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Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Beth Ewen
March 2008

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Dear Informer

Becoming razor sharp takes more than attitude alone

By Beth Ewen

BANKING

DEAR INFORMER: Your editor’s note in February quoted Chuck Selcer, about making a company razor sharp. Can you give more details about that conversation and process?

DEAR SHARP:“Razor sharp” is a term that Chuck Selcer uses in his strategic planning sessions with customers. Selcer is a shareholder with Schechter Dokken Kanter, the accounting firm in Minneapolis.
As we go through delineating companies? strengths, weaknesses, opportunities and threats, I ask, ‘Are you a razor sharp company?’  he says. At first he’ll get a blank look, and he’ll explain that being razor sharp is both an attitude and a methodology.

One is an attitude, so you never put off something until tomorrow what you can accomplish today, he says.

And, it’s a methodology. We’re going to shrink all time frames. If it used to take two days, we’ll try to shrink it to a day and a half. We’re going to catch and fix all small mistakes.

We’re going to let everybody know that we catch all mistakes, because we’re a razor sharp organization.

A parallel I draw is, what happened in large cities. People said, we’re going to ticket people for jaywalking. We’re going to let people know that we’re noticing.

What happens if a company is razor sharp in a variety of areas, if it squeezes things from a variety of angles, according to Selcer?

What if we make only a one-day dent in accounts receivable, and one day less in inventory, and one more day in revenue? If you put those all together it adds up to real money, Selcer says.

How would you go about getting your company razor sharp?

Usually your employees know where you’re not razor sharp, Selcer says. They feel that life is good, no one’s questioned things, and they just go about their daily business. They haven’t been given a reason to let management know where things are lax.

So start with the employees at the transaction level, and ask where are the small issues? Then re-engineer your processes to edge out mistakes.

Selcer gives a couple of examples about where to look, starting with billing. There are many companies that may ship today and get billing out tomorrow. All this does is delay their receipt of cash. A razor sharp company bills the same time as shipping.

In a service company, maybe the service doesn’t get billed for many months or weeks later. The razor sharp company bills as service is rendered. If the excuse is, our people haven’t entered their time, then a razor sharp company says, we’ll enter our time every day.

Inventory management is another example. A lot of companies buy inventory and hang onto it too long. A razor-sharp company says, we have a warehouse that’s just this size. We have a policy that if it?s here after X number of days, we’ll vaporize it, whether it’s to a liquidator or a going out of business jockey.

Do all these small changes add up to real money? Selcer thinks so.
I have clients who come to me and they seek the silver bullet.
They’re not making money and they want the $100,000 answer. I say, I don’t have it. But if you get real good in many areas, it will work for you.

Most recently I did a retreat for an organization and they had three years of red ink. We got everyone in a room. The more we talked, we found they were so loose in so many directions. When they became razor sharp, and with no new business, they became profitable.

It sort of ripples through the system, as you start to do little things better.

Chuck Selcer, Schechter Dokken Kanter: 612.332.9319;  cselcer@sdkcpa.com; www.sdkcpa.com. Hear a complete interview on this topic here.

DEARINFORMER: It’s time for me to go to a bank for a loan, for the first time. What are some red flags for bankers that I should avoid?

DEAR BORROWER: Personal credit history is the first thing bankers look for, says Donna Aldama, vice president at Northeast Bank in Minneapolis, something that many business owners aren?t prepared to hear.

Sometimes business owners think their personal history isn’t reflective of what the business is going to do.

We believe it absolutely does. A past history of paying debts or not paying debts is really a good indicator of a future action. If someone is willing to default on their personal loan, then what are they going to do with our loan?

Judgments, current liens or bankruptcies that can’t be fully explained are a problem. What does she mean by fully explained?

There is leeway. We have had some situations where there’s been a major medical illness in the family, and then you can go through a personal bankruptcy, Aldama says.

Also, a lot of startup businesses will self-fund through credit cards, and then they’ll rack up $70-$80,000 of personal debt, and they’ll have to re-finance that.

So she as a banker would take such things into account? Yes, and they should be really forthcoming with it, because we’re going to find out everything.

If theres more than one owner, such as minority shareholders, does she look at their full personal history as well?  We look at history of someone who’s going to guarantee the loan, and we look at someone with 20 percent ownership or more.

Aldama says financial projections also present a fertile area for red flags.

We want three years of projections. If they?re younger than that, we look at the projections and evaluate them. When I see inflated numbers, it makes me question what else is unrealistic in the business plan.

We’ve seen a lot of bs