cc >> Jeanan Yasiri: I hope you
all enjoyed a fabulous break. This is Entrepreneurship
in Society, a course offered
of Wisconsin School thof Human Ecology.ity
I'm Jeanan Yasiri. As we
extend thanks to our partners in supporting this course,
the UW College of Engineering for their technical support,
the UW Office of Corporate
that is provided to us through Relations, and financial support
Foundation, which is committed the Ewing Marion Kauffman
in entrepreneurship. to advancing academic education
to thank our media partners, Additionally, we would like
their University placed crew Wisconsin Public Television and
I'm quite pleased to introduce for taping today's lecture.
Baisden, senior vice president our special guest today, Keith
with M&I Bank in Milwaukee. Keith has 32 years of experience
in the business banking world,
His work has involved working with privately held companies
from the start-up stage, all
about $22 million in revenues. the way through to those with
in getting established in their early phases, all the ways
through their life cycles,
enterprises for tens of evemillions of dollars.ell
Keith is also a great community steward, and that's originally
how I actually met him. He
Public Television's Friends organization, the development
and fundraising arm of that great public media outlet.
Keith earned his bachelor's degree at Marquette University
in business with a
And given Keith's background I specialty in finance.
his insights with us today asked him to come and share
in financing small on what we should consider
So please join me in business enterprises.
( applause ) >> weKeith Baisden: Gooden.
afternoon, everybody. Everybody can hear me all right?
You'll be happy to know, yes, I'm a Marquette Warrior.
Yes, we're called Golden Eagles right now, but I was a Warrior
from '75 through '79. Yesterday,
my sales, I had a monthly sales management team meeting with
my 40 bankers in the southeast
And M&I, on Thursday and Friday and last week, they give us the
casual days during the NCAA tourney, and we get to wear
our colors. Obviously,
and gold and I look dapper and I'm wearing blue
asked my team, how many are wearing red and white tomorrow
and Friday, and how many
You'll be happy to know, 75% are wearing blue and gold.
so good luck to you all. are wearing red and white
We're all Badger Good luck to you all.
Thank you very much, Jeanan. I fans at this time.
Public Broadcast meeting a met Jeanan at the Wisconsin
time. This is the couple first time everhe first
in my career I was more prepared
I got to sit next to her than a college instructor.
we first met, and we at breakfast, that's how
representatives and senators were meeting different
for the state of Wisconsin and regarding public broadcasting
radio, TV and the like. I juwas much better prepared,
than Jeanan, so I thought that was pretty good.
It took me 32 years to do it, but I finally did it.
But what I'm here to do and normally, I keep it kind of
loose, you know, you can ask
have to use a microphone. youSo we may keep questionswe
till the end. If
is passionate that you something is really--
This is an want to ask, please do so.
I guess I just want to raise of hands, I hope you can see you
all. How many of you think are
starting your own business after
after graduation, or graduation, during school,
Just let me see, I want to know who we have here.
All right. How many of you are going into
a family business? So we've got a couple hands
over here, one back there. All right, good.
That's what I do. Privately held companies
means family run businesses.
it's normally one owner, And privately held, you know,
that goes down from generation the father, the mother,
I've been very happy over tomy 30 years of bankingn.
to bank the same customers
generation to the next. And fpreparing it for the nextne
generation, hopefully.
a very exciting period of mine. The reason I chose business
customers the size from startup to $20 million, and not going
into larger middle market companies, is the fact that as
a banker, as a trusted advisor, as we're called, you are working
with a decision makers. And that's what I've always
liked to do, work with
Yes, they can have their CFOs. the decision makers.
and the like, but you are Yesactually talking to theOOs,
individual that's making the decision.
A lot of people, before my
to give you a kind of example pof, you know, entrepreneurs,
business owners. And
when I started growing up, well, everybody always says to me,
and these are people who it's great to be an entrepreneur
great to be an entrepreneur because you have no bosses.s
Well, that's about as far away
being an entrepreneur. Yes, as pJeanan has bosses heregine
at the University of Wisconsin. I've got bosses at M&I bank.
If an entrepreneur, 100% owner, or 75% owner, whatever the case
may be, every day you're waking up, you're going to work
and I think you have some of
in the world, and those the are your employees.sses
You're going to be putting
importantly, you're putting youfive people to work,ore
10 people to work,
The Small Business 150 people to work.
a lot of difference, different Administration has
And in SBA, the Small Business Administration, SBA,
you will hear me talk about that a number of times today.
Small can be up to 500 employees
It's always privately held. It's not public companies
that can get SBA loans, it's
When you talk about small, privately held customers.
zero to one or two employees anywhere from start-up with
for a manufacturing firm. When plus the owner, up to 500+
we started talking about, you Jknow, what would you like,
to cover. And today,
about a business plan, about I'm just talking
own business, you're looking you're looking to start your
What are your steps? And to format it together.
talking about the business plan. so first, I'm going to be
and then the different type of, Thewith regards to short-termans
loans, fixed rate loans,
estate loans and finally equipment loans, commercial real
government guaranteed loan we'll talk about some of the
copies of my presentation here, I know Jeanan will be sending it
out to you or putting it on the website for your reading
pleasure any time you want to.
have a question raise your So, with that, again, if you
We'll probably have a question hand, If it's passionate.
