Loans & Credit Evolution

Maintaining the status quo with credit

This statement speculates on how you view people and their expected behavior. If you believe that people’s behavior doesn’t change over time, then you probably rely on past history to make decisions about people. This may also reflect your desire to maintain the status quo. You find it more comfortable to judge people as “you have always known them” than to risk changing your view of them and being proved wrong.

Maintaining the status quo means you like things just as they are and do not welcome change. People who like to do familiar tasks learn how to do something and then enjoy doing it over and over.Change often causes them anxiety and makes them uneasy. In partnerships, we are frequently asked to do something differently. If change makes you uncomfortable, you may find a partnership an anxiety-ridden affair.

Competitively driven people focus on creating situations where they can win. While sometimes this helps them succeed, it can be a liability when forming a partnership. In partnerships, the focus switches from a competitive win-lose dynamic to a collaborative win-win approach. Competitiveness, by its very nature, sets up win-lose dynamics
and impedes the growth of healthy partnerships.Competitive behavior is also an indicator of a high need for independence. The nature of competition means you “go it alone” to win.To get everyone’s needs met, all parties must work together.

Determine strenghts and weaknesses of your loan

The PQ Assessment can help you to determine your strengths and weaknesses in the specific attributes that measure your Partnering Intelligence. Each statement supports a primary attribute—Self- Disclosure and Feedback, Win-Win Orientation, Ability to Trust, Future Orientation, Comfort with Change, or Comfort with Interdependence— and may reflect one or more secondary attributes needed for a high PQ and successful use of the Partnership Continuum model.

The PQ Assessment can be used to predict which partnering attributes you may be weak in. For example, if you circled low numbers for the statements regarding Comfort with Change, you may have difficulty with the changes partnerships inevitably create. The assessment can also help you diagnose which attributes you might want to consider strengthening. If trust seems to be an issue in your partnership and you scored low in Ability to Trust, for instance, you might want to explore that attribute. (To learn how to analyze your results on each of the Six Partnering Attributes.) Each of the thirty statements reflects one attribute.However, because of the systemic nature of partnering and the Partnering Intelligence needed to accomplish it successfully, no single attribute stands alone. If you have low Ability to Trust, for instance, you may have difficulty creating win-win conflict resolution because you may not believe your partners will uphold their end of the agreement. Now let’s examine the statements one by one.

Easy assesment of your credit situation

The PQ Assessment is not a test. There are no right or wrong answers. You cannot pass or fail. It is a self-assessment that poses statements you might not normally think about and asks you to rate each.

Instructions

1. Rate each statement by circling one of the numbers to the right (1 = strongly agree; 6 = strongly disagree). The rating you give should be based on your own perception of the statement and should reflect how you would react in a normal situation. The purpose is not to judge yourself, but rather to provide you with insights into how you see yourself.

2. Choose a context before responding. Some people say they behave differently at work than at home or with good friends. If you think your behavior depends on the situation, choose a context (such as your work environment or your home life) and think of that context when responding to all the statements.

Do not ponder too long over a statement. It is best to go with your first reaction. If you contemplate too long, you may begin to second-guess yourself. Your initial reaction is usually your normal response. The results are for your eyes only. There is no need to show the results to anyone unless you want to. Be as honest as you can. The more open you are in your responses, the more accurately the PQ Assessment will reflect your true Partnering Intelligence.

No secret formula to get rid of debt

There is no secret formula to help you succeed in every partnership you engage in. Each partnership is as unique as the people who make it up. Even so, there are certain characteristics that all successful partnerships have in common: the people in the partnership have a keen sense of self; they understand their own strengths and weaknesses; and they know what they want out of the partnership.

The PQ Assessment (Assessment 1) can help you determine your relative PQ at a given moment. For unlike your IQ, which changes little during the course of a lifetime, your PQ is a learned intelligence and can change and grow over time. While the PQ Assessment has predictive value—that is, it can identify potential strengths and weaknesses— its primary purpose is to help you increase your self-awareness. It reflects how you rate yourself in the Six Partnering Attributes of Partnering Intelligence.

What are credit takers looking for?

Generally, a trade sale buyer will be looking either for:

a business from which to earn a living (and make a capital gain); or

an investment from which to earn a return, either on its own or to add to an existing operation.

