average $315 a month for fuel costs. This is the type of stimulus package the American people need in today’s economy.
I have been in the financial services business since 1999 and as most people have said we have never been in times like this before. I certainly do not have all the answers but I do believe one of the reason this could be worse than the deprecation is the amount of information that is available to people. Take this blog for example during the great depression no one had the opportunity to speak their mind about the economy except for the media and government. Today anyone can talk and give their opinion on what they feel is the right solution to fix the economy. I do not have the answers nor would it be appropriate to make recommendations, but I do know the more we spend time looking at the negative aspects the decline will only get worse. Take the fuel price decline as your stimulus package and remain positive good times are ahead.
I have been in the financial services business since 1999 and as most people have said we have never been in times like this before. I certainly do not have all the answers but I do believe one of the reason this could be worse than the deprecation is the amount of information that is available to people. Take this blog for example during the great depression no one had the opportunity to speak their mind about the economy except for the media and government. Today anyone can talk and give their opinion on what they feel is the right solution to fix the economy. I do not have the answers nor would it be appropriate to make recommendations, but I do know the more we spend time looking at the negative aspects the decline will only get worse. Take the fuel price decline as your stimulus package and remain positive good times are ahead.
Wednesday, October 1, 2008
Bailout Matters
Congress will begin debating the amended proposed bailout this evening with an expectation to have an approval for the House of Representatives to approve later this week. This legislation has by far been one of the most scrutinized bills the public has had to face and to the average person might not seem fair. Being in the financial industry for nearly a decade I can assure you this is not a request but a demand for our economy and the remainder of the world to continue to operate and here is why.
What most Americans do not understand is this is not about giving the banks a free pass after all the Banks will have to take immediate losses with the bailout on portfolios that are performing well. The problem is not about doing subprime mortgages the problem is about banks lending to each other and providing capital to the financial sector. What happens if a Bank falls? In the past few months we have seen a number of banks fail and for all practical purposes customers’ deposits have been safe. What have not been safe are the customers’ credit lines and this is where the slippery slope begins. If a bank fails the credit line will be closed meaning a business owner will not have access to working capital. Sure in credit training it is very clear you are never to lend to a customer who is having trouble making payroll, rent, or utilities but the working capital lines are used for inventory, expansions, and growth. Although it might seem like a bank issue, here is an example of what can happen.
Bank fails on day 1 and begins to call business lines of credit due immediately. Business X does not have the liquid capital to repay the credit line so they begin shopping for a new business line of credit. The already tight credit market make it difficult to find a new line of credit from a bank with no existing relationship but new bank does fulfill on small credit facility. In order to pay back the entire outstanding debt the business owner decides not to purchase new inventory and sell the remaining inventory to eliminate additional capital costs and avoid legal action from the financial institution. Since the business has lowered the inventory levels sales begin to decrease and the owner is forced to reduce overhead and expenses which usually means job cuts. These cuts take place and a number of people find themselves unemployed looking for new work and trying to pay their bills. These same people are living paycheck to paycheck and this gap in employment causes them to miss a payment forcing the bank to tighten additional credit policies and shrinking the credit market. It is a vicious cycle.
So when you hear people say this is not about the average American I argue this is absolutely about the average American. After all Small Business is the future of America and these are the businesses that are impacted immediately.
What most Americans do not understand is this is not about giving the banks a free pass after all the Banks will have to take immediate losses with the bailout on portfolios that are performing well. The problem is not about doing subprime mortgages the problem is about banks lending to each other and providing capital to the financial sector. What happens if a Bank falls? In the past few months we have seen a number of banks fail and for all practical purposes customers’ deposits have been safe. What have not been safe are the customers’ credit lines and this is where the slippery slope begins. If a bank fails the credit line will be closed meaning a business owner will not have access to working capital. Sure in credit training it is very clear you are never to lend to a customer who is having trouble making payroll, rent, or utilities but the working capital lines are used for inventory, expansions, and growth. Although it might seem like a bank issue, here is an example of what can happen.