But if you want to, you know, anjump in, please feel free..
I'm more than happy to do, go through it.
Business plan. The
plan, I'll talk about the importance of a business plan,
the characteristics of the business plan
and outline of a business plan. The great thing with the
Internet, any time you want to
what I like to see as a banker, band as someone who is going toe
be an interested party to this, but you can go on the Internet,
you can go to the library,
of different forms and outlines. you can get a whole lot
as a banker. The I'll just tell you what I like
plan is the client's importance of a business
crystallize their thoughts opportunity, your opportunity to
for product or service. You have a lot of great ideas
and you have to sit down and put
which I'll give you the outline. them into a business plan, of
thoughts and ideas. AgObviously, numerous draftsur
will have to be written. I
banker even as you're writing your business plan or as you're
formatting your business plan,
what are you looking for, manage so you find out from the bank
expectations, what are they actually going to look for, and
that's what you want to stress. Road map of client as plan going
from point A to point B. To get the initial loan, it's
always very important to
You are starting up your new have a business plan.
extremely important companto have that. to be
If you don't have a business
ready to ask for a loan because you haven't put it in thought,
you haven't put your thoughts and ideas into a cohesive
analysis, and so it helps us
business owners and go as bankers sit down with the
Even my largest customers on an annual basis, they won't do the
huge business plan, they won't
formatting, but every year they put together a strategic planm
and again, it gets us from
very rough years for our point A, you know, 2008, 2009,
continued to be a rough year manufacturers, 2010,
our subcontractors. Manufacturers did much better
in the southeast region of
But the strategic plan, once you Wisconsin last year as a whole.
going to have to continue hto do this strategic planre
on a year to year basis.
in sales? What is Whatthe gross margin do
going to be? What is
going to be? How are our net profit margin
our debt? How do we grow our company?
How do we get our products and
How do we diversify? All services more into the markets?
In addition, your business plan, those types of questions.
business plans. You're you're going to have numerous
bank, that's what I'll going to have one for the
But you're going to have one for talk about today.
customers, one for your vendors, the investors, one for your
one for your employees. And that can range from how much
information you give them, but
investors, whether it's patient ymoney like mom and dad, or
like Uncle Tom and Aunt Kathy, or is it friends,
is it investors looking for a return on their dollar
better than what M&I Bank's premium money market is paying
right now, which is a very
rate, that type of thing. So competitive rate, but not a huge
change for your audience. yoThe characteristics--to
Where am I?
The characteristics of the
written and complete, and busiagain, you have to doally
several drafts of it. Don't bring, unless you have a
good banker, bankers do have the
help you crystallize your tthoughts and plans, help you
go over it, but again, you'll be doing numerous drafts.
Adequate length to the user,
the government agency or the whether it's the bank,
trying to accomplish. Get the loan, you're tryinge
to get investors. It's
length to get your thoughts gand passions acrosse
to the audience. I've seen business plans that
are three three-ring binders
I'm sorry, you bring me fthree huge business bindersu,
full of information,
the bottom of the list. I don't have the timeo
to read that much. You
mentioned, you have to have to get concise, as I
Don't bring me two pages. So get to a concise size.
actually are going to do to iget your message across.
And proper use of illustrations.
Jemovies? I'm looking at Jeff,e
I'm happy that I'm getting
Movies, obviously, you this Power Point presentation.
what is the old adage? A know, illustrations,
Pictures of your product, picpicture of your service,s.
what you're looking to do. I
is it the Green Cab company? was driving in today, and
And all of a sudden we don't, Dwe have these monster gasoline
taxis in Milwaukee, but in
little Green Cab company, Madiand I had two of them.rful
One is right in front of me,
I'm trying to figure out why it's got a bike rack on it.
taxi outside of having a would you need a bike rack on a
or anything else. The flaother one next to itng,
did not have a bike rack. Both of them were empty,
but that would be a pretty
This is, you know, we're cool thing to see, a picture.
it's electric, whatever greenthe case may be.ius,
And that's what business bankers
highway or road we're looking around saying that's a goode
idea, not such a good idea, but that's a good idea.
So that's what you want to do.
This is the outline So ilof the business plan.tant.
You can go on the Internet, Forbes Business Magazine.
SCORE, I mentioned SBA, U.S.
I'm going to talk a Small blot about SCORE.ration.
SCORE is the Service Corporation
that is a wing of the SBA. I of Retired Executives,
in preparation of this can't stress enough, I just,
last night, www.score.org presand that's later in theline
presentation, you don't have to write that down.
But I was amazed
Part of the U.S. Government, at their website.
exactly what it says, these are retired executives, retired
business owners who volunteer to
formalize your plans. I sicopied some of the thingsyou
this morning from their website.
Madison office. Not Looktoo far from here.ve a
For my customers that are looking to start up their
companies, I ask them that
trainings at SCORE. theYou can get differenthese
certificates of financial managerial accounting, and
different certificates, but just
you're going to have business towners, men and women who have
run companies, $25-$50 million, $100 million in sales and
revenues, and they'll sit down
with no charge, they will give with you and they will give you
they have and tell you the pit you the vast experience that
what you can look for. falls of owning a business,
expectations. So, later Aon in the presentationr
you'll get a list of different
go to, SBA, SCORE, and I would Internet websites that you can
looking to do this and whole heartedly, when you're
I'm going to do a personal aside right now.
