The Basel II accord is very clear on the need for banks to actively manage their operational risk. However an over-emphasis is being placed on the "loss data" aspect, to the pont where sight is being lost of what the spirit of operational risk mitigation is all about.
The Basel II Capital Adequacy requirements have been introduced to encourage banks to improve their management of Credit, Market and Operational Risks. Under the new accord comes a risk based capital requirement specifically for Operational Risk. While capital is important it is only one defense against risk. It is also unlikely that it will be the preferred solution.
An increase in capital will not in itself reduce risk, only management action can achieve this. The control of Operational Risk fundamentally lies with good management. This involves a persistent process of vigilance and continued improvement. Operational Risk Management is a value adding activity that impacts, either directly or indirectly on a bank’s bottom line performance. It therefore should be a key consideration for any bank.
However despite this, the advertising material put out by many technology suppliers on the question of Basel II Operational Risk compliance carries a single message – that Operational Risk Compliance is all about the bean counting, or to put it into their jargon, “DATA MINING”. Not a word is said about the real message flowing from Basle II; – MANAGE the risk and not, repeat NOT only measure it. Undeniably Basel II is more than an exercise in capital allocation and loss data gathering.
Consider the following assortment of claims being made for some of the Basel II software now on offer. It will:
Identify the data for Basel II reporting and analysis;
Locate that data in operational systems spread out across the whole bank and, in some cases, incorporating it with third-party data;
Extract and transform data from operational systems to provide a consistent structure for the data warehouse environment;
Clean the data to achieve a consistent and complete view needed for risk calculations, reporting, and analysis;
These folk have missed the point completely. There is also an operational risk management process waiting to be implemented and no one is saying anything about it.
And don’t only take my word for it! The international Rating Agencies have made it abundantly clear where they stand on Operational Risk and how this aspect is going to affect future bank ratings. The following quotations illustrate the point.
“A quantitative approach to operational risk management is not the ultimate solution. … critically important is the implementation of an effective qualitative process of identifying, measuring, managing and controlling operational risk.”
“Since operational risk will affect credit ratings, share prices and organizational reputation, analysts will increasingly include it in their assessment of the management, their strategy and the expected long-term performance of the business.”
Trying to summarize all the risks into a single number or a range of numbers and then trying to manage this down is the first impulse of many banks and they see technology as being the ideal solution. They are creating a false sense of security by turning a blind eye to the real issue – Managing Risk.
Home » Archive for March 2015
Avoid These Seven Deadly Dangers Of Outsourcing
Learn from the mistakes other companies have made with outsourcing. You may recognize these seven deadly dangers from your own software development experiences. However, many companies do not address them as part of an overall software development strategy. See if you avoiding them all with your present approach.
Here are seven dangers of outsourcing your software development. They become deadly if your career or entire company depends on the timely release of your software.
Danger #1- Ignoring Outsourcing
It may seem safer to ignore outsourcing and stick with what has worked well in the past -- hire employee programmers and work with them directly to get your software developed. There are situations where concerns about intellectual property or security make this the only choice. But if you do not have these constraints, then you are wasting money and time by hiring your own programmers.
Danger #2- Hiring the Wrong Team
It is a common mistake to look for an outsourcing vendor only in your immediate circle of friends and acquaintances. Considering ONLY your friend's roommate's brother in Bangalore, or his cousin in Kiev, is unlikely to provide you the outsourcing vendor that best matches your software development needs.
Don't hire an outsourcing vendor that will be distracted by developing their own products. The best teams are dedicated to providing software development services for their clients and already have multiple happy clients in the US.
Danger #3- Not Protecting Your Intellectual Property
The dangers of not protecting your intellectual property (IP) are multiplied when working with outsourcing. Are you using all three types of IP protection - physical, electronic and legal?
Make sure your outsourcing vendor has a secure facility and uses computers without removable media to reduce the risk of unauthorized access to your IP. Use firewalls, VPN and encryption to protect your IP when in transit over the Internet. Use proper legal protections including written agreements and NDAs that are enforceable in the US. A clearly stated contract helps avoid disagreements later and keeps you from the expense of litigation.
Danger #4- Not Knowing What Your Software Should Do
Having good requirements and specifications are key to successful software development, and especially for outsourcing. Fortunately, outsourcing can be successful with only a high-level specification and an outsourced team that can collaborate and communicate with you to determine the details.
Danger #5- Meager Engineering Management
Unfortunately, you cannot completely rely on an offshore team to manage your software development. They will do their best to meet commitments to schedules and a high level of quality. You can outsource the programming but not all the responsibility for creating great software.
Danger #6- Mediocre Software Development Methodology
How do you go about the process of developing software? Do you create an excruciatingly detailed spec and then micromanage? Do you pile up the features for a single stupendous major release? And do you make sure the offshore team must cram all those features in the software by next Tuesday? If so, you have a mediocre software development methodology.
Do you assume "No News is Good News", if you have not heard from your offshore team? Do you NOT have a standard software release procedure or source code control system? If so, you have a mediocre software development methodology.
Danger #7- Quality as an Afterthought
QA is a critical part of the software development process. It is also a major concern when you outsource to programmers that are far away. You cannot wait to start testing until just before you release your software and rush an unacceptable version into use. Having your users find the bugs is a bad strategy.
You don't need to repeat the mistakes of other companies that have tried outsourcing and failed. Avoid these seven deadly dangers take advantage of outsourcing as an effective strategy to develop your software.
Article Tags: Avoid These Seven, These Seven Deadly, Seven Deadly Dangers, Mediocre Software Development, Software Development Methodology, Avoid These, These Seven, Seven Deadly, Deadly Dangers, Software Development, Intellectual Property, Outsourcing Vendor, Offshore Team, Mediocre Software, Development Methodology
Here are seven dangers of outsourcing your software development. They become deadly if your career or entire company depends on the timely release of your software.
Danger #1- Ignoring Outsourcing
It may seem safer to ignore outsourcing and stick with what has worked well in the past -- hire employee programmers and work with them directly to get your software developed. There are situations where concerns about intellectual property or security make this the only choice. But if you do not have these constraints, then you are wasting money and time by hiring your own programmers.
Danger #2- Hiring the Wrong Team
It is a common mistake to look for an outsourcing vendor only in your immediate circle of friends and acquaintances. Considering ONLY your friend's roommate's brother in Bangalore, or his cousin in Kiev, is unlikely to provide you the outsourcing vendor that best matches your software development needs.
Don't hire an outsourcing vendor that will be distracted by developing their own products. The best teams are dedicated to providing software development services for their clients and already have multiple happy clients in the US.
Danger #3- Not Protecting Your Intellectual Property
The dangers of not protecting your intellectual property (IP) are multiplied when working with outsourcing. Are you using all three types of IP protection - physical, electronic and legal?
Make sure your outsourcing vendor has a secure facility and uses computers without removable media to reduce the risk of unauthorized access to your IP. Use firewalls, VPN and encryption to protect your IP when in transit over the Internet. Use proper legal protections including written agreements and NDAs that are enforceable in the US. A clearly stated contract helps avoid disagreements later and keeps you from the expense of litigation.
Danger #4- Not Knowing What Your Software Should Do
Having good requirements and specifications are key to successful software development, and especially for outsourcing. Fortunately, outsourcing can be successful with only a high-level specification and an outsourced team that can collaborate and communicate with you to determine the details.
Danger #5- Meager Engineering Management
Unfortunately, you cannot completely rely on an offshore team to manage your software development. They will do their best to meet commitments to schedules and a high level of quality. You can outsource the programming but not all the responsibility for creating great software.
Danger #6- Mediocre Software Development Methodology
How do you go about the process of developing software? Do you create an excruciatingly detailed spec and then micromanage? Do you pile up the features for a single stupendous major release? And do you make sure the offshore team must cram all those features in the software by next Tuesday? If so, you have a mediocre software development methodology.
Do you assume "No News is Good News", if you have not heard from your offshore team? Do you NOT have a standard software release procedure or source code control system? If so, you have a mediocre software development methodology.
Danger #7- Quality as an Afterthought
QA is a critical part of the software development process. It is also a major concern when you outsource to programmers that are far away. You cannot wait to start testing until just before you release your software and rush an unacceptable version into use. Having your users find the bugs is a bad strategy.
You don't need to repeat the mistakes of other companies that have tried outsourcing and failed. Avoid these seven deadly dangers take advantage of outsourcing as an effective strategy to develop your software.
Article Tags: Avoid These Seven, These Seven Deadly, Seven Deadly Dangers, Mediocre Software Development, Software Development Methodology, Avoid These, These Seven, Seven Deadly, Deadly Dangers, Software Development, Intellectual Property, Outsourcing Vendor, Offshore Team, Mediocre Software, Development Methodology
Avoid a Time Bomb: Sexual Harassment
Over 53 charges of sexual harassment are filed with the Equal Employment Opportunity Commission every business day. What have you done to prevent sexual harassment in your workplace?
Among the myriad subjects now commonly addressed in employee training is harassment. Sexual harassment, as well as age, disability and race discrimination, are among the types of harassment employees experience in the workplace.