Bank fails on day 1 and begins to call business lines of credit due immediately. Business X does not have the liquid capital to repay the credit line so they begin shopping for a new business line of credit. The already tight credit market make it difficult to find a new line of credit from a bank with no existing relationship but new bank does fulfill on small credit facility. In order to pay back the entire outstanding debt the business owner decides not to purchase new inventory and sell the remaining inventory to eliminate additional capital costs and avoid legal action from the financial institution. Since the business has lowered the inventory levels sales begin to decrease and the owner is forced to reduce overhead and expenses which usually means job cuts. These cuts take place and a number of people find themselves unemployed looking for new work and trying to pay their bills. These same people are living paycheck to paycheck and this gap in employment causes them to miss a payment forcing the bank to tighten additional credit policies and shrinking the credit market. It is a vicious cycle.
So when you hear people say this is not about the average American I argue this is absolutely about the average American. After all Small Business is the future of America and these are the businesses that are impacted immediately.
Monday, September 29, 2008
Financial Industry - Build Trust
Today marks a day that I will never forget. I have been in the financial services industry for the past 10 years and these are times we will be studying for years to come. Today’s market (stock price) is not a reflective indicator of the company’s actual net worth. For example in the past 2 weeks we have seen a merger between Washington Mutual and JP Morgan Chase and most recently a merger with Wachovia and Citigroup. This is what I consider the last man standing epidemic that is happening on Wall Street. When the music stops every one is looking for a chair and once all the chairs are taken the last person standing should be prepared to exit the stage.
What is very aggravating is the impact the media has on the stock price and reminds me of the movie Boiler Room. In the movie brokers are calling customers pitching them a great idea having them buy in and then the firm begins selling off the stock to reap the benefits on the way down. Hedge Funds today are doing the same things to financial stocks picking one after another attacking it dumping the shares and driving the value of the company into the ground. For example on Friday, there were firms that traded over 900% normal share volume. The market trades on speculation and fear and builds momentum along the way leaving companies powerless. Then the media steps in to drive the nail in the coffin announcing lead articles, “X Company loses 50% today.” The average consumer does not have the time to research and investigate the real financial condition of the firm all they know is losing 50% value cannot be good. This changes consumer behavior immediately causing anxiety, panic and concern thus leaving the firms answers questions that really cannot be answered because the price has been driven by speculation. So the only fundamental position the firm can hold with the consumer is Trust.
Should you Trust your newspaper or trust your banker? Has your newspaper every sat down with you and talked about your financial future from start to finish? Has your newspaper been able to help you through a financial planning exercise because you need to put an addition on for the new baby? Has your newspaper looked at you and said we can waive your overdrafts because we know everyone makes mistakes from time to time? I would guess the answer to all of these is no so why is it that we trust the media in difficult times when we should trust our advisors.
Times like these cause for constant contact and information sharing - be proactive not reactive. Today if you are a sales person in the financial services business you should be meeting with your clients, hosting conference calls, webinars explaining what is taking place and what you recommend for the future. Be prepared to answer the tough questions and do not hope the customers do not know what is going on after all you would rather then hear it from you then catching it on the 6 o’clock news. Think of it this way if your doctor found problems with your blood work you would expect that she tell you now rather than finding out later on your own. The strong will survive and it is our choice of how we will handle the adversity.
What is very aggravating is the impact the media has on the stock price and reminds me of the movie Boiler Room. In the movie brokers are calling customers pitching them a great idea having them buy in and then the firm begins selling off the stock to reap the benefits on the way down. Hedge Funds today are doing the same things to financial stocks picking one after another attacking it dumping the shares and driving the value of the company into the ground. For example on Friday, there were firms that traded over 900% normal share volume. The market trades on speculation and fear and builds momentum along the way leaving companies powerless. Then the media steps in to drive the nail in the coffin announcing lead articles, “X Company loses 50% today.” The average consumer does not have the time to research and investigate the real financial condition of the firm all they know is losing 50% value cannot be good. This changes consumer behavior immediately causing anxiety, panic and concern thus leaving the firms answers questions that really cannot be answered because the price has been driven by speculation. So the only fundamental position the firm can hold with the consumer is Trust.
Should you Trust your newspaper or trust your banker? Has your newspaper every sat down with you and talked about your financial future from start to finish? Has your newspaper been able to help you through a financial planning exercise because you need to put an addition on for the new baby? Has your newspaper looked at you and said we can waive your overdrafts because we know everyone makes mistakes from time to time? I would guess the answer to all of these is no so why is it that we trust the media in difficult times when we should trust our advisors.
