Friday, October 1, 2010

East Coast, who cares?

I have had somewhat of a revelation lately. Based on more commentary from the press regarding the state of the economy. I chuckle when I hear the big business perspective of whether or not the recession is over, if things are getting better?-- if we can now?--"go back to the way..."

Now, any intellectual would disregard this as a bunch of crap. Most people knew when the planes hit the towers that things would be changed forever. I said it while driving my car down highway 70 to William Woods University, moments after the second plane hit. I remember who was in my car, and what happened the rest of the day. Katrina was another benchmark for what was soon to come. God Bless.

So who is stimulating the economy? Other than Obama and his effort to create more jobs by printing money? Well, I for one am putting pressure on the developers of all the strip malls and greedy sprawl. Now the developers are the ones with the shells of buildings sitting empty and deals are getting done by their thinking outside the box, partnering with the businesses, getting involved, doing deals that are win/win. They need cash flow.

I feel it important to mention that, back when the country was in a total state of flux, my businesses were busy opening retail restaurants, catering services and investing in the innovative future, developing new brands, and yes, hiring people.

Just so you know, the developers and empty building owners are the ones making the deals as a third party to the money in some cases. I am unsure if the banks are still working with them, but it is likely so, because they are the ones holding the notes and they are already knee deep with under performance from their previous lending. Banks don't think outside the box, nor does big business for that matter, because they pretty much control the banks. Lets face it, if acquisitions by cash rich business is the only means a company can use to grow it certainly reveals their aptitude. The ivory tower is a bit predictable now days.

I put pressure on the developers and their vendors because they are the ones who can negotiate in order to get space built out. If you have a good enough concept, consider the developer to be the bank and consider their network of vendors, friends of developers and influences to be those who might want to partner in the endeavor. Forget the bank, forget the bank forever.

Check this out. I was approached by a local Branch Bank Manager recently. He wants to stand in our restaurant and buy people their coffee and shake their hand, and encourage them to think of -----Bank. I am not all that excited about this. But I genuinely admire the young mans approach. I told him very seriously, that if he really wanted to make a hit, dress up as a naked guy with a barrel around his mid section. Wave to passersby in an effort to draw them in using some humor. When they stop, hand them a one dollar bill and tell them that if they open an account at ---bank, they would get 100% return on that first one dollar. My father did similar things as the character "Friendly Ralph" for a 6 unit chain of Finance Offices called Thrifty Finance in the late sixties. Made him a very wealthy man at a very young age.

I am sure the bank ivory towers would not allow such a thing. But I find it interesting that the bank is now going to small businesses, those heroes in the trenches who have felt the backlash of the lending community screwing everything up. How dare they prey on my customer! I cannot turn my back on this guy, nor anybody else on the journey to getting it. I think this kid is on his way and it is my duty to help him.

I should mention that when I went to my bank to get a cash infusion something interesting came out of it. Now, since we are boot strappers, and only spend money on what we need in order to maximize our current situation, we don't often have our hand out. Also, entrepreneurs like us don't often have deep cash buckets to get our businesses off the ground or keep them well stocked with cash. In our case, the deep pockets that got us started were jack asses that wanted their money out first and had no real concern for the welfare of the business and how it would change the world if it were to evolve with purpose. I worked for them and the government for 6 years. Frankly, I wanted them out first to get rid of them as a liability towards the industry and our culture in general. They never thought we would be successful. Not sure what the government thinks.

I suppose that I chose to be under capitalized from the start in order to set a discipline for emergence that only allowed us to spend money on what we only desperately needed. We didn't have adequate office space with a conference room until year 10, and yes, we did get approved for the loan to build it. You know why? Because it was easy for the bank in their incredible knowledge to understand the need for office space/infrastructure. Capital for growth and stabilization is a stretch for the bankers now days, they look at me funny and I do what I usually do while there, go to the teller and deposit money...jeez.

So I discussed a cash injection on our line of credit in passing. Ten weeks (yes ten weeks) later I had a proposal. We had booked three major pieces of business and eccentric costs would likely require a differed return of around 100 thou out of our cash flow. I am no financial genius, but I knew that 100 thou would be the ticket, I would need it for a short time, based on my projections, a swift return of the money, interest paid, everyone happy, right........?

Here was the offer. "Give us personal securities to the tune of 100 grand, they will need agent of record over the securities, btw. We may need to convert if necessary to a less aggressive position (like cash?). We will lend you 70% of it for interest of around 6%"

Can you believe it? Lets review...deposit money, lend only some of it for a fee...brilliant!-- but it is indeed the reality. I lent the business the money in what has become a win/win for everyone.

I had a meeting the other day with a developer who is in a big project down on Washington Ave. Again, I am just the hot dog guy and big time developers, well, lets say big time East Coast developers and their crazy language on "square foot" kind of make me turn my head and look stupid from time to time. We were to present a conceptual overview of a new concept (soon to be announced) for a significant space down near the convention center. We were approached by the city, the CVC, the RCGA and others to do a music themed (secret). We met early on with the real estate folks and they set up a meeting in order to discuss in more detail our concept.

I was bitch slapped, corrected on my terminology, informed that our current organization level was sketchy and that they would not be supportive financially of any part of our endeavor. I was allowed only a small amount of time in a very small board room with a bunch of folks who flew in from, well, it had to be east coast, because I have only been treated so rudely by east coast folks in the past. I had 7 business days notice to prepare and organize a committee for the project, nobody was getting paid to do jack squat. We were called to the board room to be literally humiliated in front of, I don't really even know who, but they asked us to come up with something.

What was interesting was that they missed the mark...we, are the customer, the locally rooted organization called upon by the City, the Convention Group to tee something up. Mr. East Coast will most likely have an empty space due to the fact that he wanted to draw a line in the sand with the rooted organization too early and with too much attitude towards our towns method.

Regardless, Mr. out of town guy will now officially be an honorary hero for providing said perspective. What I learned most was that roots is where it is at with my projects from now on. My roots, the roots of the city, the roots of the business in the region, doing business only with those whom we share that special connection with, share frustrations with, share vision with. Good luck dude, go back to your world where your brinkmanship, your attitude towards vision and feasibility are centered on big box culture and little man stuff. And by the way, you should have had lunch for us.

Now, I ask, aren't people like this the most incredible source for motivation...for doing it your way...?

So not all want to play. Maybe its just the ones who truly have skin in the game who we should be talking to, only the entrepreneurs who have the story telling behind them, just like us. Why not do business with those who can go the distance using vision and resources of said culture, new districts, new wards in the city with entrepreneurial spirit. Big money thinks they get it, but fall shorter and shorter and shorter daily, like the banks. ifyouknow....

1 comment:

VP Interiors LLC said...

Ralph once again you hit the nail on the head! I couldn't have said it better myself. I am glad (or maybe glad is not the word) to know that well established and well ran companies are being treated the same way I am at said banks. I keep getting calls from their "Small Business" managers wanting me to come in so they can "help me with any thing" but really they just want me to apply for a loan and one that they will not give me.... I have yet to return the calls and yet to go in and speak with them...

Keep up speaking for us little businesses!