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Monday, April 14, 2014

What to consider when someone wants to borrow money from you.

It's a topic I have blogged about before, but it's an important one.  A friend of mine was recently burned when a friend of his loaned some money for a business venture that failed and was unable to pay him back.  As you can imagine the friendship has seriously soured.  I wish he'd chatted to me before he'd generously loaned the money rather than afterward.

A number of years ago one of my clients came to me to ask my advice about loaning a significant amount of money to her daughter.  The first question I asked was whether there was any chance that her daughter might not pay her back, to which she replied "oh there is every change she won't pay me back."

I knew her financial position and knew that she couldn't afford that risk so told her to explain to her daughter that she wasn't in a position to help out.

But there are cases where we are in a position to help and at the end of the day, the only person who can decide if you want to loan a friend or family member money is you, but I do have some tips.

Questions to ask yourself:

1. Will you suffer financially if the loan isn't repaid?  If the answer is yes then my recommendation is to walk away.  You don't want to put yourself into financial hardship because of somebody else's money problems.

2. Will your relationship be damaged beyond repair if the loan isn't repaid?  If the answer is yes then, again, I recommend walking away.  You don't want to lose your relationship AND your money.  In the very few times I've loaned money,  I have gone into the arrangement with the attitude that if I never saw the money again, I would live with it.  If I can't feel that way then I just don't do it.

3. How formal do you want the arrangement to be?  If someone asks to borrow money from you, particularly if it's what you consider to be a sizeable amount, then you have the right to expect a formalised written agreement.  The written agreement should state the amount borrowed, any interest that may apply, payment terms (how much and how often), and the date the loan should be finalised.

I'd recommend having the agreement drawn up by a solicitor and I personally believe that the person borrowing the money should foot the cost of the fees.

4. Will you charge interest?  And if so, at what rate?  Often loans between friends or family members are no interest or low interest and this is of course up to you.  You may wish to apply a market rate of interest, particularly if you believe there's a reasonable chance that you might not get your money back.  Perhaps it's unlikely that person will be able to get a loan from a bank or other lending institution and would be more than happy to pay the market rate to obtain the capital.

You do need to be aware that legally you have to declare all interest to the ATO, even if it's a loan between friends or family.

5. If it's not a formal written agreement, what are your terms?  Even if you decide not to formalise the agreement, I do think you need to be clear on the terms.  Your terms might include a structured amount to be credited to your account each month or a lump sum to be paid at the end of a certain period.

6. And once you've decided the terms, what happens if the terms aren't met?  At what point are you going to start jumping up and down or at least give a little nudge?  That's probably something you should also agree upon from the start.  And if the loan is never repaid - what are you going to do?  If an agreement is in place, are you going to take legal action?

Probably the best advice I can offer is to be totally up-front right from the start.  You may feel a little awkward, but if someone has had the courage to ask you for a loan, then setting the terms should definitely be your prerogative and should be expected.  Some ideas for approaching this might include:

"This is a lot of money to me and while I'm happy to loan it to you, I will need it to be repaid in monthly instalments by July.  Is that going to work for you?"

"I won't need the money for the next twelve months, but after that I really do have plans for it.  Will you be able to pay me back by September next year?  And will you do that as a lump sum or regular payments?"

"I'm happy to loan you some money, but I have to be honest, I've seen some relationships turn really sour when money is involved and I would hate that to happen to us.  Would you be agreeable to formalising the arrangement so that we don't have to worry about any of that?"

"If you happen to miss a payment, do you want me to give you a reminder straight away or give you a few days in case it's just slipped your mind?"

At the end of the day it comes down to personal circumstances and your relationship with the person needing a loan.  Just make sure you consider the risks involved and what you need from the arrangement.

If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Money" radio segment on 98.1FM Radio Eastern.

Talk soon,

Friday, April 4, 2014

Should business owners exhibit at events? 8 tips...

To exhibit or not to exhibit...

I'm often asked whether exhibiting at an event is a good idea for a business-owner and, as is often the case, the answer is "it depends".  Having a stand at an exhibition can be expensive and, even when it's not, it's a big chunk out of your day or weekend, so you need to make sure it's worthwhile.

Here are my 8 top tips to consider before you commit: 

Before the exhibition: 


1. Be selective. 

Don't just take any opportunity to have a stand at an event.  You need to do your homework and ask the organiser the following questions (at least):
  • Who do they expect the event to appeal to?
  • Who will they be targeting/inviting?
  • How will they be promoting the event - where, when and how often?
  • How many people do they expect to attend?
  • How many exhibitor stands are they offering?
  • What facilities will they have for each stand?
  • Is there an opportunity for you to also present?
Unless you're incredibly lucky, expos are pretty hit and miss.  Even if people seem really interested on the day, it's unlikely you'll hear from most of them again.  So don't waste your valuable time, energy and money on exhibitions that don't specifically cater to your target market and where the organisation of the event isn't top notch.

