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[This post is part of a series on business…for business owner/managers and their lenders.]

In sea kayaking, when a paddler capsizes, he tries to roll right back up and keep going. If he cannot, he ‘wet exits’ and needs to get back in the boat. And in 50° water, that needs to happen quickly. He is no longer a paddler, we call him the ‘swimmer’.

If there are other paddlers nearby, an assisted rescue may be the quickest. And no matter how skilled or experienced the swimmer is, the rescuer takes charge of the rescue. Why? Because the swimmer may be injured and/or getting cold, both of which impair his judgment.

Business ‘shock’…
A business owner or manager may have many years of experience and great skill and knowledge about her industry and her business…but this recession has put many business owners and managers into ‘shock’.

It may be one big shock, or the wear-and-tear of repeated capsizes and recoveries over and over again. It is easy to get into a bunker mentality and possibly take action that may hinder instead of enhance recovery or rescue.

Just this month…
I hindered my own recovery two weeks ago, not in my business, but in my kitchen. I have canned vegetables for over 30 years. I told people for years that pressure canning is safe, and I still believe that. However, August 6th I was helping my husband with a stuck lid. Long story short, I received 1st and 2nd degree burns from my wrist to my elbow.

I have always been the ‘medical’ person in my family and my husband trusted my judgment.  Unfortunately, I did several things that increased or prolonged the injury. I trusted my own judgment and did not realize how being the one that was injured impaired it.

I am doing well now and almost healed, but missed several good kayak trips this month and will likely have permanent scarring. I (and my husband) should have recognized the ‘shock’ factor in the situation and gotten help.

Sometimes even impaired judgment is pretty good…
Then again, when my son Brian was 12 years old, he fell face first out of a tree house. When we finally got enough of the blood cleaned up to assess his injury he started to shake. I said: “Honey, are you cold?”

My 12 -year-old boy scout mumbled through his hurt mouth, “Mom, I am probably going into shock. You should lay me down and put my feet up.”

Who is the business owner/manager paddling with?
This is one of my ‘ten essentials of lending’. In sea kayaking, we make sure that we are paddling with the right people given the conditions. Experience (general and on this route), rescue skills, and conditioning all play into it. There need to be enough of us to effect a rescue and get help if needed.

And then, when things go wrong, we need to rely on each other.

As a lender, when you are considering a business loan or a loan to a business owner, ask this question. A business owner/manager has more resources and resiliency who is

  • Connected and active in local and national business, trade and professional associations
  • Part of a business large enough to have a strong management team
  • Advised by their CPA, Attorney, Banker and other business consultants
  • Has a personality that allows them to reach out to others for help or advice

Lending is going to be harder in the recovery, not easier.
Include in your write-up the ways in which you think the business management has good resources and is willing to use them.

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Linda Keith, CPA

Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis.
She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans.
Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.