Times like these cause for constant contact and information sharing - be proactive not reactive. Today if you are a sales person in the financial services business you should be meeting with your clients, hosting conference calls, webinars explaining what is taking place and what you recommend for the future. Be prepared to answer the tough questions and do not hope the customers do not know what is going on after all you would rather then hear it from you then catching it on the 6 o’clock news. Think of it this way if your doctor found problems with your blood work you would expect that she tell you now rather than finding out later on your own. The strong will survive and it is our choice of how we will handle the adversity.
Thursday, July 31, 2008
Set the Bar
This summer has been extremely busy but I have been able to continue to play my favorite sport, golf. When I think about the game of golf I think about how it resembles life events not really knowing what the next 18 holes can bring. If you are scratch golfer (0 handicap) this post might not be for you but for everyone else you will understand what I mean.
My wife recently picked up the sport of golf and we have been playing regularly for about the past 3 weeks. As you can imagine golf like life can be very frustrating when you do not know what to expect. As I watch my wife improve each week it is apparent to me she continue to set the bar higher a higher the next round. I view this as a very positive event because she is not settling for where she is today knowing tomorrow can be even better. I think as life goes on you will eventually settle and not set the bar but for each person this time is different. I know friends of mine who clearly stopped raising the bar after then finished college, some near retirement still have not stopped raising the bar. Where is your bar?
Golf might be one of the most humbling games on earth from hole to hole you can go through the full range of emotions, confident, angry, happy, stressed, and hopeful. With each hole brings new hope, new challenges, and new opportunities to be great. The same goes with life each day you wake up brings you the same emotions and it is the decisions you make during that day that will results in the accomplishments for the day. As Phil Mickelson would say I know the safe approach is to hit an iron but I am going to hit the driver. Go for it!
My wife recently picked up the sport of golf and we have been playing regularly for about the past 3 weeks. As you can imagine golf like life can be very frustrating when you do not know what to expect. As I watch my wife improve each week it is apparent to me she continue to set the bar higher a higher the next round. I view this as a very positive event because she is not settling for where she is today knowing tomorrow can be even better. I think as life goes on you will eventually settle and not set the bar but for each person this time is different. I know friends of mine who clearly stopped raising the bar after then finished college, some near retirement still have not stopped raising the bar. Where is your bar?
Golf might be one of the most humbling games on earth from hole to hole you can go through the full range of emotions, confident, angry, happy, stressed, and hopeful. With each hole brings new hope, new challenges, and new opportunities to be great. The same goes with life each day you wake up brings you the same emotions and it is the decisions you make during that day that will results in the accomplishments for the day. As Phil Mickelson would say I know the safe approach is to hit an iron but I am going to hit the driver. Go for it!
Friday, July 11, 2008
Brand Matters
In banking we have a fairly strict dress code Monday through Thursday so business casual Friday is a welcome change. Today I wore standard black slacks and a red golf shirt. As I looked in the mirror I thought this looks very similar to what Tiger Woods wears on Sunday. I am an avid golfer so I quickly disregarded the idea that someone else would come to the same conclusion.
As I walked into the office I stopped by and talked to a fellow co worker, she on the other hand is not a golfer and knows very little about the sport. To my surprise her first comment was, “I am going to call you Tiger, today.” So then I began to think about the importance of brand and imaging and how much it really does matter in business.
There have been numerous books, studies, and articles done on the importance of brand and how to create a successful brand. As a former MBA student some ideas you will buy into and other ideas you think are pure fluff. However, this was a real life experience of how brand can make a person identify and think about the product. She began asking questions about golf a conversation I am sure she was not planning on having today. Sure Nike and Tiger do not walk around saying we are RED but when you see someone dresses with black pants and a red shirt you think Tiger Woods. Tiger is an icon that we should all relish and study very carefully. He has single handled changed the image of golf and possibly the image of sports marketing. If an image or a dress combination can make someone think about a product, imagine the power this has when it comes to consumer behaviors. In this case the brand helped a person connect to an idea that was unintentional but effective. What is your brand?
As I walked into the office I stopped by and talked to a fellow co worker, she on the other hand is not a golfer and knows very little about the sport. To my surprise her first comment was, “I am going to call you Tiger, today.” So then I began to think about the importance of brand and imaging and how much it really does matter in business.
