Have Some Fun
In my last blog, I shared how to think like a banker so as to up your chances of getting a conventional bank loan. Today I would like to drill down a bit more into a very specific sort of loan – one made in conjunction with The Small Business Administration.
What if I were to tell you that there is an agency of the United States government whose sole job is to help you succeed in your business? Would you like that? And what if I further told you that said agency has a yearly budget of over $1 billion and that it facilitates in excess of 50,000 small business loans a year, totaling more than $15 billion? Do you think that may help you get your business funded?
Of course we are talking about the Small Business Administration. In many ways, the SBA is one of the best friends your business can have, but this is even truer when it comes to funding. SBA loans have helped millions of entrepreneurs start and grow their business and it can help you too.
The first thing to understand about SBA loans is that the SBA does not make loans, as strange as that sounds. What the SBA does is guarantee loans. By offering a loan guarantee to a bank, the SBA makes it easier for that bank to make more loans since the bank is assured of repayment; if the borrower is unable to repay the loan, the U.S. government will. That is a fine incentive for making more loans.
How much does the SBA guarantee? Traditionally, SBA loan guarantees worked this way:
- Loans up to $50,000 – SBA guarantees 50% of the loan
- Loans up to $150,000 – SBA guarantees 85% of the loan
- Loans above $150,000 – SBA guarantees 75% of the loan
A big change resulting from the 2009 stimulus law is that the SBA now has the right to guarantee up to 90% of all loans. Sometimes the SBA does in fact guarantee that much, but not always. As they say, "your results may vary."
The core loan the SBA makes, its basic, mainstay loan program, is the 7(a) loan. 7(a) loans can be used for all sorts of things – startups, working capital, equipment, furniture, and real estate even. The length of the loan can be anywhere for 10 to 25 years, and loan amount have recently been raised to $5 million.
But this is just one type of loan. There are many others fo other purposes. Check out this site.
There really is not a lot of difference between applying for an SBA loan and a conventional business loans. You will need to provide extensive documentation as to your need and use of the monies and you will need to make a great impression. The main difference is that here, you will need to fill out SBA forms in addition to whatever else the lender typically requires. The basic SBA forms that you should expect to encounter, among others, are these:
- Form 4: Application for Business Loan
- Form 4A: Schedule of Collateral
- Form 413: Personal Financial Statement
- Form 912: Statement of Personal History
- Form 1846: Statement Regarding Lobbying
One last note: Aside from more lenient underwriting criteria, one other good thing about SBA loans is that you may not need collateral to get one. According to the SBA, "To the extent that worthwhile assets are available, adequate collateral is required as security on all SBA loans. However, SBA will generally not decline a loan where inadequacy of collateral is the only unfavorable factor."
(For even more business tips and strategies, check out our podcast on iTunes, Small Business Success with Steve Strauss, Powered by Greatland.)
In my last blog, I discussed why having fun at work means, ironically, that usually more work gets done. Having a great culture is a mighty motivator for employees, but of course it is not the only one. Essentially, there are two other ways to motivate employees: with money and without money. In this blog I am going to discuss ways to motivate with money (which is not always as easy as it sounds). In my next blog, we will look at non-financial motivators.
It is no secret that money motivates people, you know that, I know that, we all know that. Holding sales contests, offering bonuses, dangling raises—these are tried-and-true ways to motivate people. The benefits package you offer is another financial motivator, but this begs the question: Why does it take money to motivate an employee?
The answer is that the possibility of making more money transforms the employee into an entrepreneur, and entrepreneurship is based on the premise that hard work and ingenuity will be rewarded. Isn't that how you think? "If I implement that plan, we could increase sales by 10 percent!" Well, that is precisely what an employee thinks when offered a money motivator. "If I sell more than anyone else this month, I win that trip to Hawaii!" So the secret to motivating with money is to tap into this mind-set for mutual benefit.
First, you can always link an employee's pay to performance. That is exactly how commissioned salespeople work. Similarly, you could link bonuses to desired outcomes. For example, you might offer your director of operations a nice bonus if he can reduce overhead by 10 percent for the year. A manager might get 10 percent of any increased revenues for his store for the month. There are many ways to structure such a compensation program.
But remember, when creating a money-motivated system, it is important that the reward be linked to an outcome that the employee can control. The director of operations can directly affect overhead, but he or she cannot increase sales, so a reward based on increased sales would not work for him or her and in fact may be counter-productive. If the reward is based on overall company performance, the employee will be motivated to try harder only if he or she can affect that performance. As long as the reward and the desired action are linked, the motivation will be there.