But it wasn't until the early 1990s that sexual harassment and discrimination training became a higher priority for companies large and small.
During the Clarence Thomas Supreme Court confirmation hearings in 1991, sexual harassment was brought to the forefront when Thomas was accused of harassing an employee, Anita Hill. This was a wake-up call for companies.
Harassment and discrimination of all types can hurt businesses. According to the U.S. Equal Employment Opportunity Commission (EEOC), in the past 10 years, the average jury verdict in a case of sexual harassment was $250,000, not including legal fees, court costs and punitive damages, making it the most expensive harassment complaint.
With such significant jury verdicts, companies have to take the issue seriously.
In the years since the Thomas case, companies, especially large companies, have been preparing more effectively to defend themselves against claims of sexual and other types of harassment in the workplace.
Under Title IV of The Civil Rights Act of 1964, harassment on the basis of sex, race, color, religion or national origin will not be tolerated in the workplace.
To help companies comply with this law, the EEOC established a set of guidelines defining three primary elements a company must implement to demonstrate its commitment to providing employees with a safe work environment free of harassment.
1.Educate employees. Explain what harassing behavior is and that it's not tolerated.
2.Provide a reporting system and make all employees aware of that system. Make sure everyone knows who they can go to if they feel they're being harassed.
3.Plan for action. Have investigative procedures in place and look into the claim quickly.
Two U.S. Supreme Court cases helped better define a company's responsibility, in particular regarding charges of sexual harassment. The two cases – Faragher vs. City of Boca Raton and Burlington Industries vs. Ellerth – gave birth to the Affirmative Defense Strategy.
The Affirmative Defense Strategy is recognized in the courts as a way for companies to reduce their liability if they follow the training guidelines established by the EEOC.
Average Sucks!
The very first "motivational speaker" I heard as an adult was a gentleman named Mort Utley. I was absolutely coming out of my skin with an indescribable combination of intense excitement and great fear. Mort Utley's speech made one of the most "un-motivational" statements I had ever heard. He said:"Most people do not get what they want out of Life."
The very first "motivational speaker" I heard as an adult was a gentleman named Mort Utley. I experienced his speech in May of 1989 in Nashville, Tennessee, at the end of a week of Sales School with the Southwestern Company. I was 19 years old and had just finished my freshman year at the University of Wisconsin, and Mr. Utley's speech was the final component of my formal training to sell educational books door-to-door for the summer. I was absolutely coming out of my skin with an indescribable combination of intense excitement and great fear. Mort Utley's speech made one of the most "un-motivational" statements I had ever heard. He said:"Most people do not get what they want out of Life."How depressing, I thought. This guy gets paid large amounts of money to "motivate" people and he comes on stage and says that most people do not get what they want out of Life. Thanks for the tip, Mister genius - I suppose next you'll tell me that people from France all speak French. No kidding most people don't get what they want out of Life, I thought - WHY DO YOU THINK I AM LISTENING TO YOU IN THE FIRST PLACE?!?!?!I didn't want to be most people, and my guess is that you don't either. If you want to be most people - broke, unhealthy, and with too little time to actually enjoy your Life - then I doubt you would be receiving this newsletter in the first place. However, throughout these installments you will have some of the things you might believe are "just the way the world is" challenged very directly, and this is the first one. We spend so much of our lives wanting to fit in and be normal that we often unconsciously find ourselves striving to be like most people. In other words, we are actually trying to be average.In America at the beginning of 2003, here is what "average" really means...Physically - roughly half of Americans are clinically obese.Relationships - over half of American marriages end in divorce.Professionally - somewhere between 75% and 85% of Americans do not like their jobs.Financially - at least half of American households regularly struggle with "too much month at the end of money."And I could go on and on and on. Why do I spend the first part of this supposedly inspirational article being such a bummer? Well, it's mainly because if you are serious in your quest to lead the kind of Life that you really want and really deserve, the first realization that needs to happen is that even now - in the most technologically advanced and prosperous society the world has ever seen - AVERAGE SUCKS!But like we said earlier, you don't want to be average - congratulations. The fact that you even subscribe to this newsletter tells me that you are already on the path to being way out of the ordinary. In the coming months you are going to learn some very basic principles - principles that have been proven over literally thousand of years to help individuals and organizations see consistent upward growth in every area of Life - professionally, financially, physically, emotionally, spiritually and in all types of relationships. The great thing about success it that it's simple. Not easy, mind you, but simple. If you learn the fundamentals of successful working and living (and there are really only a few) and then apply then diligently, you definitely will achieve the things you want to be in Life. A bold statement, to be sure, but it's not really up for debate. A mentor of mine once gave me some advice that "Success leaves clues,"and"If you do the right things long enough consistently, your success is assured." Some of the best advice I ever received, and I've never found it to be false. I've seen these principles bring real joy and success to thousands of individuals who've followed them. At the same time, when I counsel individuals or groups that are not seeing the results they desire, they are invariably in violation of one or more of the principles we teach in our workshops and in our writing.So to sum up; people are always asking the big questions - what is the key to success? They ask God, gurus, mentors, speakers, themselves, parents, friends, the boss, the coach, sometimes they even ask us here at Freedom Speakers & Trainers - which is why we created this newsletter. I am here to tell you that if your question is "what's the key?" your first challenge is that there is no key. It's a combination lock. The principles we teach will simply help you determine what the combination is for you. I congratulate you on walking the path - feel free to call and ask directions.
Article Tags: Most People
The very first "motivational speaker" I heard as an adult was a gentleman named Mort Utley. I experienced his speech in May of 1989 in Nashville, Tennessee, at the end of a week of Sales School with the Southwestern Company. I was 19 years old and had just finished my freshman year at the University of Wisconsin, and Mr. Utley's speech was the final component of my formal training to sell educational books door-to-door for the summer. I was absolutely coming out of my skin with an indescribable combination of intense excitement and great fear. Mort Utley's speech made one of the most "un-motivational" statements I had ever heard. He said:"Most people do not get what they want out of Life."How depressing, I thought. This guy gets paid large amounts of money to "motivate" people and he comes on stage and says that most people do not get what they want out of Life. Thanks for the tip, Mister genius - I suppose next you'll tell me that people from France all speak French. No kidding most people don't get what they want out of Life, I thought - WHY DO YOU THINK I AM LISTENING TO YOU IN THE FIRST PLACE?!?!?!I didn't want to be most people, and my guess is that you don't either. If you want to be most people - broke, unhealthy, and with too little time to actually enjoy your Life - then I doubt you would be receiving this newsletter in the first place. However, throughout these installments you will have some of the things you might believe are "just the way the world is" challenged very directly, and this is the first one. We spend so much of our lives wanting to fit in and be normal that we often unconsciously find ourselves striving to be like most people. In other words, we are actually trying to be average.In America at the beginning of 2003, here is what "average" really means...Physically - roughly half of Americans are clinically obese.Relationships - over half of American marriages end in divorce.Professionally - somewhere between 75% and 85% of Americans do not like their jobs.Financially - at least half of American households regularly struggle with "too much month at the end of money."And I could go on and on and on. Why do I spend the first part of this supposedly inspirational article being such a bummer? Well, it's mainly because if you are serious in your quest to lead the kind of Life that you really want and really deserve, the first realization that needs to happen is that even now - in the most technologically advanced and prosperous society the world has ever seen - AVERAGE SUCKS!But like we said earlier, you don't want to be average - congratulations. The fact that you even subscribe to this newsletter tells me that you are already on the path to being way out of the ordinary. In the coming months you are going to learn some very basic principles - principles that have been proven over literally thousand of years to help individuals and organizations see consistent upward growth in every area of Life - professionally, financially, physically, emotionally, spiritually and in all types of relationships. The great thing about success it that it's simple. Not easy, mind you, but simple. If you learn the fundamentals of successful working and living (and there are really only a few) and then apply then diligently, you definitely will achieve the things you want to be in Life. A bold statement, to be sure, but it's not really up for debate. A mentor of mine once gave me some advice that "Success leaves clues,"and"If you do the right things long enough consistently, your success is assured." Some of the best advice I ever received, and I've never found it to be false. I've seen these principles bring real joy and success to thousands of individuals who've followed them. At the same time, when I counsel individuals or groups that are not seeing the results they desire, they are invariably in violation of one or more of the principles we teach in our workshops and in our writing.So to sum up; people are always asking the big questions - what is the key to success? They ask God, gurus, mentors, speakers, themselves, parents, friends, the boss, the coach, sometimes they even ask us here at Freedom Speakers & Trainers - which is why we created this newsletter. I am here to tell you that if your question is "what's the key?" your first challenge is that there is no key. It's a combination lock. The principles we teach will simply help you determine what the combination is for you. I congratulate you on walking the path - feel free to call and ask directions.
Article Tags: Most People
Automating Your Home Based Business - Saving You Time
First of all, what is automating a business? Simply put, it’s having today’s technology do the tedious and time consuming tasks that you currently have to do manually. This in turns frees up time that you can work on other business building aspects or spend it with loved ones.
