Family Businesses

August 2018 Newsletter: Essential HR Practices for your Business

By | Family Businesses, Human Resources, Privately Held

Protecting your most Important Investment: Essential HR Practices for your Business

As a small business owner, you are keenly aware that even if you worked 24/7 there still would not be enough time to get everything done. Being an effective manager requires knowing the critical elements to lead your team. We, at Warren Whitney, strive to inform you of the essentials to run your business. To help get you started with your HR program, Beth Williams, Director of Human Resources at Warren Whitney, has provided guidelines for a sensible and practical HR program. Included in these guidelines are three basic requirements:

  • Creation and maintenance of three specific employee files
  • Publication of an employee guidebook with specific policies
  • Posting of required state and federal notices


Beth Williams advises that every employee have 3 separate files; Employee Payroll File, Employee HR File, Employee Medical/Benefit File.

  1. Employee Payroll File. This file should include: Direct Deposit Form, W-4, VA-4 and other withholding forms, and the offer letter. The file may be shared with the payroll or finance department (Note: The file may be kept with the finance department).
  2. Employee HR File. This confidential file will have general employment information on the employee and include his/her: Resume, Employment Application, Offer Letter, Contract or Agreement, Performance Evaluation, Awards, Disciplinary Documents and finally termination or exit interview information.
  3. Employee Medical/Benefit File. A separate, confidential medical/benefit file for health and medical issues on each of your employees should include: Applications for insurance, notes from a doctor excusing a person from work, medical examination results, information related to a disability, beneficiary forms, open enrollment forms and any other benefit related documents.


Next on the list is the Employee Guidebook. “A good employee Guidebook should contain several key sections and information on your company culture, policies, and procedures” Beth explains. Listed below are must-haves for the guidebook:

  1. An introductory statement to explain the purpose of the handbook and at will employment.
  2. The guidebook should list the following company policies:

·        Equal Opportunity Statement

·        Onboarding Information ·        Harassment and Discrimination
·        Open Door Statement ·        Confidentiality ·        Employment at Will
·        Social Media ·        Computer Use ·        Alcohol and Drug
·        Personal Appearance ·        Solicitation ·        Immigration Law
·        Disclaimer Statement ·        Business / Work Hours ·        Company Property
·        Ethics Policy

·        Standards of Conduct

3. Below are some remaining key topics that may be included based on your business and industry:

Timekeeping and Payroll: Timekeeping Procedures, Paydays, Pay deductions, Time Off

Work Conditions: Violence in the Workplace, Workplace Safety, Drug Free Workplace Policy, Employee Standard of Conduct and Disciplinary Policy, Office and Facility Information

Benefits: Sick Leave, Personal Leave, Vacation, Holidays, Bereavement Leave, Jury Duty Leave, Military Leave, Maternity/Paternity Leave, Group Insurance, Worker’s Compensation Insurance, Healthcare Continuation, 401K, Business Expense Reimbursement


To make your life easier, Beth suggests buying a combined state and federal poster that keeps you in compliance with posting regulations. If you have more than one office, you will need to post this in each location. While there are many sources, this recommended version costs less than $20.00:

July 2018 Newsletter

By | Family Businesses, Technology and Operations

Valuable technology tips for your business

Technology can be a competitive differentiator, but the constantly evolving world of technology is challenging to navigate for businesses.   Growing businesses evaluating technological support want to ensure they get appropriate value, maintain efficiencies, and stay ahead of the curve. Finding the right software and systems to best suit these rapidly changing demands, is often the key to success.

David Nelms, Warren Whitney’s Director of Technology and Operations, explains that outgrowing technology is one of the most common problems expanding companies face. “The biggest challenge when evaluating a business’s systems is knowing the path to take and making sure that the technology is keeping pace with needs. Adding to the complexity is that upgrading systems can often be very expensive; there is a lot more involved than just the base cost. “

Tip #1: Evaluate your needs. Do not dive straight into looking at new software or systems before you understand your current and future needs. When David works with his clients, he stresses the critical nature of knowing the problem they are trying to solve.  He says, “an objective, in-depth survey is essential to define the foundation for support.”