My son, my oldest son is 24, 25 this May.
He's a graduate of UW Stevens point in psychology.
Why psychology? He
I said do something you might get a job with and get paid for,
that's the banker speaking. And I'm sure that's a lot like
your dads and moms, I apologize.
he's always wanted to be a chef since he was in 7th grade, he
works at the Underground
is it Pinckney? I Kitchthink it's Pinckney.t on,
Mifflin maybe, Pinckney,
with him afterwards. And I'm actually having drinks
You know, some day he wants to own his own restaurant.
Well, owning your own restaurant
business you could possibly is own. And there is my son,e of
the son of a nice conservative
restaurant business banone of these days.he
He's worked for Tory Miller here.
Tory owns L'Etoile and the
Now he works for the Underground past Cafe Solé, now Gray's.
If you go to the Underground Kitchen, two great restaurants.
thin, red haired, Kitchgood looking guy.tall,
Single, but I digress. So,
passion and I think that's, when but here again, that's his
business owners privately held I talked about working with
customers" that's what you customers, the "small business
to come into work every day. Good news, bad news,
good economy, bad economy.
trying to figure out how they Agaare going to retain theirare
employee base. They have all these families
that they are employing, and
theirs that they that is a sincere passion of
A lot of tough decisions don't want to lose.
Laying off people, hope to god in the last three years.
And obviously if you have your they can bring them back.
makes up in a lot of passion and I'll go into what
characteristics of a good entrepreneur later on in the
presentation. But definitely having the
passion to come into work every day is a big thing.
Executive summary,
Who is my market? Who is my competition?
What am I doing? Company
what am I-- It's the description, again,
when, why and how. Who am I?
What am I doing?
How profitable will I be? How competitive in the
marketplace and the like. Organization and management,
am I going to be a
Am I going to be a partnership sole proprietor?
And again, family, I could spend with my spouse, with my brother?
businesses because not only do three hours talking about family
ups and downs, pros and cons, ybut then all of a sudden,ss
put it into a family
three or four hands. You mixture and I think I saw
going into a family business all know that if you're
expectations. Not you konly do you have has
expectations of yourself, but then there are still the family
expectations. So, again what is the company
partnership, service
that type of thing. Marketing corpoand sales management, firm,
again, spend some time. And how are you profitably
going to get your business, your product, your service,
out into the marketplace? Service or product line,
again, what is this?
You know what, I'm going to jump around a little bit.
I'll come back to these,
The funding request. don't worry about it.
you're going to have these. IThese are the forms,
we like to see. These are actually on M&I Bank's
website: www.mybank.com again, don't need to write
that down, it's in the
But this is what we like to see. presentation later.
When you're working on a It's not the end all be all.
to get an attorney involved. business plan, we're asking you
involved, an insurance We are asking you to get a CPA
You want a team of professionals agent involved.
this wonderful entrepreneurial helping you migrate through
marketplace. Being able busito do that, you'retive
going to need professionals.
you cannot do it all. You If Icannot, in a business,ht,
in a difficult economy, good
governmental agencies that are economy, all the different
It's the second thing I'll give to you, but have your CPA, your
attorney, your insurance
Some of my most successful agent, your banker.
taken from one generation to the customers, customers that I have
year, not only do we have a plan next generation to sales, every
they sit down with us four, they at the beginning of the year,
agent, the CPA, the attorney and sit down with the insurance
meeting for two to three hours. It doesn't have to be long.e
They put together their financial statements and say
okay, this is where we're going.
How can you help us get there? This is where we want to go.
make sure you have a great team of professionals to help you
through what is some of the best times you will have,
the greater-- The thing about being
an entrepreneur, and it's an
quoting from a little later on. Back in the day, back in my day,
you wanted to be an entrepreneur
So, the power and money thing is shifting downwards.
You are generation X, generation Y, whatever you want
to be called, you have a passion
The average age of getting for different things than we do.
when I was getting married, to now I think it's 34 or 35.d
I just read that last night. I
But you have a passion still have faith for my sons.
Good, bad or indifferent, it that we never had.
You have a passion, doyour social consciencee.
is so much more developed than ours were in 1979.
I will tell you I didn't go to
because all I wanted to do after Europe with my college roommates
a job and make money because I, grafor four years, I had zip.get
I'm sure there's a lot
For four years you're living of you like that.
the slovenliest guys ever, with a bunch of crumb bums,
all I wanted to do is make and back in the 1970s,
and get away from the bums. Good, bad or indifferent, it was
interesting reading this
for entrepreneurs lastin your generation.asons
It's not the old power and
in a little bit. But money, and I'll go into that
Back into the source back, I digress.
This is where you list what money do you need for lines of
credit, for equipment you're
Green Cabs. I need X going to buy, to buy those
I'm not sure how many aGreen Cabs there were.
I think number 367 and
I'm not sure if he has 367 312 in front of me.
How much money am cabs,I going to need?sn't.
And how many of you are business finance majors,
accounting majors in the
Raise hands. Oh, my goodness.
Engineering? There we go.
Engineers have always been
I don't care what anybody smsays. So what, liberal arts?,
So where are you all
So you don't have a college of business,
you have college of retail? Wow.