Today’s technology gives you a multitude of programs to smooth your way to owning a highly successful business. Using automation programs are a necessity for every business. It can give you back hundreds of hours a year for the more important things in life. It’s like having a personal assistant at your fingertips 24/7.
Why do some businesses struggle year after year and others seem to take off like a rocket right from the start? Well, if you were able to see “behind the scenes” of those highly successful businesses, you would find that one of their secrets to their success is using technology to automate as much of their business as possible so that they can continue to grow their business in other areas.
Automating Your Business Will
Increase traffic to your site or store - Did you know there are ways to automatically send your articles and messages to all forums that you are a member of? Automating your submissions increases your link exposure, which will build your search engine rankings and traffic to your site. Learn more about this at Forum Fortunes
Streamline your website administration - One of the most time consuming tasks is replying to individual emails. By automating your email program to respond to every inquiry immediately, create mailing lists for your newsletters and sending out your Ezine, you will save countless hours that you can use for other business growing projects. Learn more about this at AWeber
Improve customer satisfaction and make your life a lot less stressful - Offering a good shopping cart to keep track of items your visitors choose to purchase from your site until they are ready to “check out” will assure that your customers are getting exactly what they want. Many shopping carts come with special features to calculate discounts and coupons as well as offer secure payment transactions instantly. Learn more about this at Store Front Ecommerce
Increase profits - Again, by building traffic and improving customer satisfaction, your sales will increase and you will see more repeat customers.
Protect your computer and your business - By filtering and deleting all spam and dealing with suspicious email before it reaches your in-box, you can prevent viruses and other malicious content from being downloaded to your computer which will save you time and money. Read more about this at Mail Washer Pro
Allow you to run your business from virtually anywhere - Wouldn’t it be nice to take that much needed vacation yet still be able to run your business? If you are like many business owners, it seems that every time you go out of town for an extended weekend or vacation, your business has some sort of meltdown.
Though most times they are minor problems that can be fixed fairly quickly once you get home, they still cost you time and quite possible customers, both of which equal money. By automating much of your business, you will decrease the amount of problems while allowing you to fix any others even if you are in Cancun or Paris! Now that has to give you some peace of mind.
With all of these benefits, why wait another minute to find out how you can start to improve your business and gain much needed time?
Asset Searching for Recovery Actions - The Decision Maker’s Most Critical Tool – Part 1
As certified fraud examiners (CFE), we all know the nuts and bolts of our respective areas of specialty, and hopefully, we are all growing professionally at an astounding pace. Crime does, unfortunate...
As certified fraud examiners (CFE), we all know the nuts and bolts of our respective areas of specialty, and hopefully, we are all growing professionally at an astounding pace. Crime does, unfortunately, pay – just not for the criminal.
After conducting asset research for over 14 years for such demanding institutions as FDIC, FSLIC, and RTC, as well as major hotels and casinos in the gaming industry, property management firms, and many of the nation’s larger law firms, one thing that has emerged is a distinct lack of information – not about the type of items searched, but the depth and quality of other searches. In cutting to the chase, the following is the result of the compilation of asset search guidelines, and should serve to assist in setting at least a baseline standard for developing a viable domestic asset search strategy.
Subject Identification
Prior to beginning the acquisition of information on any subject of an asset search, the subject should be properly identified. Studies have shown that as much as 30% of the American population uses undisclosed aliases and/or “akas” to conduct and transact various levels of personal and professional business. This statistic does not take into account the existence of corporate, DBA and/or partnership entity names, which are created to transact the various forms of business on behalf of the principals of said entity. To properly identify a non-corporate subject, the following minimum recommendations are made for non-law enforcement environments: Obtain credit reports from the three major credit bureaus, per Fair Credit Reporting Act (FCRA) requirements.
However, make sure that obtaining the reports is in compliance with permissible purposes as defined in Public Law 91- 508, Title VI (FCRA), to avoid tainting your pursuit should the matter ever be litigated. Remember, in the context of this discussion, we are focused on asset searches as recovery medium, and the basic assumption is that the asset search has already been determined to be sanctionable. This could be determined, for example, by a loan in default, a judgment that has been rendered, or a court order obtained for the release of the credit information in cases that are not clearly defined under the FCRA.
Remember this simple guideline: credit reports are legal post-judgment, for purposes of collection, and/or where consent has been given somewhere in the stream of the creditor/debtor relationship. In the case of a receivership institution
(i.e., where a director is being scrutinized for alleged conversion of assets), consent may also have been given for a credit history during pre-employment evaluation or as a policy-based condition of employment.
This is referred to as “extended consent,” and constitutes valid use, especially in matters where a criminal investigation is under way, and where the conversion of assets is factually alleged as the result of a forensic audit or proven by admission. Be careful, though, as “extended consent” from the employment perspective is still a gray area under the law. The following two items are available from credit bureaus and their sub-vendors but have less coverage extended to them under the FCRA, yet the “FCRA compliance attitude” should be used when accessing them:
•Obtain social security traces from the three major credit bureaus.
•Obtain address update/credit report header information from the three major credit bureaus.
•Obtain voter registration information for the applicable jurisdiction germane to the primary, or most recent, residence of the subject. Some states have compiled voter data through private repositories, which should be checked for movement.
Match the information obtained through the independent sources to the information presented by the candidate in the form of the credit application with
the institution, and/or the information developed independently by the institution in the initial credit qualification process.
Many other methods of identification exist, but the above represents the very least that should be done. The reason for obtaining the information from all three bureaus, instead of only one, is to develop any alias and/or aka data, as well as current addresses (not specified), and/or any additional addresses that may provide venue data. This will assist the asset searcher in determining whether to advise the client to proceed with asset discovery in additional areas unknown to the client at the time the asset search was requested.
Address verifications are usually difficult without a physical inspection of the address in question, including a visual identification of the subject entering and/or leaving the address. Address information that is cross-referenced and verifiable through the major credit bureau repositories is usually presented in an asset search, and in most cases is very reliable.
To discover the current telephone number of the subject, methods available to the fraud examiner include nationwide telephone directories, criss-cross directories, directory assistance contact, and attempts at contact existing telephone numbers known by the client. There are other methods of telephone number development available. However, these methods should not be utilized by a CFE in order to avoid tainting the legality of the pursuit, in the even that litigation is ultimate undertaken.
Assets Determination
Assets determination usually constitutes an integration of certain liability data to offset the assets “worth” in order to arrive at a net equity position. This is especially true in identifying and analyzing real property assets. There are multiple forms of asset determination, which are described as follows: Real
Property Ownership: A search should be conducted of the applicable county jurisdiction. The exception is in California where a statewide assessor’s index is available, usually through the “lien date” of the prior year. This repository is made available through a private company, and is in no way sanctioned by any public jurisdiction. For traditional searches throughout the rest of the U.S., per jurisdiction research is conducted at the assessor’s office to determine if the name exists on the assessor’s roll, and/or if the known property (address) crosses-verifies to the suspect owner.
A search of the applicable jurisdiction’s Recorder’s Grantee/Grantor index (or general index as it may also be known) is then undertaken to determine if the property is still vested to the subject, and if any open Deeds of Trust and other liens exist which identify liabilities against the property. The search in the recorder’s venue should also identify (in jurisdictions where this is possible) the
Documentary Transfer Tax Stamp amount, which should be divided by the applicable factor.
This yields a sales price for the property, which should then be scrutinized by contacting a local realtor to verify the current market value. This “thumbnail” market value determination would then be subtracted from the outstanding Deeds of Trust (encumbrances) for a net equity value of the property.
Additional research of real property ownership comes in the form of updating the assessor’s rolls through the recorder’s offices to determine if the subject’s name has come into title to additional parcels of property, subsequent to the “lien date” of the assessor’s records, which is in many jurisdictions up to sixty to ninety days old.
The searches in the recorder’s offices should also identify recent transfers of ownership of an individual’s real property, wherein the ownership may have been transferred to a family member, closely held corporation, or other entity. Based upon the guidelines established by the client, the searches can be permutated to include additional research on additional names developed during the study, which the examiner may feel has a direct relationship to the subject of the report. It is important to note that asset searches are usually requested on specific names of individuals, and it is an industry standard of practice to conduct the research on the specific subject name. Competent investigative agencies contact the client in some way to disclose additional names discovered during the searches.
Searches should also include information developed on real property assets jointly held in the name of the husband and wife. This information is usually indexed by virtue of the husband’s name, or the first name that appears on the conveying deed.
It is important to understand that an asset search does not automatically search property held in the name of a wife unless the asset search is specifically ordered on the wife’s name. If so, the wife’s name would then be included as a primary search name (parameter), and assets held in the wife’s name would then be covered. Quite simply, an asset search on a husband should usually also reveal information on spousal assets held jointly, but not necessarily include assets held by the wife individually or as sole owner, or under different name styles such as aliases or maiden names.
