The Wall Street Journal and The Economist have compiled data on the state of the economy, the stock market, interest rates, exchange rates, and compared them to the short and medium term forecasts by noted economists. The published results showed that roughly three quarters of the projections were totally wrong and the balance, partially in error. The federal government's finance department, aided by a mammoth computer bank, plus a staff of a thousand, also has erred on projections.
So don’t worry if you aren’t Nostradamus.
You will have to take an educated guess and hope that you are close. You may be asked for a market analysis: The area in which you operate, market forces facing your business, your customers, suppliers, competition and market trends (your and your competitors'), strengths and weaknesses, and opportunities open to you.
But if you are going to write a long piece covering these points, you should be a journalist not a businessman—just throw stuff together that sounds logical overall. Only the first and last paragraphs will be read anyway, so they have to be brisk and memorable. Mention something along the line that companies like Xerox enjoyed fat profits and growth when they had temporary product monopolies but not since. This kind of stuff goes over well.
Remember the banker's buzzword: SWOT. SWOT stands for the Strengths, Weaknesses, Opportunities, and Threats facing your company.
In my dealings with banks I found it most annoying when bank managers asked me to state my strategy for the next decade. How can anyone? These are tough questions to answer—very tough. One makes an educated guess. Circumstances change all the time.
Strategy is something that grows out of the moment; sometimes an opening, an opportunity emerges that may be critical to one’s entire business career. You jump at it or regret. You learn to develop a feel for the times. If you are running your business at a profit and don't require new loans, the bank will not require an essay on strategy.
Next, you'll be asked to briefly describe your primary customers. One does this without hesitation but how accurate will the list be two years down the road?
As any entrepreneur knows, one cannot count on a customer's loyalty. Some will stop doing business with you for no apparent reason, even if you treat them royally. Of course you will lose customers if they feel they had been treated shabbily, but anticipating their every wish guarantees you nothing. A small, medium, or large firm, in any line of business, must look for and find new customers all the time.
Frederick Reicheld, author of “The Loyalty Effect; The Hidden Force Behind Growth, Profits and Lasting Value,” estimates that U.S. companies now lose half their customers every five years and half their employees in four. “You can't grow when customers are defecting out the back door faster than the sales force can pull new ones in the front doors,” he wrote.
Manny Drukier has been in business, from manufacturing to publishing, retail to real estate, stocks to stockpots for the past 60 years. He is the author of two books and resides in Toronto, Canada.
