It is common for a business owner to get defensive when asked “who is your biggest competitor?” They tend to believe that if they never mention their competitors then it is like they don’t exist… REALITY CHECK, knowing your competition is the best knowledge any Marketer can have!

Business owners do not always understand how critically important it is to know the ins and outs of their three biggest competitors. I am always asking my clients the following about their competition:

1.       Name your top 3 competitors locally, and your top 3 competitors on a regional or national scale.

2.       Why each is considered competition to your company?

3.       What are these companies doing that your business is not doing?

4.       What are you doing that is similar to these companies?

5.       What are you doing that is different from these companies?

Understanding the five points above will show holes in the market place, provide a picture of opportunity/lack of, or prove that the market is saturated resulting in the business owner making some changes to their model.

Unfortunately, I have seen companies that spend years working toward building their business and dipping into savings to finance the project, only to then find out that their business model is extremely similar to many other operating businesses in their desired area. Researching your competition and determining if you are correctly positioning your company is one of the first steps one should take before investing any money. In the long run, this could make or break your business!

Can you relate to the common mistake of ignoring competition? Or maybe you have seen companies who do not think competitive analysis is important and it backfires on their business. LET’S TALK ABOUT IT!

Have you figured it out yet? Watchdog reports surfacing today argue that $2.1 billion of the Obama Administration’s Small Business Lending Fund was used by banks to repay bailouts.

Are you as angry as I am? You should be. According to an article by Jose Pagliery on CNN Money website (FULL ARTICLE), Obama’s not so favored $4 billion fund was established in 2011 and was dispersed to 332 banks and community lending groups. The purpose of the fund was to increase small business lending. Unfortunately 137 banks had a different idea for the fund; using it to pay back bailout money or as the government labels it TARP (Troubled Asset Relief Program).

Many analysts and bankers believe it was inevitable that 80% of the banks would use the fund to pay back TARP. But what does the government have to say about it? According to Pagliery’s article, “The Treasury Department said there’s nothing wrong with the way the banks used the funds.” The Treasury Department also claims that even though these banks used the money to repay TARP they also increased small business lending. Let’s look at the numbers; “TARP banks received $2.7 billion in funds, and they increased small business lending by $3 billion…the non-TARP banks received $1.2 billion in funds and increased small business lending by $4.2 billion” (Pagliery).

Does anyone else see something wrong with this? As the Obama Administration promised, they gave banks a fund to lend to small businesses, and what did the banks do? They spent it to better their own pockets! The government seems to be accepting of the mistreated money, how accepting are you?

Anyone who has gone through the process of trying to secure a Small Business Loan knows how difficult it can be. Because I am in the business of helping others with the materials needed to apply for a loan, I always find it interesting to hear what the banks are doing to try to help, or for lack of better words, “screw over” small businesses.

I came across an article by author Robb Mandelbaum from the Small Business section of The New York Times called “The S.B.A Wants to Encourage More Small Loans” READ ORIGINAL ARTICLE HERE and it immediately caught my attention. Here is a list of things I found noteworthy.

• The White House sent a budget to Congress for 2014 that attempts to push banks to make smaller loans to small businesses

• The S.B.A. – guaranteed “general business or 7(a) loan” for $150K or less has decreased $3.5 billion since 2007.  

• The recession that hit in 2009 is still partially to blame for loan uncertainty today.

• S.B.A reported that the decline in smaller guaranteed loans went up in flames because the loan approval was based on personal credit scores rather than business fundamentals. The banks that participated in this “S.B.A. Express Loan” experienced huge losses.
• Another loan program called “Community Express” introduced in 2010 has not been successful.

• Borrowers have been forced  to use the traditional 7(a) program which is costly and time intensive for the banks; since it cost the same and takes the same amount of time for any loan amount, banks are finding bigger loans more profitable and worth the work. 

• Because banks are heavy lending to larger businesses with larger loan requests, the S.B.A. needed to come up with a plan for small businesses/smaller loans. 
• The S.B.A.’s solution is to waive the fees for banks to guarantee small loans (this includes the one time and annual fees). It is still unclear if this fee waive will spark new lending. 
• The S.B.A. has also rolled out a new program called “Small Loan Advantage.”  
  

It is too soon to tell if the new S.B.A. programs will be beneficial for small businesses or just add fuel to the fire. My advice, DON’T GIVE UP! The economic health of our country is turning around, and this article proves the S.B.A. acknowledges the problems and is putting programs in place to fix it.

Keep visiting your trusted lender and keep pushing for small business loans…your hard work will eventually pay off.