Tip #2: Analyze your software options. After defining the foundation for support, a thorough analysis of your top software options will help cut through the clutter so you can make the most cost-effective investment.  David cautions, “the most expensive, shiny new system with lots of bells and whistles may not be the answer. For some, the most basic, cost effective solution may solve most, if not all, technological problems. “

Tip #3: Embrace your new technology. After purchasing a new system, the commitment to being educated on how everything should work, configuring the systems to achieve results, and providing employee training are keys to success. “This total commitment will determine the system’s success.”

To give an example why all three of these tips are equally important, David recently worked with a firm that was frustrated with its newly acquired ERP and Human Resources systems. During the discovery process, he learned this company had purchased the most highly regarded and functional systems in the industry.  These systems were an excellent fit; not overly complicated or expensive.  The company had done a good job of understanding their capabilities before the purchase but it had not been effectively implemented. As a result, the systems were configured to duplicate the client’s old systems. Also, there had been no employee training. Understandably, the firm did not gain anything from the investment and their frustration was with good reason. Fortunately, David was able to identify and address the client’s issues, allowing the team to benefit from the investment and achieve what they originally set out to accomplish.

Commitment and knowing your business’s current and future needs are two of many necessary detailed steps to ensure a smooth and successful integration of new technology. Integrating new technology is a major investment and big expenditure, it can be risky especially if it supports core business processes. Having someone with experience to guide you through this complex world is essential. Unbiased and objective conversations are critical to the selection and implementation process.

If you are looking to update your infrastructure or core business systems and would like to speak with a professional, contact David Nelms at or 804.282.9566.

Leadership: Lessons Learned from the Trenches

By | Family Businesses, Finance & Accounting

G Herceg cropped

Contributor: Greg Herceg

Downloadable link

Organizations can only be as good as their leaders; even with top talent and sufficient resources, a lack of proper management and guidance can mean the difference between failure and reaching your full potential. Fortunately, regardless of the size, revenue, or industry of the business, some leadership skills are always applicable. This newsletters outlines five important lessons in leadership that were learned from the trenches.

1.  Build personal and trusting relationships.

The most important lesson I’ve learned in leadership is to build a strong team around you through developing deep, trusting relationships. Take an interest in really getting to know those who work around you and learn what makes them happy, whether it’s fishing on the weekends or a particular sports team. Show that you care by asking about your team members as individuals, not just as workers. Learn employees’ names even outside your department, ask about hobbies and interests, talk about their family, write personal thank you notes, or visit the hospital when someone is ill. Build trust by being fair and consistent, clearly expressing expectations, and never criticizing one manager to another, especially in front of your team.

2.  Learn each employee’s motivation “button.”

Motivating the employees on your team to perform their best is not one-size-fits-all. Build upon your personal and trusting relationships with your employees by learning what motivates each person. Some people work better with flexible scheduling options and being left to work independently on a variety of tasks, whereas others prefer structured timelines, stability, and regular updates. Showing appreciation, supporting community involvement, and a willingness to listen can also encourage loyalty and excellence from those who react positively to interpersonal workplace connections.

3.  Financial dashboards are a must.

Tracking a business’s financials is not a job exclusively for CFOs and Controllers; especially in marketing and sales divisions, leaders at all levels should keep a pulse of the financial health of the business. Departments may find it helpful to have visual aids such as charts displaying monthly, quarterly, and annual data to track financial trends, including revenue, operating income, net income, cash flow, and return on investment. Monitoring the business’s finances may also mean rolling up your sleeves and auditing a few invoices periodically, holding cash flow meetings, checking on the timeliness of invoicing and collections, and getting other departments involved when necessary. Rather than delegating all duties, leaders who are actively involved in the financials demonstrate that it should be a priority to both their team and the organization as a whole.

Leaders should also keep abreast of customer feedback and satisfaction. This can be tracked over time using customer surveys analyzing categories such as customer performance average scores, willingness to recommend percentages, and overall process ratings. Don’t be afraid to call customers yourself to resolve disputes and express your appreciation for their business.

4.  Update your strategic plan (and use it).

Your organization has gone to the great time and expense to create a strategic plan, but after it is written and bound it sits on a shelf and collects dust for the next few years. Sound familiar? Too often strategic plans are treated as a mile marker or a hurdle to tackle and move past on the way to success rather than as a map.