I'm sorry? School of
What's that? Okay, super.
Wow, this is kind of cool.
you're not going to have a Jeanan did warn me, she goes,
here, so I'm going to get into whole lot of business students
finance on the 20,000 foot level some finance, I'm going to hit
debits and credits and cash and loans and everything else, I'llt
kind of go through that because I do want to answer your
questions that you may have of
what are your concerns about me about what your passions are,
But back to loans. When you start a business,
it is the riskiest time of the
as Jeanan said earlier, businthe company cycle.ycle,
It's the riskiest. Every
and cons but you have no money, you have to get money, you have
to have those angel investors.
truly are mom and dad, A lot of time angel, investors
Uncle Tom, Aunt Kathy. What we call it is patient debt.
Somebody has to be patient. Number one, banks, they have a
risk profile that they have to
give you money but our analysis is you have the ability to repay
that money. We are not
We are a for-profit agency. And so what you need to know,
you're going to have to have
You're going to have to have some skin in the game,
if you will. Your cash
comes from you, that comes from family members, that comes from
investors, whatever the case may be.
And so this source and use of funds right here, it talks
about personal investment,
mortgage loan, equipment loan, bank loans, it gets to bank
and then when you're starting your company the other, other,
other, is really the
Where are you getting your most important part.
investment to start equity ouyour business?personal
And then what's it
Starting as an entrepreneur, going to be used for?
land and building. As an you should not be buying
want to do is buy those cabs. You don't need to have--
lease the cabs, whatever
You don't need to have a the case may be.
because that takes a lot of money and there's no repayment
back from you. I call it brick and mortar.
You don't need a lot of money in
own brick and mortar. That the early cycles of business to
that doesn't put money doesn't pay back the loan,
Especially nowadays with the way in your pocket.
leasing rates and everything commercial real estate is, your
versus buying. When eyou're stable, when youve
are a mature company, and you have excess cash,
you have huge retained earnings,
that's the time when you can you have very little debt,
buy your own building and buya family limited holdingar,
partnership and again, that is
We talked about vehicles, alsequipment, inventory,ou.
working capital, revolving, other, other, other.
So that's what
Let me get back to where you're going to see.
Wow, this is kind of cool, I was. I did that.
And then the financials. Bruce and Jeff, thank you.
too fast raise your hand. ThIf I'm going too slow orng
confusing you, because so many
accounting majors, a lot of this of you aren't finance majors,
may be foreign to you, but that is why you need the CPAs of then
world to help you get through these mine fields.
And then your appendices. When
information, and again, these forms are what we use, you can
use any forms, you hire a CPA,
money, as well as he or she should because they're givingu
you a great service. And I
know, it's money think that's important to
You do not want to get into, extremely well spent.
bank loan, even if Uncle Tom and even if you're not asking for a
money to fund you, you don't Aunt Kathy are putting all the
down a rabbit hole. You want want to throw their money
a return for the faith that they're putting in you.
And so you need to do this. And that's why Service
Corporation of Retired
numerous webinars, they have Executives, SCORE, they have
about this kind of stuff. You don't need to be a finance
grad. You don't need to be an
accounting grad. It helps,
that. You can still bhave the passiond
for what you want and your product or service,
and what you're going to do.
loss, again, we're going to Twant to see, the bank is goingd
to want to see at least one,
Is there a laser if not two years of monthly--
Ooh, that's cool. See, on this, Jeanan?
But you're going to have the I'm a business banker.
margins here, all your expenses, total net sales, the gross
expenses, these are variable and then all your fixed
and you're going to go out for expenses, your fixed expenses
going to ask you 12 months and we're probably
A profit and loss is important. I'll show you if I can leave you
with another thing, and you can write this one down, because
it's not in here, cash is king. Making profit is extremely
important. You got
long-term growth and long-term to make a profit for
earnings and everything stabielse. Cash is king.ained
You need to have a cash flow
your employee's salary. tWhether it pays your salaryys
or not, right at the beginning
your salary or not, that's of the company, whether it pays
Obviously you have to pay your kind of a mixed bag.
else. The other thing employeesthat is not inverything
this presentation, the only person you pay before the bank
is Uncle Sam. Whether it's county taxes,
whether it's sale taxes, whether
withholding taxes, you make sure, if your business, and this
is where so many young
business cannot pay Uncle Sam in businesses fail, if your
state and national taxes that ayou will pay, if you cannot do
that, do not start a business.
yourself and your family Because all you will do is put
Certain taxes, you can go bankrupt and yes, you can.
dissolve the need to pay back a bank or whatever else.
Then you'll have to live through
to do this again. But sevUncle Sam is not going to try
let you go bankrupt and not pay your taxes.
You will have state tax liens,
your life. So, again, federapay the bank firstst of
outside of any governmental agency, and then everybody
will be happy. And then you will get yours and
you're saying why in god's name do I want to start a business
but it is pretty exciting stuff. So that's the P&L.
Balance sheet. Basically
I have and what do I owe? I mentioned, when I talked about
the source of use of funds
much am I bringing to the table? before, we talked about how
don't have a lot of finance grads, or students, for every
dollar that you borrow, we would
to see you have maybe 50 cents want to see, we would hope
of your money into it. We would like to see that.,
That would be a 2:1,
A lot of times in a start-up debt to worth.
a 4:1 debt to worth. So for every buck of debt you
have, you only have a quarter of net worth.
