Tag Archive for: strategy

Hey Lenders, Is Winter Coming???

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One of my favorite shows recently has been the HBO series Game of Thrones. One of the sayings from the series is “Winter is coming.” This is a dire warning to all that the current favorable conditions are ending and you need to prepare for the inevitable struggle of a long, harsh winter. During the CFSA conference last week it struck me that this saying could apply to the payday loan industry and its anticipation of new rules coming from the CFPB. While it may be a stretch to say that the landscape after the rules are implemented will be as foreboding as what is portrayed in the Game of Thrones, the sentiment shared by the operators in the industry certainly is not one of excitement and understanding.

One of the questions repeated by operators in the industry is why there are new rules being created when there are already existing laws in each state? Historically there have been comments that the numbers of complaints from consumers about payday lenders to the state agencies are very low. If consumer satisfaction is high, why the need for more rules? Maybe to help clarify this, the CFPB created a mechanism for consumers to make complaints directly to them – not only for payday lenders, but other industries (credit cards, private student loans, mortgages, bank accounts and services, credit reporting, consumer loans, money transfers, & debt collection). Based on a presentation given by the CFPB at the CFSA conference, the bureaus started collecting complaints on 11/6/2013. As of 1/31/2015 they had received 538,300 complaints covering the named industries. The payday loan industry had over 7,100 of these complaints. My rough math says that is about 1.32% of all the complaints. Out of the nine groups they are compiling data on, the payday loan group had 1.32%. One of the attendees stated, “This seems really low”.   Obviously with complaints this low there must be a problem…. just not sure it is with the operators.

As I was walking between workshops I overheard one operator tell another that she was shutting her business down due to her bank kicking her out with no notice and no past issues. Another victim of Operation Chokepoint? Apparently, she could not find a replacement bank. While recent news has been positive that this “initiative” has been halted, are the banks opening their doors back up to those they kicked out unnecessarily? I actually had a bank representative (name withheld to protect the “innocent”) contact me to try and help place their customer with another bank that would accept check cashing and payday lending. I asked the obvious question – “Do you not serve businesses in the industry?” The response was, unfortunately, not surprising, “No.” I sent him an article to enlighten him about the change in Operation Chokepoint. Never got a response. I still go back to the high customer satisfaction in the industry and the high product demand and just don’t understand the disconnect.

There was much discussion during the conference about the CFPB’s timeline for the rules to be effective. It appears that the final rules may not be effective until 2017, but that could change. At this point we still don’t know if the rules will only cover payday loans or if they will reach over into title loans, installment loans and other products. Based on the amount of time this is taking, it may be safe to assume the reach will go beyond payday loans. Not only are there going to be industry-changing rules in the future, data at the conference illustrated that customer demand has been shifting from a single-pay product to a multi-pay product. Customers are also getting more comfortable operating in an online environment for their financial products. Think about these last two items as they relate to your current operations. Do you offer a multi-pay product now? Do you offer your products in an online or mobile environment? If you said no to either of those, winter may be closer than you think!

So what should your strategy be to prepare for the upcoming “winter”? Here are a few things to consider as the landscape continues to evolve:

  • Continue to provide excellent customer service in a compliant, ethical fashion. The best way to maintain and grow your business is to still offer it at a high standard.
  • Explore options to add installment loans to your portfolio. There is a lengthy runway to implementing installment loans successfully – start now!  At the same time, you might want to start looking for extra funding – installment loans tie up cash.
  • Look at your current systems to understand what it would take to offer your products online or in a mobile environment. Will your current system handle installment loans? Do you need to change platforms?
  • Maintain good relationships with your vendors and bankers. At the same time, look for effective replacements. Don’t let yourself get caught without a way to operate.
  • Stay informed. The product and regulatory landscape are changing quickly and dramatically. Monitoring regulations and your competition are critical to gain insights to the future.

While these times are fluid and maybe a little ominous, there is also good news.  If you have the right strategy and the ability to adapt with the times, customer demand is out there.  If you don’t, there are experts out here that are able and willing to help you succeed.  Winter is coming.  Let’s get ready!

Contact Mike

Goal Status Check – How Are We Doing?

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What is SMART?