A good strategic plan re-energizes people around the organization’s mission, vision, and values. The plan outlines what the organization intends to accomplish over the longer term, how it will achieve that, and the specific goals it will address to move forward, including objectives, actions, key stakeholders, and time frames. Once complete, the strategic plan and progress on the plan should become a regular agenda item at board and staff meetings, forming the basis for annual budget and performance reviews, and acting as a platform for frank discussions about the company and your competition. Management should evaluate and refresh short-term initiatives annually, and create a new plan at least every three years to ensure that the organization stays on track and continues moving forward.

5.  Collaborate your way to success. 

One issue that can arise with a growing business is that it can be difficult to keep up with the demands of expanding into new markets. Whether it requires hiring more personnel, employee training, increasing capacity, or large capital investments, growth can put a strain on any organization and its resources. Consider leveraging your internal resources to collaborate and partner with other businesses on aspects of expansion that would be difficult for your company to accomplish on its own. Partnership opportunities could minimize risk by assisting with finances or providing education, training, or resources that will take your organization to the next level.


The Warren Whitney team is ready, able, and willing to help! We would welcome the opportunity to have a conversation about your organization.  Contact Stephanie Ford at or at (O) 804.977.6691 with any questions.

Turn Your Technology and Operations into a Competitive Advantage

By | Family Businesses, Technology and Operations

David Cropped

Contributor: David Nelms

Downloadable link

Technology can be your hidden competitive advantage. Warren Whitney’s Technology and Operations Practice Group outlines six fundamental recommendations below to ensure that your technology is appropriately aligned with your business strategy, operates as efficiently as possible, and is ready to support future growth. We offer a high-spot technology assessment to help you identify ways to ensure your technology is supporting and strengthening your operations.

1. Develop a technology plan that is aligned with your strategic plan.

For a variety of reasons, hardware or software technologies used by organizations become too difficult, risky, or expensive to support and maintain, or they simply do not keep up with the needs of the business. It is important for organizations to frequently assess how well their systems are positioned to support their current and long-term needs so that they can stay ahead of the curve. Just as organizations have a strategic plan for their overall business, we recommend that they have a strategic plan for their technology as well. The technology plan needs to be closely aligned with the overall business strategies and functional needs, but it also needs to consider a variety of other factors, such as information security risks, vendor stability and availability of adequate support, new capabilities available within the marketplace, and whether their systems are prepared to continue operating in the event of disasters or other external events.

2. Do not underestimate the complexity of a hardware or software conversion.

At some point, all organizations will need to upgrade or replace their software systems. Some companies will simply upgrade to a new version of their existing systems, while others may look to add new systems or move systems to the Cloud. Regardless of whether projects involve selection of a new ERP/MRP system, a move of business applications to the Cloud, or an upgrade of the version of operating systems or software used on employee desktops, the potential complexity and impact of these initiatives cannot be taken lightly or underestimated. Software conversions rarely go off without a hitch, so organizations need to be prepared to manage the efforts closely and deal with unexpected issues. From the beginning, the projects need to follow some form of structured requirements and risk management processes, and they need to utilize solid project and issues management. Organizations need to allow time for organizational change management and appropriate staff training. The extent to which all of these things need to happen will vary by project and organization, but they all need to happen. They are especially important when new software is being selected that will make dramatic change to the way key business functions are supported. Above all, before the organization makes an investment in any software change, there needs to be a clear understanding of the expected benefits and a commitment to taking a fresh look at the way internal policies, processes, or procedures may need to change to capitalize on the new investment.

3. Look for vendor relationships that provide a competitive advantage for your organization, not just an expense.

Often management feels that their vendor partners or internal technology resources are not fully aligned with the needs of the business. Conversations often reference personnel who operate reactively versus proactively or that “speak another language.” Possible solutions could include more structured vendor management programs or service levels, coaching and mentoring programs for internal staff, development of policies and procedures, or improved processes for prioritization and project management. Above all, regardless of their role in the organization, companies need knowledgeable resources who actively manage strategy, spending, and day to day efforts for all aspects of their technology systems and resources.