So for every $100 of debt you have, you would have $25
of stockholders' equity. The
very difficult, if you have so risk you have there, it's
the monthly cash flow payments much debt that you cannot make
very difficult. And so and the like, it's just very,
key and that's why this tbusiness plan is so key.
So that's what balance
P&L statement. This sis, again, a 12-month.
statement for cash flow. Cash incoming, cash outgoing.
You need to have enough cash. So many times, god forbid, we
have had companies that overdraw
overdrawing it on a tFriday and it's payroll.
And so now you have made your decision, my decision, you made
your decision that I don't have money enough in the checking
account to pay payroll, so I
employees, you made the bank's gave all the checks to my
going to pay that decicheck. Don't do that.e're
That's your decision. It's against the law
to write bad checks.
your credit rating and I'll mention credit ratings in ao
little bit. But don't overdraft your checks.
I know personally, if you're
23, I was trying to figure out like me, back in, when I was 22,
student loan back with the how I was going to pay my
back in those days. But wonyou can't overdraw it,ing
just don't overdraw your checking account.
Don't make it the bank's
return because if you do, the bank will return, and as I've
told my sons, that hurts your personal credit rating, if it
hurts your personal credit
And we can go into that. This rais the break even analysis.n.
I'm not going to spend
Because it's pretty busy. There is a form in here you can
go to www.my bank. A break
states, how much do I have to sell of my product or service
to at least break even to get to zero loss, so I can
at least fund my
We went over the business operations.
Type of loan. Any questions, I kind of went
through that but only have 24 minutes left, so I'm kind of--
any questions on that? Okay.
Type of loan, seasonal
We have our revolving lines of lines of credit.
government guaranteed credit, tloan programs. then our
Seasonal line of credit. It's funding inventory build-up
for a seasonal need. And
1970s we talked about widgets, the finance back in the
is, it's a fictional thing, and Iit's a stupid thing.at it
I talk about my Easter candy company.
They make their profit in only
They make a ton of money in onthree months, if you will.e.
One to three months. But
months they're losing money to the next eight to nine
of credit, it's for a very build up that, the seasonal line
We fund the inventory, we fund short period of time.
employee wages to do all this, the cocoa, the milk, we fund the
whatever the case may be, it's we fund the rent expense,
Right now, on these types of a floating interest rate.
you probably would be asking credits that you would see, that
have a floating interest for, you're probably going to
Prime is 3-1/4. Nobody rate to near the 6% range.
We look at the London Interbank Origination Rate, LIBOR.
It's a different way of basically what our cost of funds
are, what is the premium we have
that's how we make our money. to maSingle payment note., and
Hopefully the week after
you're basically paid out Chon the line because all theer
Easter candy has been sold. You have gotten all your cash.
You take whatever you borrowed
bank off and the rest is your profit and it's paid by the cash
flow cycle, i.e., collection
sales. Revolving line of credit,
this is for manufacturers,
to fund the accounts receivable cycle, the inventory cycle,
the build-up of operating expenses, and I'll hit it at
the 20,000 foot level. It's at the floating interest
rate, a one-year renewable note,
credit. My father it's whwas a commercialline of
painting contractor. So for large jobs in the
Fox River Valley he would borrow
to pay for the employees' weekly wages and the like.
He would get the job done.
his customers were Back in those days, hopefully,
The terms of the paying him in 30 days.
And then once he got that money for that large specific job then
he would be paying back the loan, the line of credit on that
basis. Term loan.
The line of credit, the seasonal
line of credit for short-term linneeds, less than one year.ing
When we start talking about term loans, that's normally
over one year, it's for equipment, it's for long-term
working capital and again, a lot
to have a company that is ogrowing extremely fast, you're
going to need some long-term
not going to make enough cash wto fund the working capitalre
or the growth cycle. It funds equipment, real estate,
long-term working capital,
It's normally a fixed interest rate from two years
to three years. Commercial real estate,
is 20-year amortization. It's like your parents' mortgage
or your mortgage, if you have one now, a personal mortgage
can normally go up to 30 years. You are not going to see
commercial real estate
There is more risk in the commercial real estate mortgage
than the personal home mortgage,
to repay instead of 30. Term that's why you get 20 years
This is not paid by cash, this is paid by profitable
operations of the company.
short-term needs and so, to pay back your equipment loans, your
manufacturing, your C&C, your lathe machining centers,
whatever the case may be, the cars, if you're a taxi,
the green taxi cab, it's got
operations and not cash flow. to Spend a little time onble
government guaranteed loan programs.
The SBA, I was a true specialist
As a young banker I got ointo the 7-A program.s.
There's a bunch of
There's a product grid here that I'll just touch base on.
But that's where I became the who's who of business banking in
Milwaukee because I really
government programs, and for focused and I knew the SBA
entrepreneur, for a start-up a start-up company, for an
the risk that the bank is going cto maintain because you're af
higher risk company because you are a brand-new company, higher
risk, they defer some of these
will guarantee from rianywhere from 50% to 90%.BA
Normally the focus
I'll go through that product grid.
The SBA is your national one. WHEDA, Wisconsin Housing
Economic Development, thanks, Jeanan.