Vehicle Searches: Searches should be conducted of the applicable states Department of Motor Vehicles to identify all vehicles owned under the name and address given to the state repository for search purposes. Several states do not provide this service, as the tax registration responsibility for vehicular ownership rests with a county or parish jurisdiction. Where states will not provide this information, the applicable jurisdiction or jurisdictions should be researched to determine if vehicles are owned by the name given as primary search parameter. It is also important to understand that most assets search requests are not only based upon single name searches, but usually single jurisdiction searches as well.
Some examiners may feel justified in providing additional “over-the-county-line” information in order to bolster the information developed without an additional asset search. However, single county or parish jurisdictions should be expected as an industry standard. Analyze credit reports to determine if current outstanding) and/or previous loans may have existed, linking this type of asset to the subject. Many times vehicular, vessel, and aircraft assets are not identified through standard search parameters, but are identified if the subject may have the asset registered in a different jurisdiction; if the asset may be registered under different name; or if the subject may be a guarantor on the loan.
Vessel Ownership: There are three possible forms of accessing vessel ownership information. The first is on a state-by-state basis at the Departments of Motor Vehicles. The second is at the county or parish level. The third is a search of the U.S. Coast Guard’s Watercraft Index, a nationwide repository of registered vessels over a certain length. Depending upon the location of the asset search to be conducted, one or all of these methods should be utilized.
Aircraft Ownership: Other than by “intelligence” information which may have been submitted to the institution at the outset of the credit qualification process, the only method of developing aircraft registration information is to perform an FAA
Airman’s Search to determine if an FAA Pilot’s license has been issued, and/or if an individual has an aircraft registered in his or her name within the Federal Aviation Administration’s files. As with the vessel ownership search through the
U.S. Coast Guard Watercraft registration, there is only one national root repository that makes this service available. The service is resold through other database repositories, yet it is advised that the “root” repository be utilized in order to minimize data transfer/loss from vendor to vendor.
Banking Information: Bank account searches may be the world’s “second-oldest profession.” There is no specific way to access bank account information, other than by a multitude of artistic pursuits including the development of information within a consumer’s credit history; director contact with a banking institution; the use of sources in the U.S. Federal Reserve Clearinghouse System; or by sources and contacts developed by the fraud examiner with local, state, or national banking institutions.
This is truly the “art and science’ of an asset search, in that the ability to successfully identify banks rests heavily with the fraud examiner’s prowess in this arena.
The standard guidelines for bank account searches are “exact name basis only” searches, with less emphasis placed on jurisdictional lines, since most bank account searches are developed via intelligence leads. In many instances, an asset search will refer “no record found” to a banking institution under an exact subject name.
The subject’s name may appear as a signatory on an alternate account, possibly under the name of a disclosed or undisclosed entity, or as a signatory on an account held under the name of another. Bank accounts will not usually be disclosed in this fashion. Unauthorized information pertaining to a no searched consumer could compromise that person’s privacy under federal privacy laws, the FCRA and the CCPA, as well as many other statutes.
It is safe to say that most agencies are quick to obtain at least some banking information. This should rest with the successful Write of Execution language, constructed by counsel as served upon the institution’s regional administrative and/or corporate offices (for examples send a request to tomlawson@apscreen.com).
In Part 2 of this article, we’ll look at other financial and business information that should be gathered during an asset search, liability-related data which impacts the subject’s net worth as well as other information.
As certified fraud examiners (CFE), we all know the nuts and bolts of our respective areas of specialty, and hopefully, we are all growing professionally at an astounding pace. Crime does, unfortunately, pay – just not for the criminal.
After conducting asset research for over 14 years for such demanding institutions as FDIC, FSLIC, and RTC, as well as major hotels and casinos in the gaming industry, property management firms, and many of the nation’s larger law firms, one thing that has emerged is a distinct lack of information – not about the type of items searched, but the depth and quality of other searches. In cutting to the chase, the following is the result of the compilation of asset search guidelines, and should serve to assist in setting at least a baseline standard for developing a viable domestic asset search strategy.
Subject Identification
Prior to beginning the acquisition of information on any subject of an asset search, the subject should be properly identified. Studies have shown that as much as 30% of the American population uses undisclosed aliases and/or “akas” to conduct and transact various levels of personal and professional business. This statistic does not take into account the existence of corporate, DBA and/or partnership entity names, which are created to transact the various forms of business on behalf of the principals of said entity. To properly identify a non-corporate subject, the following minimum recommendations are made for non-law enforcement environments: Obtain credit reports from the three major credit bureaus, per Fair Credit Reporting Act (FCRA) requirements.
However, make sure that obtaining the reports is in compliance with permissible purposes as defined in Public Law 91- 508, Title VI (FCRA), to avoid tainting your pursuit should the matter ever be litigated. Remember, in the context of this discussion, we are focused on asset searches as recovery medium, and the basic assumption is that the asset search has already been determined to be sanctionable. This could be determined, for example, by a loan in default, a judgment that has been rendered, or a court order obtained for the release of the credit information in cases that are not clearly defined under the FCRA.
Remember this simple guideline: credit reports are legal post-judgment, for purposes of collection, and/or where consent has been given somewhere in the stream of the creditor/debtor relationship. In the case of a receivership institution
(i.e., where a director is being scrutinized for alleged conversion of assets), consent may also have been given for a credit history during pre-employment evaluation or as a policy-based condition of employment.
This is referred to as “extended consent,” and constitutes valid use, especially in matters where a criminal investigation is under way, and where the conversion of assets is factually alleged as the result of a forensic audit or proven by admission. Be careful, though, as “extended consent” from the employment perspective is still a gray area under the law. The following two items are available from credit bureaus and their sub-vendors but have less coverage extended to them under the FCRA, yet the “FCRA compliance attitude” should be used when accessing them:
•Obtain social security traces from the three major credit bureaus.
•Obtain address update/credit report header information from the three major credit bureaus.
•Obtain voter registration information for the applicable jurisdiction germane to the primary, or most recent, residence of the subject. Some states have compiled voter data through private repositories, which should be checked for movement.
Match the information obtained through the independent sources to the information presented by the candidate in the form of the credit application with
the institution, and/or the information developed independently by the institution in the initial credit qualification process.
Many other methods of identification exist, but the above represents the very least that should be done. The reason for obtaining the information from all three bureaus, instead of only one, is to develop any alias and/or aka data, as well as current addresses (not specified), and/or any additional addresses that may provide venue data. This will assist the asset searcher in determining whether to advise the client to proceed with asset discovery in additional areas unknown to the client at the time the asset search was requested.
Address verifications are usually difficult without a physical inspection of the address in question, including a visual identification of the subject entering and/or leaving the address. Address information that is cross-referenced and verifiable through the major credit bureau repositories is usually presented in an asset search, and in most cases is very reliable.
To discover the current telephone number of the subject, methods available to the fraud examiner include nationwide telephone directories, criss-cross directories, directory assistance contact, and attempts at contact existing telephone numbers known by the client. There are other methods of telephone number development available. However, these methods should not be utilized by a CFE in order to avoid tainting the legality of the pursuit, in the even that litigation is ultimate undertaken.
Assets Determination
Assets determination usually constitutes an integration of certain liability data to offset the assets “worth” in order to arrive at a net equity position. This is especially true in identifying and analyzing real property assets. There are multiple forms of asset determination, which are described as follows: Real
Property Ownership: A search should be conducted of the applicable county jurisdiction. The exception is in California where a statewide assessor’s index is available, usually through the “lien date” of the prior year. This repository is made available through a private company, and is in no way sanctioned by any public jurisdiction. For traditional searches throughout the rest of the U.S., per jurisdiction research is conducted at the assessor’s office to determine if the name exists on the assessor’s roll, and/or if the known property (address) crosses-verifies to the suspect owner.
A search of the applicable jurisdiction’s Recorder’s Grantee/Grantor index (or general index as it may also be known) is then undertaken to determine if the property is still vested to the subject, and if any open Deeds of Trust and other liens exist which identify liabilities against the property. The search in the recorder’s venue should also identify (in jurisdictions where this is possible) the
Documentary Transfer Tax Stamp amount, which should be divided by the applicable factor.
This yields a sales price for the property, which should then be scrutinized by contacting a local realtor to verify the current market value. This “thumbnail” market value determination would then be subtracted from the outstanding Deeds of Trust (encumbrances) for a net equity value of the property.
Additional research of real property ownership comes in the form of updating the assessor’s rolls through the recorder’s offices to determine if the subject’s name has come into title to additional parcels of property, subsequent to the “lien date” of the assessor’s records, which is in many jurisdictions up to sixty to ninety days old.
The searches in the recorder’s offices should also identify recent transfers of ownership of an individual’s real property, wherein the ownership may have been transferred to a family member, closely held corporation, or other entity. Based upon the guidelines established by the client, the searches can be permutated to include additional research on additional names developed during the study, which the examiner may feel has a direct relationship to the subject of the report. It is important to note that asset searches are usually requested on specific names of individuals, and it is an industry standard of practice to conduct the research on the specific subject name. Competent investigative agencies contact the client in some way to disclose additional names discovered during the searches.
Searches should also include information developed on real property assets jointly held in the name of the husband and wife. This information is usually indexed by virtue of the husband’s name, or the first name that appears on the conveying deed.