2. Be prepared.

This may sound obvious but it's surprising how many business owners leave their exhibition planning to the last minute - and not only is it stressful, but it usually shows... You'll have limited space so think about the decoration and props you want to use as part of your display.  Set it up at home or in the office to see how it looks - don't just hope for the best on the day.  Once it's set up the way you like, take a photo so you can easily replicate it on the day.

Write a comprehensive list of all the things you want to take with you on the day and check it off as you pack your car the night before.  Don't forget incidentals like sticky tape, blu-tac, scissors, snacks etc.

Choose the main message about your business that you want to be able to get across to people who visit your stand.  In many cases you will only have a few minutes, maybe even seconds, to engage people so you don't have time to fluff around!  This is where your positioning statement is really important.

Think carefully about what you want to have as a giveaway at your stand.  A gimmicky gift is fun and will often grab attention, but doesn't necessarily make you memorable afterward.  You should also make sure you give away something that the attendees will value.  Something that makes them think about your business afterward and want to learn more about you.  A great idea in this age of information is to actually give away some of your intellectual property.  Given you're only exhibiting to your target market and of course you know all the WIIFMs (what's in it for me) your business offers them, you should be able to come up with an article, fact sheet or video that's content driven and valuable to them.  This positions you as an expert, which is what they're really looking for. 

At the event:  

3. You are your brand.

On the day, remember that you're representing your business brand, so make sure you dress and behave in a way that's consistent with your business message.

4. Ask questions.

One of the biggest mistakes exhibitors make is talking too much about themselves and their business.  This is completely understandable given the financial and time investment you've made for this stand, but is in fact the wrong approach.  Remember it's all about the potential client or customer, so you need to be an "information getter" rather than an "information giver".  Ask lots of questions and take a genuine interest in the people you're talking to and you won't have to bring up your business at all - they'll ask you about it!  And because you've taken a few minutes to get to know them, you'll be able to talk about your business specifically in relation to how it can help them.

Oh, and don't forget to take the time to talk to other exhibitors.  Even if they're not your target market, they're clearly targeting the same market as you are, so there might be some awesome collaboration opportunities you can explore.

5. Get details!!!!

I can't stress this enough - you need to make sure you get the details of as many attendees as possible for your database.  This is the most important purpose of exhibiting at an event.  Opportunities to do business at the actual event are limited and even if you do reasonably well, when offset against the cost of exhibiting (including your time before and during the event) in most cases the result is still fairly minimal.

The value is in your "follow-up" - a critical point most exhibitors completely miss and then wonder why it "didn't work".

A great way to get details is to offer a prize.  Make it something that's valuable to your target market and don't necessarily make it anything related to your product or service.  You may prefer to ask people to join your mailing list, which is fine so long as you let them know exactly what they can expect from this service. 

After the event: 

The advantage of an exhibition is that you get to put yourself and your "wares" in front of a large group of people.  Furthermore, they're often like-minded people.  On the negative side, there's a lot of other "stuff" going on so you usually only get a short time with potential customers or clients.  There are other shiny things to distract them...

6. Keep your promises.

If you've promised to contact someone personally then you must do that and do it quickly.  Most people will give you a grace period of a week, after that they're starting to wonder about your reliability and business efficiency.  Not to mention they've started going cold on your product or service anyway.

7. Get in touch but with respect.

If you collected contact details "in bulk" (ie. business cards, written list) then my strong advice is low gradient contact.  What I mean by that is that you absolutely shouldn't start bombarding people with pushy sales calls, emails or letters.  I recommend a series of increasing gradient steps, letting people progress along at their own pace.  You need to sell philosophy and methodology before you engage a new client or customer.

Take it easy.  If there's mutual benefit and the fit is right, it'll happen.  If you're contacting someone that hasn't specifically asked you to call/email/mail them, you need to respect their boundaries.

8. Don't waste the opportunity.

Many years ago I attended an expo that I spent a lot of time preparing for and then worked hard over two days to meet people and to build our database with their details.  The prize was terrific and expensive - a weekend away at Heritage Golf Course - and I collected hundreds of attendee details.  I was so pleased with myself.  But guess what I did when I got back to the office?  Ummmmmm - nothing!  I never followed up!  After all that hard work and great result, I never added the names to our database and I never got in touch with any of those potential clients.  What a complete waste of time and money.  It was about 15 years ago, but I'm still kicking myself.

Whatever you do, make sure you add the details to your database and make contact within a week.  Don't miss or waste a great opportunity by procrastinating.  And of course, if you're using email (a nice inexpensive option) don't forget to include the unsubscribe option (and don't feel bad when anyone does unsubscribe, it just means your information is not for them and they're cleaning up your database for you).

Hopefully that gives you some direction for when you're next presented with an opportunity to exhibit at an event.  Follow my 8 tips and you'll be able to make sensible decisions about where you choose to exhibit and make it a super success when you do!

If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Business" radio segment on 98.1FM Radio Eastern.

Talk soon,

PS. Please don't keep me a secret.  If you know someone who'd enjoy this or find it useful, pass it on!