That's more of your state program.
City of Milwaukee, Milwaukee
Corporation, they have a local Economic Development
program. City of West govAllis in Milwaukee,loan
Wauwatosa in Milwaukee
I'm sure Madison has it. So wherever you end up, wherever
you go back, whether it's Green Bay, Madison, Milwaukee,
Rockford, Illinois, your
programs that will help the mstart-up business owner.e
This funds various needs from business plan development,
working capital, acquisition of equipment and real estate, and
it's at floating
This is the busy grid, and fixed rates.
for start-up customers, you're and for entrepreneurs
SBA express document here. And normally going to look at the
you have to write down here. again, not a lot of things
It's on our website, mybank.com.
And then it goes on to the
general program, and preferred lending program, the
And 504 is for long-term finally, the 504.
acquisition, and/or machinery acquisition.
It's for your fixed assets. Local loan programs I talked
about, state loan programs I talked about.
And then the national loan programs.
Seek these out, if you're an
financing for the first entretime, seek these out.tting
Your banker partner should know these.
If your banker partner doesn't
banker that knows them. kWhen we look back at thisa
program these PLP, Preferred
is a preferred lender, U.S. Bank is a preferred lender,
Associated Bank is a preferred
is the SBA, the United States government has given us their
approval, authority, because of our historic great service of
SBA loans. We have a
collection rate. We have higher than average
than maybe other banks do. a smaller default rate
programs. We know We khow to analyze the the
business plan, we know how to analyze the individual and the
like. And I'll get
individual, and I want to share with you a couple business
plans, a couple of the
when I read and what hits home. And a lot of this stuff that
hits home, you may not think
banker, I'll just go about would be exciting to a
But, seek out a PLP Bank. You have a number of choices.
But find a bank that knows what the heck they're doing and they
can manage your expectations, and listen to the banker.
One of the attributes of an entrepreneur is perseverance.
You might want to write this
But perseverance. If you down, I don't have it in here.
whether it's by a bank, by an investor, or whatever, the
attribute of a good entrepreneur
You have to persevere, move wion. Some of the world's beste.
entrepreneurs went
I'm not sure about the good old days but right now if you go
bankrupt, you could pretty much bet for the next seven years
you are pretty much going to
being able to avail yourself of credit because it's basically on
your credit report
But they're the risk for seven years.
So, search for a PLP These takers and the like.
that I talked about, SB A.gov, score.org, wheda.com,
here in the state of
MEDC online, that's Milwaukee WiEconomic Development.
Corporation, a fantastic partner
Wisconsin Business Development, they're throughout the state.
They help our customers.
for the SBA 504 loans. They're the intermediary
Madison, Milwaukee, Oshkosh, They're fantastic people.
Five tips on approaching your bank, this is from SCORE.
Something I added, Jeanan,
This is one of the updated I'll send this to you.
tomorrow morning, screenthe new power play. to you
It's in this one, but it's not
yesterday. Understand on thethat your primaryto her
responsibility is the proper use
business to make a profit. You of capital and that you're in
profit, that's the only way you are going to pay your loans
back. Test the economics of your
product or service. Make
And that the gross profit percent is in line with that of
the industry. And in
go through that in the market analysis of your product and
service. Know how you will finance your
business. Visit lenders,
seeking financing to banks, prior to
Ask your lenders what they want to see before you apply for a
loan. Manage, they're going to manage
your expectations and you should
and manage their expectations. manage your own expectations
evaluation, it's a personal Devefinancial statement,cial
it's just a balance statement.
and what's my net worth? What do I have, what do I owe,
entrepreneur, you're a student And when you're a young
I'm not sure like me, I had bupkus, I had zero.
I still remember for 10 years I made an $87.15 loan payment to
pay back my college loans, and I
of those 10 years. And I'm was so stinking happy at the end
that, maybe your monthly payment sure you have more than
as you like. But will not be as close to $87.15
my credit bureau, that's what started my credit score and
that assisted me through
Develop realistic alfinancial forecasts..
I already showed you the forms
cash flow and balance sheets for we use for income statements,
for the first year. That's three years, forecast monthly
over. This is just my contact
information. I just want to share with you
some of the things that I pulled
about the attributes of an out this morning, just talked
William E. Jennings, a entrepreneur and this is from
And the most important profile of the entrepreneur.
like I mentioned, desire and attributes would be perseverance
competitiveness, if you want to wbe an entrepreneur you have to
be competitive, I don't care, because bottom line, you wake up
every morning and you want to beat the other person doing the
same thing you're doing.
achieve, self-confidence. When Self-reliance, strong need to
plan you need these attributes. It says good physical health,
I will tell you that's so important in these last three
years. I've had not only in the banking
industry, whatever industry we are in, in order to be
successful, you're
And you're managing stress by working out, by eating right,
whatever the case may be. But my manufacturers,
my wholesalers, because -- you
about jobless recoveries. Bottom line, in 2007, 2008,g
our customers were
They were laying off people. slashing expenses.
extremely efficient process at What they thought was an
be more efficient and that's their company they found how to
We are kind of a do it, get whup and do it, and find out.a.
And they had to. They had families, they had
families to pay and the like. And so all of a sudden what they
thought was an extremely
wholesale distribution plant efficient manufacturing plant,
actually could be whatevemore efficient.hat they
And so that's why 2008, 2009, tough years, but then 2010
all of a sudden the economy started picking up.