It is important to understand that an asset search does not automatically search property held in the name of a wife unless the asset search is specifically ordered on the wife’s name. If so, the wife’s name would then be included as a primary search name (parameter), and assets held in the wife’s name would then be covered. Quite simply, an asset search on a husband should usually also reveal information on spousal assets held jointly, but not necessarily include assets held by the wife individually or as sole owner, or under different name styles such as aliases or maiden names.
Vehicle Searches: Searches should be conducted of the applicable states Department of Motor Vehicles to identify all vehicles owned under the name and address given to the state repository for search purposes. Several states do not provide this service, as the tax registration responsibility for vehicular ownership rests with a county or parish jurisdiction. Where states will not provide this information, the applicable jurisdiction or jurisdictions should be researched to determine if vehicles are owned by the name given as primary search parameter. It is also important to understand that most assets search requests are not only based upon single name searches, but usually single jurisdiction searches as well.
Some examiners may feel justified in providing additional “over-the-county-line” information in order to bolster the information developed without an additional asset search. However, single county or parish jurisdictions should be expected as an industry standard. Analyze credit reports to determine if current outstanding) and/or previous loans may have existed, linking this type of asset to the subject. Many times vehicular, vessel, and aircraft assets are not identified through standard search parameters, but are identified if the subject may have the asset registered in a different jurisdiction; if the asset may be registered under different name; or if the subject may be a guarantor on the loan.
Vessel Ownership: There are three possible forms of accessing vessel ownership information. The first is on a state-by-state basis at the Departments of Motor Vehicles. The second is at the county or parish level. The third is a search of the U.S. Coast Guard’s Watercraft Index, a nationwide repository of registered vessels over a certain length. Depending upon the location of the asset search to be conducted, one or all of these methods should be utilized.
Aircraft Ownership: Other than by “intelligence” information which may have been submitted to the institution at the outset of the credit qualification process, the only method of developing aircraft registration information is to perform an FAA
Airman’s Search to determine if an FAA Pilot’s license has been issued, and/or if an individual has an aircraft registered in his or her name within the Federal Aviation Administration’s files. As with the vessel ownership search through the
U.S. Coast Guard Watercraft registration, there is only one national root repository that makes this service available. The service is resold through other database repositories, yet it is advised that the “root” repository be utilized in order to minimize data transfer/loss from vendor to vendor.
Banking Information: Bank account searches may be the world’s “second-oldest profession.” There is no specific way to access bank account information, other than by a multitude of artistic pursuits including the development of information within a consumer’s credit history; director contact with a banking institution; the use of sources in the U.S. Federal Reserve Clearinghouse System; or by sources and contacts developed by the fraud examiner with local, state, or national banking institutions.
This is truly the “art and science’ of an asset search, in that the ability to successfully identify banks rests heavily with the fraud examiner’s prowess in this arena.
The standard guidelines for bank account searches are “exact name basis only” searches, with less emphasis placed on jurisdictional lines, since most bank account searches are developed via intelligence leads. In many instances, an asset search will refer “no record found” to a banking institution under an exact subject name.
The subject’s name may appear as a signatory on an alternate account, possibly under the name of a disclosed or undisclosed entity, or as a signatory on an account held under the name of another. Bank accounts will not usually be disclosed in this fashion. Unauthorized information pertaining to a no searched consumer could compromise that person’s privacy under federal privacy laws, the FCRA and the CCPA, as well as many other statutes.
It is safe to say that most agencies are quick to obtain at least some banking information. This should rest with the successful Write of Execution language, constructed by counsel as served upon the institution’s regional administrative and/or corporate offices (for examples send a request to tomlawson@apscreen.com).
In Part 2 of this article, we’ll look at other financial and business information that should be gathered during an asset search, liability-related data which impacts the subject’s net worth as well as other information.
Asset Searching for Recovery Actions - The Decision Maker’s Critical Tool Part 2
In Part One of this article we took a look at some minimum ... for asset searches as a recovery medium. This ... is based on the ... that an asset search has already been det
In Part One of this article we took a look at some minimum recommendations for asset searches as a recovery medium. This discussion is based on the assumption that an asset search has already been determined to be sanctionable by, for example, a loan in default, a judgment that has been rendered, a court order obtained for the release of credit information in cases that are not clearly defined under the FCRA or “extended consent” given in a creditor/debtor or employee - employer relationship.
As Part One suggested, to properly identify a non-corporate subject, fraud examiners in non-law enforcement environments should take the following steps:
Obtain credit reports form the three major credit bureaus, per FCRA requirements
Obtain social security traces form the three major credit bureaus.
Obtain address update/credit report header information from the three major credit bureaus.
Match the information obtained through the independent sources to the information presented by the subject of the asset search.
Part One also provided suggestions for determining assets, including real property ownership, vehicular searches, vessel ownership, aircraft ownership, and banking information. Following is additional financial and business information that should be gathered, as well as liability-related data that impacts the subject’s net worth in a recovery action.
Financial Information
Credit reports should be obtained from all major credit bureaus in order to completely determine the subject’s credit worthiness or credit status. The Federal Home Loan Mortgage Association (“Fannie-Mae”) determined several years ago that a minimum of three national credit bureau repositories should be accessed to develop credit information prior to the qualification for a mortgage loan. While this is the standard, many companies do not provide this information in the pursuit of the asset search, and limit their request to only one major credit bureau. Some difficulty also exists with respect to the investigative community’s lack of access to major credit bureaus, and many credit reports procured for investigative purposes are, in fact, procured through third- and fourth-party blind sources.
Credit bureau-based research agencies are usually your best source for credit and financial information, as well as banking data, since their primary focus is in the credit community and understanding the limitations of the credit system, as well as knowledge of “better” access to the credit bureaus. This assures their continued success in operating their business.
Credit reports are important not only from the standpoint of providing identification information, additional addresses unknown to the client, and/or additional name variations in the form of aliases and/or akas, but they also provide an almost up-to-the-minute window of credit activity pertaining to the subject. This gives an impression of the subject’s credit worthiness with respect to paying off the obligations the subject is currently faced with, not to mention, in many cases, his or her current whereabouts.
If an overwhelmingly favorable credit report is generated on the individual, chances are strong that the subject may be hiding assets, and a more aggressive collection and/or litigious pursuit is justified. If the individual’s credit is in a “pre-bankruptcy” mode, chances are strong that the lack of discovery of available assets, which would affect the decision whether to charge-off or litigate the matter, is more easily palatable by the analyst.
Credit histories also contain adverse public records that may not have been developed throughout the course of the search, since the primary search parameters are on an exact name basis, and usually a specific jurisdiction basis only. The benefit of credit reporting agencies is that they procure information from large repositories, which contain information from jurisdictions that may not necessarily be germane to the original asset search request.
Corporate Affiliations
A determination of an individual’s Officer/Director and/or Registered Agent status within a corporation is important to determine whether or not that individual may own stock in that enterprise, which can also be determined somewhat by a search of applicable public records within certain state jurisdictions. Some states do not provide public access to information with respect to stock ownership in corporations, yet many states do provide information with respect to the Officer/Director and/or Registered Agent status of an individual.
These searches are conducted at the Secretary of State level, and if the information is developed, certain other information with respect to the corporate enterprise may be provided. This includes the status of the corporation (i.e., good standing, suspended, or forfeited), the filing date and filing numbers of the corporate enterprise, and the subject’s affiliation with the enterprise.
Many states require a secondary search level to be undertaken, which is the procurement of a “Statement of Officers/Directors” (ET SEQ.). There are database repositories, which provide President and/or Registered Agent information.
However, most searches that develop Officers and Directors must be conducted by hand at the applicable state jurisdiction.
Security & Exchange Commission files provide information on individuals who own more than 10% of a publicly held or publicly traded corporate entity. This search is conducted by database through a few private companies, and the searches are, by and large, undependable. The searches conducted directly through the SEC, which are extremely time-consuming, are the only valid searches to rely upon within this instance, and for all intents and purposes, inside information with respect to this file indicates that it is roughly 80% accurate and complete.
Partnerships
Searches for partnerships, be they limited partnerships, general partnerships, or specific partnerships, are conducted at the state and local jurisdictional levels, depending upon the state. In California, for example, searches at the California Secretary of State’s Office identify “LP-1” Statements, which are filed by the general partner of the limited partnership, and identify not only a name reservation, but also the name of the general partner of the business. This one-page form is not a full-blown search with respect to the partnerships that could pertain to an individual. The search conducted at the county or parish jurisdictional level would identify all general partnerships, which would be required to be recorded and limited partnerships which own real estate.
Uniform Commercial Code Filings
While a Uniform Commercial Code Financing Statement could be primarily viewed as a lien instrument, in the context of an asset search it should be addressed as more of an asset determinator. From the perspective of a UCCs relationship to an asset, when an individual is identified as a debtor, usually the debtor’s status pertains to the securing of personal property for a business that may not have been disclosed throughout the course of additional research.
