Businesses of all sizes are facing problems. Individuals, family and friends are having problems. Given the governmental restrictions imposed upon almost everyone, virtually all of us have been negatively impacted in one way or another. For some, income streams have been interrupted. That fact alone is enough to cause mental stresses for many. People need help and businesses need help. For those with the desire and ability to help, the question is how to deliver appropriate and effective assistance.
It seems that the initial response is always to “throw money at it.” That may seem crass but bear with me. We have watched caring individuals rush to put a plan together to aid local businesses before it’s too late. Incomplete plans have been put before town councils which resulted in a number of impassioned debates. Funding has been requested without procedures in place for disbursement. Some even thought that disbursement on a first-come, first-served basis was a reasonable idea. That was rightfully dismissed with the question, “what about need?”
That leads to a whole other discussion. How can need be determined? Additionally, who will be assigned the task of determining need? Who even wants that assignment? Then another question … should disbursements be in the form of grant — free money? Should it be loan? If a loan, repayable or forgivable? If it’s truly a loan, shouldn’t the ability to repay be considered?
Now there’s a subject near and dear to my heart — lending. Most of my career was spent as a lending officer. After seven years of consumer and small business lending, I got the plum. My employer selected me to attend The National Commercial Lending School sponsored by the American Bankers Association — a weeklong course at the University of Oklahoma.
The real point to be made here is that deciding who gets money and who gets turned down is not a casual task. Even as a governmental award program, a flip of a coin is not appropriate. Considerations are endless. True need — how is it determined. Which businesses’ needs are greater than another? How does one compare the needs of a bicycle shop with those of a clothing store? The businesses are apples and oranges. Do you play banker and ask for balance sheets, profit and loss statement, a receivables listing or tax returns? Professional lenders require years of training to make such decisions on an informed basis.
A system of credit scoring was developed years ago. Point values were assigned to various factors — length of time on job, renting or buying, length of time at residence, credit history, etc. It the borrower made the cut off, the loan was granted. Notable is the fact that specific, written criteria existed for scoring. In any loan or grant program, such criteria must pre-exist the program for the program to be sustainable and valid. Decisions cannot be arbitrary. Requesting funding without a fully vetted plan in place is putting the cart before the horse.
I don’t wish to appear critical of people whose hearts are clearly in the right place. These are well-meaning folks who want to act now. It’s the hurry that is most concerning. Perhaps this current situation will create the groundwork to plan today for the next unforeseen crisis.
In closing, I’d like to share a series of random, but related thoughts.
A young man once told me that doing it fast is more important than doing it right. He was a Navy guy and he was wrong! I’ve watched it done both ways. Many will confirm that if it’s done right the first time, less time is expended than if it’s done fast and you have to go back later to plug the leaks.
I must share this old poster I had. Picture the Leaning Tower of Pisa. In front is an engineer looking at it through a transit and theodolite. Caption reads “Do it right the first time.” Truth?
The process of rushing it through and fixing the details later is too reminiscent of Nancy Pelosi for my tastes.
An old basketball coach once advised me, “We need to look before we leap.”
In the military it’s said that a plan is only good until the first shot is fired. A good plan, however, provides a firm base from which to begin.
Best of luck to everyone concerned. And remember, doing it fast almost always creates future problems.
Rick Blatchford writes from Mount Airy. Contact him at firstname.lastname@example.org.