Finally, let's look at contests. Contests have been used to motivate employees for ages, and for a good reason – they work. Contests build excitement and create desired behaviors and outcomes. The secret is that the best contests:
- Use realistic and achievable goals
- Are limited to a short period of time
- Have desirable prizes
- Link rewards to performance, and
- Have uncomplicated rules
So yes, motivating with money works, and works well, but fortunately, it is not the only way to motivate people. Read my next blog to get some good ideas of non-financial motivators.
Employees who are disengaged are so for a reason. The Gallup Organization's annual survey of employment found that employees are unmotivated when they do not know what is expected of them, when they feel stagnant in their work, and when they do not feel appreciated. People lose enthusiasm for a job when it becomes boring and routine, when bosses are clueless, and when their employer seems to care more about money than people.
If you want to motivate employees without money, the first thing you need to do is engage them. You need to learn what excites the problematic employee and try and incorporate that into their work. What motivates people is feeling appreciated as individuals and contributing what they have to offer.
Indeed, there are many simple ways to motivate people, to have them feel appreciated, without spending a lot of money:
Show your appreciation. Thanking employees for a job well done is so simple yet so effective. Thanks can take many forms. It could be a pat on the back from a manager, a call from the president, a special parking spot for a week, a night out with your team, increased territory, a massage and facial, or a round of golf. FedEx inscribes the names of special employees' children on the nose of new planes to thank the employee for a job well done. How often do you see a plaque naming the employee of the month?
Recognize employees. Letting everyone know that a team member did a great job works wonders. A survey conducted by the Minnesota Department of Natural Resources found that for 68% of employees, being appreciated is important to job satisfaction. At Blanchard Training in Escondido, California, praise from customers and managers is reprinted in the company newsletter. What about sending a press release regarding an accomplishment to your trade journal?
Ask for input. Listening to employee ideas and taking action on them makes people feel as if they are part of a team and that what they say makes a difference. At Grumman Corporation in New York, employees whose suggestions are implemented receive gift certificates. Fel-Pro in Skokie, Illinois, has a yearly drawing for $1,000 for all employees who participated in the employee suggestion program.
Offer freebies. Employees who do something above and beyond the call of duty can be given an afternoon off, a gift certificate to Nordstrom, or tickets to a sporting event. At H. B. Fuller Company in St. Paul, Minnesota, employees get a paid day off on their birthday. Mary Kay Cosmetics gives the birthday girl a lunch voucher for two.
Make your business a special place to work. What about having a massage therapist come by every other week for complimentary 15-minute back massages at employees' desks? What about an in-house yoga class? Have a yearly picnic with spouses and children. Organize a rafting trip down the river. None of these ideas costs a lot, but all would be appreciated, and appreciation is motivation.
The thing about non-monetary rewards is that you need to be creative. Take suggestions. A few changes can reap tremendous rewards.
What Kind of Boss Are You?
All month, we have been looking at what makes for an enjoyable workplace: culture, fun, bonuses, giving thanks, etc. But maybe the most important factor that goes into the 'good place to work' equation is whether you are a good boss or a bad boss.
I recently heard this great, great-boss story:
A woman was about to start a new job when an unexpected medical emergency came up and she had to schedule significant surgery right before starting the new position. So she called up her boss-to-be and explained the situation. But rather than being upset, or calling the new job off, he arranged it so that she would start the job on disability leave and thereby get her salary to kick-in.
When her first check arrived two weeks later, it turned out that it was for her full salary and not the partial disability salary she expected. She called the boss to say that a mistake had been made, but he said no, that they decided to pay her normally. He wished her a speedy recovery and said that they hope to see her soon. Of course she is so grateful that she says they will have a loyal employee forever.
Isn't that one of the main benefits of being a great boss – you get to create a happy and productive workplace? Yes, being a good boss sometimes costs more and requires greater patience, but the payoffs far outweigh any burdens:
- You make more money. Studies show that happy employees create happy customers and happy customers create happy bank accounts
- You instill loyalty and hard work. People like to work for people they like, and will work harder and better. They will also have a better attitude and be willing to go the extra mile
- You can sleep at night: I can tell you that, having once had a boss threaten to put his cigarette out in my forehead because I didn't hit my numbers that month, I don't know how some of these people live with themselves. But the opposite is true too – good bosses set great examples.
And the thing is, it is not that difficult to be a good boss. It is really a matter of trying to do the right thing. How about the boss who offered an employee all of the available overtime work one month because he knew she was in a bad financial situation? It didn't cost him anything but it sure did gain him a lot. Or the boss who made sure that the pregnant cashier was able to sit down while doing her job?
Little things go a long way in the workplace. Good bosses are fair, they trust their staff, they challenge you to do your best, they listen, and they are respectful.
And just maybe, they give folks that extra Friday off here and there during the summer.