The age of the Uniform Commercial Code Financial Statement (they expire after five years in 48 states) would determine the extent of possible equity in equipment and fixtures, which may pertain to an individual and/or his business. In the case of a manufacturing facility, with depreciation schedules as they are, clearly a 4 ½-yearold UCC-1 on a piece of equipment that was purchased new at the time the UCC was filed would still retain equity, and thus constitute the discovery of a “hidden” asset which may be liquidated.
There is also a little known side of the UCC spectrum that is often ignored by examiners. This is searching for “Secured Party” status on a UCC-1. Clearly, this would be where the subject is, in fact, the Creditor on a UCC-1, with the implications of the discovery of this type of hidden asset quite obvious. Many states do not provide “Secured Party” status indexing, and thus, while it is not available in most states, it can be expected within certain state jurisdictions where the asset search will be based.
Sole Proprietorship Entities
A search should be conducted of the Fictitious Business Name and/or Assumed
Name Index of the applicable county or parish level of jurisdiction to determine if the subject’s name appears as a Registrant, or Declarant of a Fictitious Business Name or Assumed Name Registration. The discovery of these items usually constitutes the discovery of additional bank account search possibilities, as well as entities and/or enterprises that may be unknown to the institution or client.
Other Assets
In many instances, an individual could hold offshore assets in the form of trusts, partnerships, and so forth. A thorough search of applicable public records within the jurisdictions germane to the activities of the subject can often reveal information, which might lead to the discovery of these offshore assets. This particular type of asset search is highly sophisticated, and should be left specifically to agencies that have demonstrated high levels of competence in international asset research. The trustworthiness of the agency should be scrutinized before entering into a contract.
LIABILITIES
Litigation
A search should be conducted of the applicable jurisdiction to determine the extent of possible litigation involving the subject from both current and prior perspectives. A standard expectation for the research should be primarily an index review of the cases, which are outstanding, and if required, an analysis to determine the extent of “pending” lawsuits, which, as of the date of the report, remain unresolved. The search should be conducted on a ten-year basis, with the pending actions focused within a five-year window.
Federal, State, and Local Tax Liens
A search of the applicable jurisdictions should be made in the Recorder’s Office to determine the extent of federal, state and/or local tax liens that might impact the net equity position of the subject. The existence of, for example, a $150,000 federal tax lien could wipe out all equity positions enjoyed by the assets discovered throughout the course of the research. Thus, the discovery of this liability is critically important in the assessment of the subject’s net worth and ability to pay.
Bankruptcies
A search should be conducted through applicable jurisdictions germane to the residences and/or activities of the subject of the U.S. District Bankruptcy Court records for a ten-year period. The purpose of this research is to determine if the subject has established a pattern of filing bankruptcy, and/or possibly (in the event a bankruptcy is discovered) to scrutinize the assets and/or creditor’s list to determine if there was fraudulent misrepresentation of assets and/or liabilities at the outset of the credit relationship with the institution.
Judgments
Searches for Abstracts of Judgments, or Judgments, are usually conducted in the applicable jurisdiction’s Recorder’s Grantee/Grantor Indices. The searches should reflect primary judgments that were filed in the applicable jurisdiction by the court, and can be included in the research for pending and/or previous lawsuits at the court jurisdiction level. The Abstract of Judgment concept is that a particular judgment is “extracted” from the court records, and “abstracted” to the county jurisdiction, in order to encumber items of personal and/or real property which are identified, and are targeted for attachment and liquidation to pay off the claim. Plaintiff actions can be considered potential assets, and should not be overlooked.
Miscellaneous Liabilities
Additional searches should be conducted on a wide-area basis, both at the state level (Secretary of State) and the county or parish jurisdictional level, to determine if additional liabilities exist from the standpoint of judgments, tax liens, or county-based UCC Financing Statements. These identify specific types of assets such as crops, timber, and inventory. They are not usually found at the state level UCC search, and most agencies do not provide them unless requested to do so. This search is more specifically covered in the following Intelligence section.
Intelligence
In any good asset search, the fraud examiner should develop intelligence throughout the course of the research that would refer to information as specified above concerning additional names on real estate ownership, transferee names, and so forth. Additional modules of research that should be conducted include criminal histories on the individuals targeted within the asset search, as well as a search for evidence of known connections with other business enterprises and/or individuals with whom regular associations are engaged.
There are multiple methods of access to this type of information, not the least of which would constitute a surveillance (highly unusual in an asset search) which would identify the comings and goings of the subjects at hand, and would assist in the identification of the “intelligence” type of data. Additional information is developed with respect to the assets, in order to assist in the determination of the market value so that a net equity figure can be derived for one asset, or a group of assets, from all levels.
To delve into the methods of this type of discovery would be to get into the mind of the fraud examiner working the case, and shall not be addressed in this article, but should be included in an overview process in the Intelligence Section of any asset search report.
Some other instances where information would be helpful include areas where other tangible net worth is discovered, such as intelligence provided by developed sources close to the subject regarding stamp collections, gold coin collections, cash under a mattress, and so forth. This information is highly inconsistent within the context of a normal asset search, and, while hoped for, should not be expected as a matter of doing business with a particular fraud examiner.
Go to www.apscreen.com for the remainder of this article.
In Part One of this article we took a look at some minimum recommendations for asset searches as a recovery medium. This discussion is based on the assumption that an asset search has already been determined to be sanctionable by, for example, a loan in default, a judgment that has been rendered, a court order obtained for the release of credit information in cases that are not clearly defined under the FCRA or “extended consent” given in a creditor/debtor or employee - employer relationship.
As Part One suggested, to properly identify a non-corporate subject, fraud examiners in non-law enforcement environments should take the following steps:
Obtain credit reports form the three major credit bureaus, per FCRA requirements
Obtain social security traces form the three major credit bureaus.
Obtain address update/credit report header information from the three major credit bureaus.
Match the information obtained through the independent sources to the information presented by the subject of the asset search.
Part One also provided suggestions for determining assets, including real property ownership, vehicular searches, vessel ownership, aircraft ownership, and banking information. Following is additional financial and business information that should be gathered, as well as liability-related data that impacts the subject’s net worth in a recovery action.
Financial Information
Credit reports should be obtained from all major credit bureaus in order to completely determine the subject’s credit worthiness or credit status. The Federal Home Loan Mortgage Association (“Fannie-Mae”) determined several years ago that a minimum of three national credit bureau repositories should be accessed to develop credit information prior to the qualification for a mortgage loan. While this is the standard, many companies do not provide this information in the pursuit of the asset search, and limit their request to only one major credit bureau. Some difficulty also exists with respect to the investigative community’s lack of access to major credit bureaus, and many credit reports procured for investigative purposes are, in fact, procured through third- and fourth-party blind sources.
Credit bureau-based research agencies are usually your best source for credit and financial information, as well as banking data, since their primary focus is in the credit community and understanding the limitations of the credit system, as well as knowledge of “better” access to the credit bureaus. This assures their continued success in operating their business.
Credit reports are important not only from the standpoint of providing identification information, additional addresses unknown to the client, and/or additional name variations in the form of aliases and/or akas, but they also provide an almost up-to-the-minute window of credit activity pertaining to the subject. This gives an impression of the subject’s credit worthiness with respect to paying off the obligations the subject is currently faced with, not to mention, in many cases, his or her current whereabouts.
If an overwhelmingly favorable credit report is generated on the individual, chances are strong that the subject may be hiding assets, and a more aggressive collection and/or litigious pursuit is justified. If the individual’s credit is in a “pre-bankruptcy” mode, chances are strong that the lack of discovery of available assets, which would affect the decision whether to charge-off or litigate the matter, is more easily palatable by the analyst.
Credit histories also contain adverse public records that may not have been developed throughout the course of the search, since the primary search parameters are on an exact name basis, and usually a specific jurisdiction basis only. The benefit of credit reporting agencies is that they procure information from large repositories, which contain information from jurisdictions that may not necessarily be germane to the original asset search request.
Corporate Affiliations
A determination of an individual’s Officer/Director and/or Registered Agent status within a corporation is important to determine whether or not that individual may own stock in that enterprise, which can also be determined somewhat by a search of applicable public records within certain state jurisdictions. Some states do not provide public access to information with respect to stock ownership in corporations, yet many states do provide information with respect to the Officer/Director and/or Registered Agent status of an individual.
These searches are conducted at the Secretary of State level, and if the information is developed, certain other information with respect to the corporate enterprise may be provided. This includes the status of the corporation (i.e., good standing, suspended, or forfeited), the filing date and filing numbers of the corporate enterprise, and the subject’s affiliation with the enterprise.
Many states require a secondary search level to be undertaken, which is the procurement of a “Statement of Officers/Directors” (ET SEQ.). There are database repositories, which provide President and/or Registered Agent information.
However, most searches that develop Officers and Directors must be conducted by hand at the applicable state jurisdiction.
Security & Exchange Commission files provide information on individuals who own more than 10% of a publicly held or publicly traded corporate entity. This search is conducted by database through a few private companies, and the searches are, by and large, undependable. The searches conducted directly through the SEC, which are extremely time-consuming, are the only valid searches to rely upon within this instance, and for all intents and purposes, inside information with respect to this file indicates that it is roughly 80% accurate and complete.