Inventories across the nation were at their lowest so people
were buying stuff. And so inventories were being
made again. The sad part
what our entrepreneurs and of that, because of
could be more efficient than business owners found that they
yes, they're rehiring, but even they had thought they were,
pre-recession job levels. Ask yourself these three
questions. Are you
hours and make the sacrifices necessary to get your business
going. And that's what it is.
It's the risk return. More risk, more return.
Do you want to bear the responsibility for all business
decisions, and responsibilities related to your company?
And again, whether you're a flower shop, whether you're a
restaurant, whether you're the
whether you're a larger Greemanufacturing plant--son,
One of my proudest moments
customer start their company up, is when I can help a
advisor for years. And one work with them, be a trusted
wholesale adhesive distributor. And in the early 1990s
he started his company. Two years ago he sold his
company, I can't say for how
well. And so from much1990, 1991, throughvery
2009, I was his banker. And that is a relationship that
he took seriously,
Hopefully you build up a that I took seriously.
I don't bank my friends, friendship, but bottom line,
Hopefully my other bankers are I don't bank my family.
I personally do not, because banking my friends and family,
because I have to make hard decisions for the customer.
For good times or bad times for 19, 20 years, I helped the
company employ approximately 20 people, financed his business,
financed his home, financed his second home, financed his third
home, financed his plant and
come from. Are you that's where the risk and return
and committed to independent, disciplined
Are you ready to serve entrepreneurship?
organization? Networking, mulI was at a financeur
career day at Marquette University a couple weeks back
and I was amazed how many young students, sophomores and
juniors, already had calling
Marquette University stock, cbut then they had their name,he
then they had their address,
their email address. Some yof them were more creative.,
Some of them were a little
Again, it's the bucreative, that passion.t.
My youngest son is a junior down
home for spring break last week atand he's in finance, he's ins
business and finance down there.
know, this is a great Andthing for networking.you
Whether, wherever you're going
fine arts, whether you're in to go, whether you're in
retail, whether you're in engineering, networking is huge.
And you're never too
Professional organizations early to start.
within your own college school within your own business school,
I think the schools are doing it, I know Marquette is doing a
much better job getting us to network with our students now.
We spent a day with them on a Saturday about 5 hours talking
about careers in finance. And I'm sure you have that in
the other different colleges. Dress up nice, put some
good-looking clothes on, make yourself presentable and go to
those things and get
My son got cards through those, get those cards.
ridiculous low amount of money Vista Print for an extremely
down at St. Louis with and now he'll be able to network
I talked about friends and whoever he comes across.
I just want to step back real quick, I want to talk just about
a couple personal notes from me to you, and again, if I sound
fatherly, I apologize. But I
can make so many easy mistakes have to tell you that you
couple years. And my that are going to hurt you for a
my sons are going to roll their eyes and going, lord,
he's talking about Facebook again, he's talking about
personal credit bureau again. So two things I want to talk
about. Personal credit and Facebook.
And then I'm done preaching.
listening to me. Jeanan Anis not paying me anythingust
so I'm just jumping into the fray.
Personal credit. Timely payments, overdrafts and
your personal accounts. Defaulting on a WPS electric
bill. All that will follow you.
So if you want to start a credit
it. Watch your credit rating, card balances.e to do
I am amazed at how many credit
at home when one lives in carMadison and one lives inill
St. Louis. I rip them up.
Just be careful and that's all I've got.
Just be careful. Do not spend any money that
you can't afford to spend. Use
credit card, but don't your debit card, not your
And lastly, Facebook. I will tell you that graduate
schools and employers are looking at your Facebook pages.
And my sons have heard my story.
or not, thank god they did My sons, whether they wanted to
some of the stupid listen to me because they got
And so I'm just telling you and I said this at Finance Career
Day at Marquette University so you're hearing it as well.
Don't think ill of me. But
Facebook. That stuff watch yourselves out on
it can follow you, can just hurt you,
graduate school is tough enough. business is tough enough,
opportunity to succeed and keep away from the stupid stuff.
All right? I'm sorry, that's it.
I believe, yes, that's
I got three minutes itfor questions.s?
Yes, sir. >> Hi.
How are you? >> I'm good.
I have a question about Facebook.
Bruce, would you mind cutting down the lights so I can see the
audience? Please, go ahead.
Okay, it's like a two-part question.
I'm not a Facebook
Is it true some employers, expert but I'll try.
private, they have like an even if you have your Facebook
still look on your pictures and astuff if you have it private?o
You know, I'm not --
I'm not an HR expert. I spoke with a professor at
a local school here in
I'm sorry, when we say UW, Madison, not UW-Madison.
I don't know how they we ddo it. But they can.son.
I was talking to a friend of
mine, he's got a Facebook that mine and he's got a friend of
everything else, and that's under his name and nothing on
there is stupid. And then he's got something else
for when he's going up to the lake and he's being stupid with
his friends. I don't
I just know that know how they do it.
The finance, the College of Business people at Marquette
University, they tell me they can do it.
And so, and I have heard enough stories that they can do it.
I don't know how, but they can do it.
Thank you. >> Is that the first
or second part? My
Make me feel wanted. >> Thanks.