4. Use technology to produce information that creates business value.

Most companies seem to be fairly comfortable with the information and metrics they are currently using to manage the business. Some can get it at the click of a button, while others tell stories of their CFO, controller, or other business area resources locking themselves in an office for a week or so at the end of each month to produce the necessary information from a wide array of Excel spreadsheets. Many have heard the term “Big Data,” but they do not know what it means or how it will benefit them. Regardless of where folks are on the information delivery curve, we strongly recommend that they have a very solid understanding of where all of their information is coming from, the exact meaning and relevance of each key piece of information, how information from different sources fits together, and most importantly that they have the necessary checks and balances in place to make sure that all of the information remains accurate. Similar to our advice related to the overall technology plan, we also encourage organizations to continually evaluate additional ways that they can use information to create business value.

5. When there is a planned or unplanned change in personnel, take the opportunity to evaluate reporting structures, take a fresh look at management and staff responsibilities, and optimize organizational alignment before making a new hire.

When there are personnel changes, management is often in such a hurry to fill the hole in the organization that they just hire someone with similar skills to the last person. This is the best time to consider whether an organizational change or different skills could provide a business advantage. This is the time to consider an interim IT Director, CIO, COO – or whatever position is vacant – to evaluate and bring perspective before making the next hire.

6. Cultivate a culture of continuous improvement at all levels of the organization, and consider how technology can support it.

As businesses grow, competition increases, or other factors change, businesses continually need to adapt. This involves continually making sure that people, processes, technologies, and information are all aligned. Creating and maintaining this alignment is particularly difficult if it is just seen as the responsibility of senior management. While this need is not specific to any given technology, industry, or project, one of the most frequent recommendations that we make to all of our clients is that they do things to implement an ongoing culture of continuous improvement. Empower everyone within the organization to share ideas on how to make their individual jobs better and improve upon the products or services delivered to customers. Once this culture is established, all other initiatives have a much greater chance of success.

Warren Whitney’s Technology and Operations services can help in any of the areas above. Specifically, we:

• Take roles as CIO, IT Director, or COO. We can serve on an interim basis while you replace a full-time position or on a longer-term basis if you are a growing organization and do not yet need a full-time information leader.
• Facilitate strategic planning and technology planning.
• Develop and implement processes and procedures that strengthen your use of technology in support of operations. Often this does not entail new systems.
• Guide you in evaluating and implementing new hardware and/or software.

Please call David Nelms, Director of the Technology and Operations Practice Group, with any questions. We would welcome the opportunity to have a conversation about your organization. Contact David at or at (M) 804.513.6581 or (O) 804.282.9566.

Technology & Operations Services Overview

By | Family Businesses, Nonprofit, Technology and Operations

Organizations need efficient business processes and robust technologies to remain competitive. Warren Whitney provides a variety of fractional and project based management services to help businesses improve operational efficiency, adapt to industry changes, and prepare for continued growth. Our professionals typically assist clients with strategic needs, but we can also roll up our sleeves and help drive tactics once the strategies are in place. Examples of services we provide are:


  • Leadership assistance during transition or loss
  • Fractional CIO/COO leadership services

Strategy and Planning

  • Organizational assessment and design
  • Technology SWOT evaluations and long range planning
  • Governance, risk management, and policy definition
  • M&A readiness assessments and post transaction assistance
  • Management reporting, KPIs, and executive dashboards
  • Turnaround planning

Management and Consulting

  • Management of internal and external resources
  • Staff mentoring and management development
  • Large project oversight and management
  • Expense evaluation and stabilization
  • RFP and systems/vendor selection processes
  • System conversion, integration, and migration planning
  • Information management and reporting
  • Process evaluation and optimization
  • Vendor review and service quality management
  • Resource needs definition and sourcing

All our professionals have significant management and leadership experience in a wide variety of industries. We have a proven ability to “right size” solutions that can help you address your most complex needs.

Please contact David Nelms at 804-282-9566 to discuss ways we can help you address any issues and improve your business performance.

The Human Resources Alphabet: EEO, ICE, COBRA, ADA and many more…

By | Family Businesses, Human Resources



Contributor: Beth Williams

Downloadable link

Today in business, there are more acronyms, legal agencies and regulatory requirements than ever before. If you employ people in your business, you must understand and comply with some of these requirements, many of which can be daunting.  The number of people on your payroll will determine the magnitude of your time involved and, ultimately, the work expended to comply with the requirements.  The full life cycle of an employee from recruiting strategies through terminations and all actions in between, present opportunities for a lawsuit.  The key is creating best practice processes, policies and a workplace culture that protects your company and manages risk.rements than ever before.  AND they just keep on coming with the impact of the Affordable Care Act (ACA) and the Fair Labor Standards Act (FLSA) being at the forefront this year for many employers.

If you are a smaller company, the business of managing the needs of employees may not be a full time job.  But, if you are doing it along with running your business, it can be distracting.  Outsourcing professional roles in the infrastructure of your organization may lend the expertise, efficiency and be the most cost effective approach.  That enables you to spend more time growing your business.  If your business is expanding, the human capital needs may be overwhelming enough that hiring a human resource professional is the best option.

Human resources professionals can assist you in wading through the acronyms and their impact on your business.  2016 brings an awareness of some important employer risks, including:

1. Fair Labor Standards Act (FLSA) – New federal rules defining exempt and non-exempt employees are very likely to become effective during late 2016. The rule proposed by the Department of Labor (DOL) includes increasing the salary threshold for white-collar exemptions from the current $23,660 per year or $455 per week to $50,440 a year or $970 a week. This includes those in the categories of executive, administrative and professional. Consider the reclassification exercise as a way to review job duties, schedules and staffing levels as well as salaries. This could have a profound impact on payroll and budgets by making more employees in the workforce eligible for overtime pay when converted from exempt to non-exempt. Above all, ensure that your approach is consistent across the organization.

2. Family Medical Leave Act (FMLA) – Even before the Supreme Court’s landmark ruling, the DOL made news by revising the FMLA’s definition of “spouse.” While the Supreme Court ruling subsequently made same-sex marriage lawful nationwide, the DOL’s standard followed the “place of celebration” standard, recognizing as spouses for purposes of the FMLA those lawfully married under the law of the state where the marriage took place. Now, however, same-sex spouses are clearly covered by the FMLA regardless of the place of celebration.

3. Affordable Care Act (ACA) – Employer mandates kick in this year for most every employer along with big fines for failing to provide health benefits and also for failing to properly comply with ACA reporting requirements. Your payroll and benefit advisors can assist you in defining your workforce for reporting purposes. Ultimately, it is the organization that is responsible for compliance.

4. U.S. Immigration and Customs Enforcement (ICE) – the number of I-9 audits has spiked significantly in the last year due to new federal initiatives. It is expected that I-9 audits will continue to be a significant hot button for ICE in 2016.


Reaching out to a human resource professional to discuss employer best practices, to review current policies and to obtain advice for strategic initiatives for your organization can result in very high returns from a risk management perspective.

Beth Williams, Director of the HR Practice Group at Warren Whitney

Contact Beth at or at (M) 804.301.8009 or (O) 804.282.9566.


Technology Is The Easy Part, or It Should Be…

By | Family Businesses, Technology and Operations

David Cropped

Contributor: David Nelms

Link to Downloadable Article

The following is a paraphrase of conversations I’ve had with several business owners and CFO’s recently. Does some or all of this apply to you and your business?

“My business is growing. The software we use is outdated, and the vendor we use doesn’t support it well anymore. We use a lot of Excel spreadsheets, but they are increasingly difficult to keep up with and are causing us a lot of problems. I’m having a hard time getting the information I need to manage the business. I know I need better tools and a more current system, but I don’t know where to start or how to find what we need. What do I do?“

This is not an unusual situation, but my response to each of the folks I spoke with may not be what you expect. It has nothing to do with a cool way to do an internet search for software. The response I generally give is that the actual technology is the easy part. The more challenging part relates to making sure we have an appropriate foundation for the discussion before we go down the path of thinking about a potentially large technology investment that could have major implications to the business. We need to make sure the organization is committed and prepared for change, and that they have a fairly clear understanding of what’s actually needed before they even start thinking about specific technologies or solutions.

Assuming you really do need to pursue an overhaul of some or all of your key software systems, or if you simply think you might, the following are a couple of general things to consider as you think about getting started with an undertaking of this nature:

• Make sure you have a solid medium to long range plan for your business.