Partnerships
Searches for partnerships, be they limited partnerships, general partnerships, or specific partnerships, are conducted at the state and local jurisdictional levels, depending upon the state. In California, for example, searches at the California Secretary of State’s Office identify “LP-1” Statements, which are filed by the general partner of the limited partnership, and identify not only a name reservation, but also the name of the general partner of the business. This one-page form is not a full-blown search with respect to the partnerships that could pertain to an individual. The search conducted at the county or parish jurisdictional level would identify all general partnerships, which would be required to be recorded and limited partnerships which own real estate.
Uniform Commercial Code Filings
While a Uniform Commercial Code Financing Statement could be primarily viewed as a lien instrument, in the context of an asset search it should be addressed as more of an asset determinator. From the perspective of a UCCs relationship to an asset, when an individual is identified as a debtor, usually the debtor’s status pertains to the securing of personal property for a business that may not have been disclosed throughout the course of additional research.
The age of the Uniform Commercial Code Financial Statement (they expire after five years in 48 states) would determine the extent of possible equity in equipment and fixtures, which may pertain to an individual and/or his business. In the case of a manufacturing facility, with depreciation schedules as they are, clearly a 4 ½-yearold UCC-1 on a piece of equipment that was purchased new at the time the UCC was filed would still retain equity, and thus constitute the discovery of a “hidden” asset which may be liquidated.
There is also a little known side of the UCC spectrum that is often ignored by examiners. This is searching for “Secured Party” status on a UCC-1. Clearly, this would be where the subject is, in fact, the Creditor on a UCC-1, with the implications of the discovery of this type of hidden asset quite obvious. Many states do not provide “Secured Party” status indexing, and thus, while it is not available in most states, it can be expected within certain state jurisdictions where the asset search will be based.
Sole Proprietorship Entities
A search should be conducted of the Fictitious Business Name and/or Assumed
Name Index of the applicable county or parish level of jurisdiction to determine if the subject’s name appears as a Registrant, or Declarant of a Fictitious Business Name or Assumed Name Registration. The discovery of these items usually constitutes the discovery of additional bank account search possibilities, as well as entities and/or enterprises that may be unknown to the institution or client.
Other Assets
In many instances, an individual could hold offshore assets in the form of trusts, partnerships, and so forth. A thorough search of applicable public records within the jurisdictions germane to the activities of the subject can often reveal information, which might lead to the discovery of these offshore assets. This particular type of asset search is highly sophisticated, and should be left specifically to agencies that have demonstrated high levels of competence in international asset research. The trustworthiness of the agency should be scrutinized before entering into a contract.
LIABILITIES
Litigation
A search should be conducted of the applicable jurisdiction to determine the extent of possible litigation involving the subject from both current and prior perspectives. A standard expectation for the research should be primarily an index review of the cases, which are outstanding, and if required, an analysis to determine the extent of “pending” lawsuits, which, as of the date of the report, remain unresolved. The search should be conducted on a ten-year basis, with the pending actions focused within a five-year window.
Federal, State, and Local Tax Liens
A search of the applicable jurisdictions should be made in the Recorder’s Office to determine the extent of federal, state and/or local tax liens that might impact the net equity position of the subject. The existence of, for example, a $150,000 federal tax lien could wipe out all equity positions enjoyed by the assets discovered throughout the course of the research. Thus, the discovery of this liability is critically important in the assessment of the subject’s net worth and ability to pay.
Bankruptcies
A search should be conducted through applicable jurisdictions germane to the residences and/or activities of the subject of the U.S. District Bankruptcy Court records for a ten-year period. The purpose of this research is to determine if the subject has established a pattern of filing bankruptcy, and/or possibly (in the event a bankruptcy is discovered) to scrutinize the assets and/or creditor’s list to determine if there was fraudulent misrepresentation of assets and/or liabilities at the outset of the credit relationship with the institution.
Judgments
Searches for Abstracts of Judgments, or Judgments, are usually conducted in the applicable jurisdiction’s Recorder’s Grantee/Grantor Indices. The searches should reflect primary judgments that were filed in the applicable jurisdiction by the court, and can be included in the research for pending and/or previous lawsuits at the court jurisdiction level. The Abstract of Judgment concept is that a particular judgment is “extracted” from the court records, and “abstracted” to the county jurisdiction, in order to encumber items of personal and/or real property which are identified, and are targeted for attachment and liquidation to pay off the claim. Plaintiff actions can be considered potential assets, and should not be overlooked.
Miscellaneous Liabilities
Additional searches should be conducted on a wide-area basis, both at the state level (Secretary of State) and the county or parish jurisdictional level, to determine if additional liabilities exist from the standpoint of judgments, tax liens, or county-based UCC Financing Statements. These identify specific types of assets such as crops, timber, and inventory. They are not usually found at the state level UCC search, and most agencies do not provide them unless requested to do so. This search is more specifically covered in the following Intelligence section.
Intelligence
In any good asset search, the fraud examiner should develop intelligence throughout the course of the research that would refer to information as specified above concerning additional names on real estate ownership, transferee names, and so forth. Additional modules of research that should be conducted include criminal histories on the individuals targeted within the asset search, as well as a search for evidence of known connections with other business enterprises and/or individuals with whom regular associations are engaged.
There are multiple methods of access to this type of information, not the least of which would constitute a surveillance (highly unusual in an asset search) which would identify the comings and goings of the subjects at hand, and would assist in the identification of the “intelligence” type of data. Additional information is developed with respect to the assets, in order to assist in the determination of the market value so that a net equity figure can be derived for one asset, or a group of assets, from all levels.
To delve into the methods of this type of discovery would be to get into the mind of the fraud examiner working the case, and shall not be addressed in this article, but should be included in an overview process in the Intelligence Section of any asset search report.
Some other instances where information would be helpful include areas where other tangible net worth is discovered, such as intelligence provided by developed sources close to the subject regarding stamp collections, gold coin collections, cash under a mattress, and so forth. This information is highly inconsistent within the context of a normal asset search, and, while hoped for, should not be expected as a matter of doing business with a particular fraud examiner.
Go to www.apscreen.com for the remainder of this article.
Assessing The Unique Features Of Commercial Real Estate Parcels
Whether you are a property owner, developer, or commercial real estate agent, identifying and marketing the unique features of your commercial property will maximize the attractiveness of the site to prospective buyers.
As commercial real estate development progresses into the 21st century, many of the principles upon which the market was founded remain the same. Whether you are a property owner, developer, or commercial real estate agent, identifying and marketing the unique features of your commercial property will maximize the attractiveness of the site to prospective buyers.
Depending on the highest and best use for the property, you may be able to attract a wide spectrum of potential buyers to your site. In addition to basics such as price or zoning, experienced buyers – local or national – will consider several key factors of each potential site, including:
Location and visibility
Any existing physical improvements on the site
Average daily traffic count, or ADTC
Site access
Utility availability
Environmental status of the property
Any existing or planned surrounding commerce
Let’s explore some of the primary features of commercial land, and how each is interpreted by buyers.
Location, Location, Location
Because real estate is finite, location is a fundamental consideration in the purchase decision formula for buyers. Unless a property is undevelopable, each site has unique benefits that will meet the needs of a buyer seeking a particular criteria. Increasing the number of potential buyers is dependent on efforts to realize and market the full value of a parcel’s location.
Location not only encompasses city and state, but also variables such as traffic arteries and surrounding commerce. Research neighboring parcels to learn what sort of future commerce, residential communities, or roadways are planned for development.
Aerial photos are a great way to showcase a site’s potential. Google’s free satellite mapping service provides detailed aerial images for most of the United States. To view your property, visit: http://maps.google.com.
Existing Physical Improvements
Contrary to popular belief, existing physical structures on a parcel may hinder a property’s value, as opposed to increasing it. If a site has exceptional location, access, and traffic, but includes a functionally obsolescent structure, the cost of razing the structure will be a primary consideration for any prospective buyer.
If your property includes an obsolete or deteriorating structure, consider razing the structure before marketing the site. Incorporating this expense into the asking price is oftentimes easier and more profitable than deducting it from the price during negotiations with the buyer.
Average Daily Traffic Count (ADTC)
The amount of daily traffic traveling on nearby roadways can be an excellent selling point for even the most difficult properties. Many counties maintain Average Daily Traffic Counts (ADTC) records for major roadways. If the property is located near or adjacent to an intersection, acquire the ADTC for both roads. Prospective buyers will appreciate these figures being readily available in the site’s marketing materials.
ADTC is a significant factor particularly for national entities, such as quick- and full-service restaurants, gas/convenience stores, hotels, and other entities that depend heavily on daily traffic patterns to draw patrons.
Site Access Options
Site access – that is, legally permissible access to the site from nearby roadways – can make or break a transaction. Even the best site can become a lemon, depending on access limitations.
Generally speaking, there are two types of access to a site. The first is "full" access, for oncoming traffic from both directions. Depending on a roadway’s existing configuration, this may require the installment of acceleration/deceleration lanes, blisters, or traffic signals.