So when creating budgets for
proposals and requests for business plans and grant
values and stuff are estimates funding, a lot of times your
costs. Do you think because it's better totions of
overestimate, underestimate, or do sometimes people put a range,
requested amount and
Great question. When you idealized amount?
you're doing an industry do an analysis, when
industry you're going to, you can find, whether it's Robert
Morris and Associates, book of
you can find what your company industry averages and the like,
service. What that with that specific product can
should be, what the net profit gross profit margin
Great question. When margin should be, and the like.
we call it blue sky. And you say overestimate,
you tell us you're going to open when we see blue sky, when
net profit the first year, a restaurant and making $300,000
estimate. But you can have three
estimates. You can have your low ball, the
highball and what a range would be, but those ranges should be
based on historical information from industrial periodicals.
Does that help you, does
Okay. I think you can thhave the best oft?
times, the worst of times. Being
thing because if you're conservative you will have
limited debt to fund and to repay.
If you do better
But make your projections on than that, great.
that you can start with. >> Yes.
My name is Ben. >> Hi, Ben.
I was wondering, how hard has the city and the banking
industry of Milwaukee been
It's been, our loan demand, I will tell you our loan demand
is soft. Our customers
in wholesaling, they're not adding new equipment, they're
not building new additions or adding new manufacturing plants
so our loan demand is down. Jobs are down.
I think Milwaukee, for all
came through it pretty well. And intents and purposes,
you know, we have had againto jockey around.ield,
We have had to make different,
back when we give a customer a you know, we have had a plan
back in 2005, and that pretty much went all to heck in a hand
basket in 2008. So you
business plan, what didn't work in that business plan, what is
the new plan, how are we going
and how do we remodel from that, if you will.int B
But for the most part,
Loan demand in metro it's all right.
It's flat. And I think Milwaukee is soft.
what you're seeing throughout. that's pretty much
enthused about the future, I think our customers are
I'm not sure they're optimistic about the future.
And that, Ben, I think that's cwhere it's going to come..
Once they're confident of what's going to happen, then I
think you will see more capital acquisition and the like.
Good question. >> Hi.
My name is Lauren. I was
been dealing with M&I being in just wondering how you've
the slack it's gotten from the the press, whether it be from
I know there was some bad press about privacy rights for users
and card holders. >>
I just read in the newspaper Privacy rights, as to who?
weeks ago about there was some or on the Internet a couple
information was being sold. c>> I'm not sure I know aboute
that. I'll address
that I have. For a the talking points
to a candidate is corpoagainst the law.onies
We didn't give any money to any respective candidate.
Our employees, whether they give to Scott Walker, Barrett,
whomever they choose, they can
choose. And so give money to whomever they
And so you know, what we do, that's what you see.
We are a good bank, we're a solid bank, we have had bad.
press, I will tell you that customers are supporting us on
all levels. As to your
I'm not sure what that necessarily is.
I'm not positive, I don't think any of our systems were
corrupted. I don't
I don't think any of our systems think anything was,
I'm not positive as were cto your second part. else.
But as to your first part,
Did we have people come into we are weathering it.
Did we handle them with oucourtesy and respect, yes..
Did they give them what they
request, if it was CRA wanted, if it was a legal
CRA means Community Redevelopment, and if it was for
that, yes, we gave them that. If
was not legal, we said no. they asked for something that
respect. >> It was But we handled them with
one more sweep, anybody else interesting and just
one. It was interesting have a quhear you as ase I have
banker talk about the importance
kind of restatement of that of provides me a great tee-upur
for the lecture I'm about to give on the importance
of networking for entrepreneurs.
And it is so important, as I >> Very much so.
a jack of all trades mentioned, you have to be
as one of the attributes were. and master of none
You need a great But you need that attorney.
And you're going to find during your businesses you need a good
business attorney, a good tax attorney, you need a good patent
attorney, you need a lot
accountants, tax accountant, of different attorneys and
case may be, and besides those audit accountant, whatever the
people in your marketplace. prI belong to the Rotary Clubess
of Milwaukee. It's one
I think in the nation, of the largest rotaries
Approximately a little over 400 members, we get together every
Tuesday at noon. It's the who's who of Milwaukee.
And I've been in the business for, you know, 30 years.
I'm 54 years old as of this past Friday.
And that's why my son and I are going to have a drink.
But it's amazing how much I still need to know, and
when you're networking and you
if it's a business dinner here, gocollege of business dinner,re
college of fine arts dinner or
table. Do not sit at what have you, do not sit at the
with a friend that you have known for three years at school.
Get up off your chair, get up off your fanny and go out and
press the flesh, as they say, you know, extend your hand.
Say hello. It's not what you get in
networking, and this is from Mr.
read a great networking book, I'm sure if you have.
I know what you're referring to.
Joe Sweeney, it's not what
The more you give, it's the old Christian attitude, the more
you give, the more you
That's what Joe Sweeney says. The more you give and don't look
for networking to be something
of information, a lot of that you're going to get a lot
The more you give, the wealth or anything else.
Well, Keith, you have given us a great presentation today
and wetted our appetites for
planning. Thank you so much.
You're an official Badger now. >> Bucky Badger!
Thank you very much,
Thank you. >> Thanks very much.
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)