Those who are primarily looking to make a living from the stand-alone business are usually considered to be financial buyers, whilst the investors with wider aims are usually considered to be strategic buyers.

From the seller’s point of view the key issue is to discover what particular aspects of your business will assist buyers to achieve their aims. For example, is it your particular products that a strategic buyer wishes to add to his existing business that will make your business attractive to him, or your customer base, or the geographic area in which you operate?

What are credit issuers looking for?

Financial purchasers are usually individuals who wish to run the business full-time as owner/operators; or investors who will not, necessarily, wish to put all their time into managing the business. In either case, they will usually require that key senior management remain in the business after transition. Where you believe that you are likely to sell to a financial buyer, it is important therefore that you:

• ensure that you have competent senior management in your business well before you exit; and
• put in place retention strategy procedures (for example, a bonus or profit sharing scheme) that improve the likelihood that these managers will stay in the business after transfer.

Also, many individual financial buyers are not very sophisticated when it comes to accounting, so for these buyers your accounts should be presented in a straightforward manner.

How will debt affect your strategic investors

You should also be aware that a strategic investor (who could be a public company) is likely to take a very long-term view of its purchase, whilst the financial purchaser could have a short-term exit strategy.

It is usual for VCs and Business Angels to take minority stakes in businesses, and rely entirely on senior management to run the business. Here your approach might be to partly exit the business as step one in a two-staged exit plan. Your first step could be to sell a minority interest to investors and remain in the business as CEO for an agreed period. Step two could be to sell the balance of the equity to the investors after you have groomed a senior manager for the CEO role. Alternatively, the investors will have their own exit strategy, which could be for a sale of the whole business through a flotation, or through a secondary buy-out (that is, a sale to another VC), thus ensuring that you fully exit the business at this stage.

Decide what type of credit you are targeting

You will now need to decide what type of buyer you are targeting and what these buyers are likely to be looking for in your business. It will help if we establish some basic concepts and definitions about buyers in trade sales.

Trade sale buyers are usually divided into two groups, called ‘financial’ and ’strategic’ buyers. Financial buyers consist of owner/managers and those wishing to operate the business on their own. Strategic buyers are institutional and other buyers who look to take over, or merge the target business within their own operations.

The strategic buyer classification also applies to what are known as ‘industrial partners’, or a ‘big brother’ from your own industry.

Disposals though a trade sale can be for all, or a majority, or minority part of a business. Minority sales in the UK are often to venture capitalists (known as VCs), or private investors (who are often known as ‘Business Angels’). Majority sales could be to strategic buyers or industrial partners’financial’ and ’strategic’ buyers. Financial buyers consist of owner/managers and those wishing to operate the business on their own. Strategic buyers are institutional and other buyers who look to take over, or merge the target business within their own operations.

The strategic buyer classification also applies to what are known as ‘industrial partners’, or a ‘big brother’ from your own industry.

Disposals though a trade sale can be for all, or a majority, or minority part of a business. Minority sales in the UK are often to venture capitalists (known as VCs), or private investors (who are often known as ‘Business Angels’). Majority sales could be to strategic buyers or industrial partners.

Does my business qualify for a payday loan?

In theory, all types of businesses qualify for exit through a trade sale, in  so far as a trade sale does not normally require you to achieve benchmarks of size, quality of management, ability and background of owners, number of branches, and so on. To achieve a successful trade sale is more a question of grooming the business to increase its value and to ensure its obvious impediments to sale have been removed and to choose a time for exit that is propitious as far as the general economy and your particular sector are concerned. But, as a useful guide, please refer to previous articles here, below, which is a checklist of the main things you need to do to ensure your business is prepared for a trade sale in most circumstances and whoever the buyers might be.

Improving loan reliablility

A business that relies on too few products for the majority of its sales is highly vulnerable to changes in taste, fashion and attitudes as well as advances in technology, loss of patent protection and/or changes in legislation. As with reliance on too few customers, having too few products
puts sales, profitability and associated business value at severe risk.

In family succession an heir who is not ready for ownership

The training of a successor is a very long-term process that can take up to 15 years. If this is your chosen exit option, you should allow yourself this sort of time for the task.

Stock accumulation

Where you have built up large stocks that will make it difficult for you to receive a fair market price for your business, you might need to start selling off stock at least five years prior to your planned sale.

Business premises

If the problem is leased premises that are unfavourably situated or unsuitable in any other way, early action.