We’re one month into 2015, which is the perfect time to evaluate the goals you set for 2015.  Earlier we talked about the importance of using SMART to make our goals.  (See Be SMART)  Below is a brief overview of what SMART means in relation to goal setting.

  • Specific – you need to know what you are trying to achieve
  • Measurable – you need to be able to quantify your goal
  • Attainable – you actually need to be able to reach your goal
  • Relevant – it should be important for you and your situation
  • Time-bound – your goal should have a target date

Using this as a guide to create your goals will increase your chances of success.

Goal Review

There are many factors that can affect the success or failure of each of your goals.  I will discuss a few of these and give you suggestions on how to overcome some hurdles.  Right now, let’s take a few minutes and review where you are with each of your goals.  If you wrote your goals out (if you didn’t, do so now), take out the piece of paper or open the document, put today’s date on it and write a few notes detailing where you are with achieving your goal.  Be honest.  Be candid.  Are you where you thought you would be at this point?  If yes, great job and keep up the momentum. If not, consider what happened or didn’t happen and write that down. Next, write down what you are going to do next to continue (or start) the progress on your goal.  Keep in mind that you are going to be reviewing these notes again in March.  Did that make you think differently about what you wrote?  Lastly, go to your calendar and create an appointment (with reminder) for March 3.  This will be the day you go through this entire process again.  The best way to commit to achieving your goals is to commit to reviewing your progress.

Goal Trippers

As I mentioned earlier, there are many factors that can keep you from reaching your goals.  I’m going to cover a few that are within your control and give suggestions on how to overcome them.

Lack of Commitment

When we sit down and start developing our goals, especially around the first of the year, we have the best intentions of achieving success.  We are excited, energized, and probably visualizing how things will look when we have succeeded.  Then, when the goal-setting process is over, do we file them away and get back to our day-to-day routine?  After a period of time we may remember that we have goals and work on them for a while, but then put them aside again.  Eventually, the due date has slipped by and we have completely forgotten about the goals.  While writing goals down greatly helps the chances of success, unless you regularly review your progress, the chances of success drop.  Depending on your goal and it’s timeframe, you should create a structured review of your progress.  It may be once each month or maybe it’s even weekly, but it needs to happen and you need to keep putting it in writing.

Fear of Success

Pick one of your goals and visualize how things look when you have succeeded far beyond your expectations?  How does this make you feel? Are you really excited or do you get a little nervous and feel uncomfortable?  One of the main reasons why goals are not met is because people get uncomfortable with the prospect of change.  Many people will focus on succeeding at their day-to-day tasks instead of working towards accomplishing their goals.  The day-to-day is what they are used to and is well within their comfort zone.  Getting outside of our comfort zone is not always easy, but is what it takes to attain your goals and grow your business.  While it is important for us to understand that things will change whether we want them to or not, understanding that does not always prevent it from blocking goals.  One way to handle this fear is to talk about it with others.  Whether it is in a peer group, business coach, spouse, friend or anyone else that you trust, discussing your fears and concerns is one of the best ways to get a grip on them and overcome them.  You would be surprised how differently you feel once you have this conversation.

Accountability

In my mind, one of the biggest reasons goals do not get accomplished is lack of accountability.  As a business owner, who are you accountable to, besides yourself?  Who can you confide in to help validate your progress or discuss issues?  If there is no one holding you accountable, it is so much easier to focus on the day-to-day issues and let the goals you set slide to the next year.  How often is that happening to you?  One of the best ways successful business owners handle this issue is to engage someone outside their business to help them.  This can be a mentor, peer group, or a business coach.  Someone that will collaborate with you and at the same time give you candid feedback.  If you met with this person on a routine basis, discussed your issues, and created action steps to accomplish your goals, do you think it would have an impact?

Your Next Goal

To increase the likelihood of attaining your goals, I want to give you a new goal.  Find someone that you can review your goals with on a routine business.  Make sure this is someone you can confide in and will give you honest, candid feedback on your progress.  Ideally, this person will be able to give you suggestions on how to overcome obstacles and collaborate with you on action steps for you to complete.  While I may be slightly biased (ok, a lot), a certified professional business coach might be the ideal candidate for this role.  The important thing is for you to accomplish your goals and succeed, so if you do not have access to a business coach or peer group, a mentor or trusted friend is also a good option.  Make sure you write this goal down and review it on March 3!