The second (and less favorable) option is "right in, right out" access, which limits vehicle access to right turns from a single lane of traffic. Because right in, right out limits the site’s access to a single direction, depending on the ADTC of the affected lane, this may limit the interest of certain buyers.
If a site has potential for broader access options, the property owner may want to consider requesting a modification from the applicable municipality. Performing this legwork before placing the site on the market will significantly increase potential for realizing the full asking price.
Utility Availability
Although still common practice in many areas, properties that employ well and septic systems are regarded as secondary sites in comparison to those with modern utility infrastructure.
The cost of bringing utilities to a site may be a significant factor to some buyers. If possible, property owners should consider having electric, water, and sewage improvements brought to the site before marketing the property. Again, such a preparative measure can optimize conditions for realizing the site’s full asking price.
Environmental Concerns
With a rapidly growing number of potential environmental issues, buyers have increasingly made environmental site assessments a contingency in their purchase agreements. This is a must in transactions involving properties prone to environmental issues, such as aging gas/convenience stores, as well as parcels adjacent to these entities.
The expense of an environmental assessment can be worth its weight in gold. A seller can be held liable for undetected environmental property defects, even after a transaction is consummated. The key to a successful transaction is full disclosure.
If it is determined your property has environmental issues, such a status does not make the site broadly undesirable. The cost of clean-up can be integrated into the asking price, made the responsibility of the buyer, or even shared between both buyer and seller. Other unrelated factors, such as location or ADTC, may outweigh negative aspects of the property.
Surrounding Commerce
Surrounding commerce can play a significant role in the future of any property. Even if physical structures have yet to be developed, knowing the plans for nearby parcels can help determine the highest and best use of your property.
If your site is located within an expansive commercial district, you’ll have little difficulty in identifying surrounding commerce to determine potential uses for your property. Conversely, if the site is located in an area gradually shifting from residential to commercial use, or a tract of vacant land with minimal surrounding commerce, it will be necessary to speak with other property owners as well as the county assessor to determine future development plans for adjacent properties.
Becoming familiar with the unique features of your commercial property is the best way to achieve a maximum ROI on your investment. A competent commercial real estate agent will have to skills and resources necessary to help property owners research these important aspects of their property.
Asphalt Paving: Striping Your Parking Lot
As you may already know, asphalt paved parking lots do need maintenance from time to time. One known asphalt paving maintenance technique is to have your parking lot re-striped to add a nicer look to existing asphalt paving properties. The repainting (striping) of an asphalt lot usually takes place every one to two years; it mostly depends on the amount of wear and tear made by people driving on the asphalt paved lots.
First, the lot must be cleaned and checked to see if there are any major problems with the lot currently. As a rule of thumb, the number of parking spaces on the lot will typically designate how many handicapped spaces are required. By using high quality paint when asphalt striping, you will ensure a greater life expectancy of the clean look of your paved lot. The lines have to be as bright as possible for people who will park in between them at a later date. The striping also serves to direct the parking lot traffic to ensure safety of drivers. You want to make it as easy as possible for drivers to see where they are supposed to go at all given times. Also, by having very bright yellow speed bumps on your asphalt paved parking lot, you make it safer for those who will not be in cars as well. Also, the proper signs must be displayed on the parking lots as well, i.e., crosswalks, loading zone, and handicapped signs. The lines that will be put on the parking lot will first be chalked to ensure a clean straight look when the work is done. Furthermore, a walk behind style striping machine will be used to get the best painted lines that are approximately 6 millimeters when dry. The lines can not be driven on until the paint has had adequate time to fully dry (at-least 30 minutes). When the asphalt parking lot has been striped, any debris that is on the lot will be collected and taken away from the property. The final stage of the asphalt striping is to put up barricades to keep other drivers from entering or exiting your asphalt parking lot. Striping is a great way to keep a parking lot looking new and professional. Costs spent in advance for asphalt striping now will definitely be lower as compared to later. Always take a proactive approach to asphalt paving maintenance. Those who choose not to take good care of their lots will pay the price in the long run. Customers always appreciate a well designed and painted parking lot. It is the first thing that customers see when visiting your property, so it should look great. A freshly striped asphalt parking lot can lead to a positive overall impression of your property. For more information about asphalt paving services & striping in Los Angeles, California-feel free to call Manhatten Paving Company today @ 310-328-1470, or you can visit our website - http://www.manhattenpaving.com
Article Tags: Asphalt Paving, Asphalt Striping, Asphalt Parking
First, the lot must be cleaned and checked to see if there are any major problems with the lot currently. As a rule of thumb, the number of parking spaces on the lot will typically designate how many handicapped spaces are required. By using high quality paint when asphalt striping, you will ensure a greater life expectancy of the clean look of your paved lot. The lines have to be as bright as possible for people who will park in between them at a later date. The striping also serves to direct the parking lot traffic to ensure safety of drivers. You want to make it as easy as possible for drivers to see where they are supposed to go at all given times. Also, by having very bright yellow speed bumps on your asphalt paved parking lot, you make it safer for those who will not be in cars as well. Also, the proper signs must be displayed on the parking lots as well, i.e., crosswalks, loading zone, and handicapped signs. The lines that will be put on the parking lot will first be chalked to ensure a clean straight look when the work is done. Furthermore, a walk behind style striping machine will be used to get the best painted lines that are approximately 6 millimeters when dry. The lines can not be driven on until the paint has had adequate time to fully dry (at-least 30 minutes). When the asphalt parking lot has been striped, any debris that is on the lot will be collected and taken away from the property. The final stage of the asphalt striping is to put up barricades to keep other drivers from entering or exiting your asphalt parking lot. Striping is a great way to keep a parking lot looking new and professional. Costs spent in advance for asphalt striping now will definitely be lower as compared to later. Always take a proactive approach to asphalt paving maintenance. Those who choose not to take good care of their lots will pay the price in the long run. Customers always appreciate a well designed and painted parking lot. It is the first thing that customers see when visiting your property, so it should look great. A freshly striped asphalt parking lot can lead to a positive overall impression of your property. For more information about asphalt paving services & striping in Los Angeles, California-feel free to call Manhatten Paving Company today @ 310-328-1470, or you can visit our website - http://www.manhattenpaving.com
Article Tags: Asphalt Paving, Asphalt Striping, Asphalt Parking
Asian Business Strategy and Approaches Today compared to the West – lessons from the classic text on Asian strategy the “Art of War” by Sun Tzu
By Jason ... Ph.D.Sun Tzu’s “Art of War” is ... to provide the most profound lessons for ... and victory in East or the West. Today its ... are applied to business all ove
By Jason Armstrong, Ph.D.
Sun Tzu’s “Art of War” is considered to provide the most profound lessons for leadership, and victory in East or the West. Today its principles are applied to business all over the world. This classic body of work came from life and death scenarios, which evolved from empire, trade and political struggles. Obviously today’s corporate world does not induce anywhere near as strong a mechanism for change, or success, as the consequences of failure in business are far less than warfare. Nonetheless, the trickle down lessons from the “Art of War” are definitely applicable to any organized effort, project or business. Although Chinese in origin, the “Art of War” and lessons from Zen were adopted by Japanese groups such as the Samurai and Corporate Japan for clarity of mind, decision making and strategy.
Past and Present: Modern Asia is now very different from its past. The question is: how much do today’s managers in an environment like Japan apply these principles? In short, the answer is that some components of the “Art of War” are easily spotted broadly across Japanese business culture and other attributes of the text are rare. Looking at specific companies, or managers, one will sometimes see avid followers of the principles of the “Art of War”, and sometimes very little application at all. The roots of almost any good strategic plan can be found in the text the “Art of War” so it’s implementation is also present in Western business (even if it not derived by someone who directly studied the text).
Alliances: Using alliances is a key strategic component of the “Art of War”. This translates to partnering in the business world. Business partnering models and strategies based on the “Art of War” are outlined in detail in a downloadable video series by Applied Zen (www.AppliedZen.com). This article will not go into the details of such strategies but rather relate to their presence in Japanese business today and make comparisons to Western business. The importance of partnering and relationships is apparent to anyone who has done business in Japan. While these may not always portrait the efficiency of Sun Tzu’s “Art of War” strategies, partnering in Japan has permeated almost every aspect of Japanese business to an extreme. Over the years it has evolved to a degree of “middle men” involvement not seen in the West. The benefits, and hindrances, of such a system are often discussed by those doing business in Japan. Strategic partnering if carried out correctly should optimize sales, marketing, reduce operational requirements and create synergies that a company who approaches end point sales cannot. From Sun Tzu’s teachings such partnering strategies should also be put into product development (both the item itself and the marketing of it) as a process – not an after thought once the product is finished. Again, broadly speaking, Japan is rich with examples of this type of implementation.
Leadership and Decisions: The “Art of War” offers many lessons on leadership and people management. After all, if you can create a situation where people are willing to follow you into battle and die, there must be valuable motivation and leadership practices in place. Nowadays in Japan, one can see good examples of team co-operation and communication, and yet also some very bad examples. For example, Japan is a group-oriented society and usually makes decisions on that basis. