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Published September 22, 2020

Bob Jahnke, Green Bay SCORE volunteer and owner of Top Hat Marketing, wants to give entrepreneurs an opportunity to "learn from the best." He will be a facilitator for a SCORE Zoom event, "Business Legends of Green Bay," at 9 a.m. on Oct. 9.

Legends will include Terry Lemerond, founder and president of Terry Naturally products; Rick Chernick, CEO of Camera Corner; and Scott King, past president of Bank One.

King, who is retired, brings a career of banking experience. No one would dispute that he started at the bottom and worked his way to the top. When he was in high school, he cut grass at the People's Bank of Green Bay and continued working there through high school and college. After graduating, he was offered a job and moved through the ranks, becoming president of Bank One (People's Bank had been acquired by Bank One) when he was just 39 years old.

He stayed with Bank One until 2014 when he joined Nicolet Bank to manage the commercial lending area. With this focus, he and his team worked with business owners and carefully weighed the prospects for success.

"In evaluating a loan, I used the six "C's" of lending (character, capacity, capital, collateral, conditions, and credit score), but the underlying principle that I learned early on and used as a guide was that character was the most important part of the C's," King said.

The character he looked for included organization, experience, dedication, and management skills. The person needed to understand risk and not just the potential for reward. He often witnessed a reluctance on behalf of the client to put up personal collateral like a home.

"They might think, 'I am willing to lose your money, but not any of my own,'" King said. "But, if they believe in what they plan to do, they will understand that signing a personal guarantee is part of that."

In addition, he said that the most successful entrepreneurs exuded passion and drive, and weren't afraid to ask for help and surround themselves with good people.

"When a client is taking a risk on a business, whether buying it or starting it, as a practice, I would refer them to someone in the industry who could be a mentor or an investor," King said. "I've used groups like SCORE and the UW-Green Bay Small Business Development Center; somewhere where someone can help you take your idea and put it on paper so you can make a good presentation to a banker."

Putting the idea on paper usually involved writing a business plan, but King emphasized that it didn't need to be elaborate. Bankers don't want to spend hours going through a pile of narratives. What's important is the numbers, and what's behind them, because the main reason for business failure is being undercapitalized. The numbers need to give a realistic expectation of income and expenses.

"As a banker, you ask for a proforma of the client's estimate of what the business is projected to do," King said. "But they better have the facts behind the estimates. If you say you are going to do $100,000, but only do $50,000, what's the plan?"

Even when the bank might be able to make a loan work by using a Small Business Administration guarantee, King said he hesitated when the cash flow was iffy. There are options for other funding, but the bottom line is that weak projections will greatly increase the chances of failure.

"Banks aren't in the business of losing money," he said. "I would tell my customers that when we get into a loan relationship, I could lose a little, but you might lose it all."

But, if those hurdles are overcome, the lender likely will present numerous options. It might include separate loans for inventory and equipment, real estate, and a line of credit, and each could carry a different amortization schedule and interest rate. Once those decisions have been made, it is the start of a relationship, and frequent meetings are recommended.

Those meetings, even if they are not in person, are especially vital during a pandemic when so many businesses have had their worlds turned upside down. King said that the challenge is great because we have never faced something like this and it will take creativity and smarts to find a path.

As an example, he said: "I had a client during the horrible recession in the '70s when the prime rate hit 20%, who watched other businesses in his industry struggling to find work for their employees and taking jobs where they lost money. Instead, he closed his doors for several years and put his money on a CD. After five years, many of the other businesses had closed and he opened his doors and is still in business today."

To sign up for the presentation, email bob.janhke@scorevolunteer.org for the link.

Tina Dettman-Bielefeldt is co-owner of DB Commercial Real Estate in Green Bay and past district director for SCORE, Wisconsin.