There have been numerous books, studies, and articles done on the importance of brand and how to create a successful brand. As a former MBA student some ideas you will buy into and other ideas you think are pure fluff. However, this was a real life experience of how brand can make a person identify and think about the product. She began asking questions about golf a conversation I am sure she was not planning on having today. Sure Nike and Tiger do not walk around saying we are RED but when you see someone dresses with black pants and a red shirt you think Tiger Woods. Tiger is an icon that we should all relish and study very carefully. He has single handled changed the image of golf and possibly the image of sports marketing. If an image or a dress combination can make someone think about a product, imagine the power this has when it comes to consumer behaviors. In this case the brand helped a person connect to an idea that was unintentional but effective. What is your brand?
Thursday, May 15, 2008
The Sales Pitch
Today we had a chance to sit through a sales presentation for a Marriott timeshare. Having been in sales, sales management and sales strategy my entire career I really enjoy seeing new approaches and strategies. Of course going into a sales presentation knowing you are not buying makes it very unfair for the sales person but nonetheless very educational.
We were lured into the presentation with a $150 gift certificate to be used on the island we were staying at. One might say $150 is a lot of money but this is a very low cost for a face to face sales presentation with someone who is a qualified buyer. The one area they forgot to ask is, were we interested. In order for someone to be a buyer they have to have 2 requirements they have to be interested and qualified. You will not complete a sale if either of these requirements is not met. As we walked into the presentation we signed up and were given a number. The number was in a 5x7 picture frame so it was not something you could hide. The room we were asked to sit in was also set up for sales one small loveseat with a single chair directly across (couple vs. sales person). After all of the numbers where handed out the sharks were released. You began to see sales people scurrying through the rooms looking for their assigned numbers. Then our sales person approached us and asked if we could follow her as she took us into a small sales room. The presentation was as expected, directional selling letting people say yes as much as possible. The presentation lacked the pressure I was expecting. The sales person had broken English but I guess this could be expected since we were in a foreign country but this was mistake #1 in the sales process. Mistake #2 was she did not gauge our interest if we wanted to buy from the beginning. There is no need to try to sell someone something they do not need or do not want. Mistake #3 once she confirmed we were not going to buy she became less than professional and swiftly moved us out the door to our $150 gift certificate.
Although we had no intention on buying I would have to say the overall sales presentation was good. I actually left the meeting with a good understanding of their product line as well as a good sense of the sales person’s ability. We were presented an option that actually would have met all of our needs if we were going to buy and for that I commend the sales person. After all she really did listen to what we had to say and tried to make the best recommendation possible. If you are in sales make sure your customer is interested and qualified and you will save a lot of time and energy.
We were lured into the presentation with a $150 gift certificate to be used on the island we were staying at. One might say $150 is a lot of money but this is a very low cost for a face to face sales presentation with someone who is a qualified buyer. The one area they forgot to ask is, were we interested. In order for someone to be a buyer they have to have 2 requirements they have to be interested and qualified. You will not complete a sale if either of these requirements is not met. As we walked into the presentation we signed up and were given a number. The number was in a 5x7 picture frame so it was not something you could hide. The room we were asked to sit in was also set up for sales one small loveseat with a single chair directly across (couple vs. sales person). After all of the numbers where handed out the sharks were released. You began to see sales people scurrying through the rooms looking for their assigned numbers. Then our sales person approached us and asked if we could follow her as she took us into a small sales room. The presentation was as expected, directional selling letting people say yes as much as possible. The presentation lacked the pressure I was expecting. The sales person had broken English but I guess this could be expected since we were in a foreign country but this was mistake #1 in the sales process. Mistake #2 was she did not gauge our interest if we wanted to buy from the beginning. There is no need to try to sell someone something they do not need or do not want. Mistake #3 once she confirmed we were not going to buy she became less than professional and swiftly moved us out the door to our $150 gift certificate.
Although we had no intention on buying I would have to say the overall sales presentation was good. I actually left the meeting with a good understanding of their product line as well as a good sense of the sales person’s ability. We were presented an option that actually would have met all of our needs if we were going to buy and for that I commend the sales person. After all she really did listen to what we had to say and tried to make the best recommendation possible. If you are in sales make sure your customer is interested and qualified and you will save a lot of time and energy.
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