Do SBA Loans Help Businesses Recover, or Drown Them in Debt?

About 2 weeks after surviving the flood waters of Hurricane Irene, I have had an opportunity to reflect on what the effects of living in a “disaster area” can do to a community; its businesses, and its morale. On August 29^th, when my wife and I returned home to begin the flood clean up and assess the damage done to our home and property, we discovered that our home had been under 3 feet of water and the contents of everything on the main level of the house were literally destroyed. A few hours into the clean up, our neighbor’s house unexpectedly exploded, bringing a wave of emergency personnel: police and firemen. The devastation of the flood displaced Wayne residents in our neighborhood, and the now condemned house across the street, drew the attention of the local press and a special visit from Governor Christie. Surely, a neighborhood with this much devastation would be one of the first to receive assistance; I have yet to see it.

As disaster response agencies like the Red Cross and the Salvation Army provide food and clean up materials for our neighbors, Verizon provided mobile communication resources for residents to make phone calls. Neighbors united and assisted each other to remove damaged furniture and other contents.   This community rallied together to support each other in this time of need. The morale in the air was positive and upbeat, there was even the occasional burst of laughter —even in the face of all this despair. Now that the water has receded, where did the help go? Who still remains to be helped?

My neighbor who just bought and moved into her house in December of 2010 has now had to move out of her house for an indefinite amount of time, and a large storage bin and dumpster now occupy her driveway. Her belongings, as well as most of the possessions of my neighbors throughout my neighborhood, are piled high on the curbs to be removed by Wayne Township as if they never existed. Passersby slow down to take in the devastation and rummage through the flood soaked contents for items they consider to still have some value.

Aside from assessing personal losses at home, I began to assess my business losses.  As a consultant, very little business property was lost to the flood. But it did take close to a week to clean up my house, assess my personal loss, and catch up on business deliverables that translate to billable hours.  After a week of clean up, the responsibility of a business can become an overwhelming, menacing and daunting reality. Business owners don’t get sick time, vacation time, or allowances for disasters. Unaffected clients expect their work completed on time, no matter what. Although the television and media outlets flood the airwaves with talks about local assistance and support from FEMA for residents and small business owners alike, many of the residents and businesses I talked to didn’t know where this help was really going to come from and to date, still do not know.

As businesses begin the long arduous process of recovering from an event like this, a lot of time must be spent not only catching up on your business obligations, but also managing and filing your insurance and FEMA claims.  A local mechanic, whose shop was underwater and sustained substantial damage was told by his insurance company and FEMA that the only assistance available to him are “low-interest loans,” which needed to be secured with collateral—in the form of his personal home and other possessions.

A non-profit in Jersey City lost all of its donated merchandise, client files, and recently donated computer lab. It is struggling to find an immediate place to relocate its business operations, and now has to convince its staff (of mostly volunteers) that they have a safe place to work. In addition, the non-profit will need to work closely with a key funder who may require them to recreate all of the client service documentation that was lost to maintain their funding. If not, there limited funding could be in jeopardy.

As I researched assistance for businesses affected by this disaster further (for my business and for my network of affected business clients), I found that “loans” seem to be the biggest and most widely publicized form of assistance. Loans?, Really loans? In the middle of the worst economic meltdown this country has seen in over 50 years, and unemployment at an all time high, I wonder how this is considered a form of disaster assistance.  Businesses are already struggling to stay afloat—managing their overhead, debt and poor accounts receivables with no successful programs being provided to invigorate small business, spawn growth, or make employing workers easier, prior to this disaster. So I ask again, the government’s response to this disaster is “low-interest loans?” This is like saving a drowning man with a boat that’s taking on water; providing temporary hope by pulling him out of the water, only to have him drown again—along with his hopes of another rescue.

What I’d like to see done with the “funds secured” for this disaster is to have real assistance made available to homeowners, businesses, and non-profits in the immediate forms they are needed. For my neighbor across the street—relocation funding and 6 months of paid rent might help her breathe easier while she negotiates the labyrinth that is the insurance claim system. For the mechanic shop, a grant that covers the cost of replacing key equipment and restoring utilities so that they can reduce down-time and get back to work, right away. For the non-profit, some funding to assist with the relocation of their business operations (temporary or permanent), and coordination with private sector businesses to help restore their computer lab, inventory, and funding to pay for the temporary staff needed to get their administrative needs back in order.

If you read this blog and are a small business or non-profit, I would be very interested in hearing about your specific experience with this disaster and how you have tried to rebound from this surreal event. E-mail your feedback to info@gambit-services.com or comment below.

The Question Most Commonly Asked of a Consultant

Just about every meeting I have with a potential client starts the same. They ask, “So what exactly do you do?” My response is always the same. “I am a consultant; why don’t you tell me a little more about what you do?” Most consultants have a specific area of expertise that can be briefly expressed, but the real discipline of consulting comes from their ability to help you realize your goals. Because of this frequent dance, I’ve decided to make this my first blog post and hope you all will enjoy this post and follow the posts to come.

A consultant is many things to many people, but at their core they are problem solvers. People who fit easily in to many different structures and are good at finding ways to improve any situation they are engaged in. Great consultants can do this under enormous pressure and deadlines. With this said, I decided to provide my followers with 3 tips on how to have a productive conversation with a consultant.

• Prepare for the Meeting- Many times over my initial meeting is spent talking about what type of services I have provided for other clients and what type of successes I have yielded with those services, but when you meet with a consultant you should be thinking about what type of results you expect of the consultant. Talk to your consultant about your vision, your short term goals, your long term goals, and why you decided to meet with him/her. The service we are selling is completely dependent on your goals. If they have a web presence, look them up and see what their advertised strengths are. Consultants have always researched your company before your meeting (at least good ones have).
  
• Discuss the Project before you discuss the Billing Structure- Another mistake is to begin discussing consulting rates before you have even discussed the project. When you ask consultants for bill rates before discussing the project, you’re basically asking them to guess. A bill rate is derived from various factors. For example, we need to consider the skill levels, length of assignment, and resources the project will consume. While most consultants have a minimum hourly rate, you should focus on expressing your needs and allow the consultant to respond with a proposal—after the meeting. This is your opportunity to negotiate the price and/or scope of work.
  
•  Close the meeting with Action Items- Many meetings have often ended with potential clients who say “we’ll see what happens” or “I’ll get back to you.” Instead close the meeting with an action item. Request a proposal of services based on your conversation or—if you already have decided to contract with the consultant—give him/her their 1^st task, contact information of the people they need to get started, and propose a deadline. This both ends a productive conversation and begins a potential working relationship.