Systems need to support the business. They are all about improving processes and providing information. They can help ensure best practices are followed in some areas, but they shouldn’t completely define how the business should operate. New systems are often major, expensive, capital investments. As with any capital investments, you want to make sure you know where you are headed before making them. Make sure you have clearly defined business strategies and specific goals. If you have specific goals, you will be in a better position to evaluate whether a certain system will help you achieve these goals as you work through the process.

• Identify your current issues and anticipated future needs before you start thinking too much about the systems. Otherwise, if you start by simply looking at systems you might be drawn to the “sparkly,” expensive solutions that are not a good fit or are more than you really need.

This is often harder than it sounds. It requires a clear understanding of how the business operates coupled with a lot of objectivity. Before making a major investment in new systems, you need to understand the business processes you want the systems to support. You also need to be willing to challenge the status quo. Don’t assume you need to keep doing everything the way you have in the past. Use this potential project as an opportunity to revise obsolete polices and adopt new, best practice processes whenever it makes sense. Understand the things you currently do well and need to continue doing, and identify the pain points you need to address. When you are working to understand these needs, make sure you get input from people at all levels of the organization, as well as external customers, if applicable. Don’t just rely on input from managers who may be slightly out of touch with day to day needs. Make sure you try to understand the scope of future changes that will be needed to support the goals you have established. As you work through defining all these needs and requirements, document and prioritize them. Be prepared to separate wants from needs.

• Understand the information and Key Performance Indicators (KPIs) you need to have to manage the business effectively.

In short, if you don’t understand the types of information you need to run the business, or will need to run the business as you grow, you won’t be able to tell if the systems will be able to support you.

• Make sure company leadership is truly prepared to “make an investment” versus thinking they will just be “incurring an additional cost” before you get started.

Investments help enable growth and efficiency. It is premature to assume you have full buy in on the overall expenses associated with a software replacement project until you know what they are. However, if a major change of this nature is not viewed as a potential investment from the start, you should really question whether you are ready to start the discussion. If it is simply viewed as an “additional cost” from the inception of the conversation, this will often lead to a process and decision based primarily on price versus functional fit. This in turn, generally leads to a failed project.

• Think about your organization’s capacity for change and make sure you have the management team’s buy in for a fairly major change to both systems and processes within affected departments.

Before you even get started with a major software replacement project, regardless of the potential cost, make sure the organization is prepared to make a significant change. Significant change always involves challenges. Some challenges can be anticipated; some can’t. Make sure you are prepared to avoid expected challenges and address unexpected challenges as they arise.

• Be prepared to manage this effort as a project.

Make sure it is considered a strategic priority for everyone involved. Document critical information. Be prepared to communicate frequently and effectively to all stakeholders. Don’t assume anything. Establish schedules and stick to them. Commit to provide necessary training.

Again, these are just a few high level things to be thinking about as you consider making a significant change to any critical systems used to support your business. There are many other more detailed steps and structured processes that need to be followed as an initiative of this nature progresses. Having someone with experience going through this process is invaluable and unbiased facilitation of many of the discussions is generally critical. Some companies are prepared to manage these efforts internally, but most others need help. If you suspect you may need help, you probably do. If you do, get it. The investment will be worth it. Don’t skimp on the up front preparation or you will typically regret it down the road.

If you’d like to discuss concerns or issues related to your technology and how it supports your business, please feel free to call or email me.


Financing Alternatives

By | Family Businesses, Finance & Accounting


Contributor: Stephanie Ford

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Imagine this…. Your company is growing… you need capital to continue to expand… however, you’ve been turned down by three banks in a row.  Yikes!   Has this ever happened to you?

In my 12 years of experience as a commercial banker, the better prepared a business owner was for the request, the more likely they would receive financing.  Owners that came to me with a binder chocked full of financial statements, detailed reports, and maybe even a strategic business plan were impressive. Entrepreneurs that provided few concrete materials and simply shared a stream of consciousness of their ideas gave me little to work with.

How to position yourself to get funding for your business is critical in today’s tight credit markets. Preparing a request for financing should be taken seriously, and good preparation will yield better results. Here is a framework for thinking about your approach.

1Think hard about why you need to borrow.  Specifically identify the purpose and develop a business case for the need to borrow and repayment.  The best way to do this is to prepare monthly cash flow projections of sources and uses of cash.  This prediction of needs and surplus will help to identify how much you need to borrow and how quickly your business can repay the loan.  The purpose of your borrowing need will also help to determine what type of loan is best for your company, such as a revolving line of credit for working capital needs or a term loan for permanent improvements to real estate or equipment purchases.

2.  The more complete a package of information you can provide to the bank, the better.  If you have a business plan, share the entire plan with your banker.  In addition to 3 years of financial statements and tax returns, also include any other key reports that you use to run your business.  This may seem excessive, but even routine reports such as an accounts receivable aging and accounts payable aging aid in giving the banker insight to your customer management and diversification.  Be sure to share any key metrics that are valid for your industry, such as inventory turns, job costing reports, days to market, customer returns, utilization rates, etc.   Providing organizational charts and competitive industry details is also valuable.

3.  Just as important as preparing your loan request package, give serious evaluation to the bank and banker you want to work with.  In today’s market, financial institutions vary widely.  Consider what is important to you: branch convenience, technology and services, commercial focus and approval process, legal lending limit, ability for the bank to grow with you over time, etc.  Think about whether these needs are best met by working with a large national institution, a strong regional player, or a small community bank.  Once you have a sense of the type of institution that would best fit your business, research to determine the best contact at that bank for you.  Most commercial banks have several bankers in one department with a manager above them. Finding the right person and personality for you to build a long-lasting relationship with can make all the difference in the growth of your business over time, particularly through the tough years.


The classic 5 C’s of Credit have been an excellent guide for many over the years on the borrowing process. If you can imagine yourself in the shoes of the banker, thinking through their concerns, it will help you prepare your request and business case.


During the entire request process, the banker is also evaluating your character to try to determine if you would be a trustworthy borrower.  Be sure to have your personal finances in order as well.  Complete a detailed personal financial statement (any bank can provide you their form), know your credit score, and clear up any incorrect items with the credit bureaus. Provide background about your relevant experience and track record of profitability and repayment ability. This can also include any prior company experiences. Most of all, be forthcoming with both the good and any downside to your experience.  Bankers never like surprises.


You should know that the bank will be examining your financial statements and then calculating certain financial ratios. Two of the most critical ratios are leverage and debt service coverage. Leverage is measured by debt/net worth and the lower the better.  While the target varies per industry, a good guideline is under 2:1. Cashflow is a measure of income/debt payments or more specifically EBITDA/(prior year’s current maturities of long term debt + interest expense).  It is essential that this ratio exceeds 1.2:1.0, no matter your industry.  The higher the better as you want to show the bank you have sufficient cashflow to service your debt along with a cushion for good margin.

The key takeaway: it is good if you are able to calculate these in advance so that you can anticipate how favorably your numbers will be viewed in the eyes of the bank.


This refers to your net worth or equity value in the businesswhich is determined by the value of your assets less the amount of your liabilities (how much youown minus how much you owe).   The higher your net worth, clearly the better.

Note: a negative net worth is a red flag to the bank and a sign you may still be at the level of borrowing from friends and family or other non-traditional sources such as factoring receivables or venture funding.


After the bank examines your cash flow repayment ability, they then look to collateral.  Consider your business assets and personal assets you have available to offer. This may include real estate, investments, accounts receivable, inventory, equipment, and even your personal residences.  How large and liquid are they in relation to the loan you are requesting?  The reality is, they should be larger than your loan request as banks discount the value of most assets and only lend 40%-80% against most assets.


If you have encountered any difficult spots in your business in the past few years, address them up front.  Prepare to tell the story of your business and how you worked through the challenging times. Different banks may also have different tolerances for different industries.  This may be based on the performance of the industry overall, the bank’s experience in that industry or their amount of current exposure to that industry.  Ask about their preferences to find a better match and increase your success rate. Remember, no industry was untouched in the recent great recession.  How you faced those challenging times will be insightful.

Seeking financing in today’s market is complex.  To put your best foot forward, much preparation is needed.  Seek the guidance of an advisor(s) for input into your request and positioning.  Your CPA, attorney or Warren Whitney consultant can be a valuable resource in this process.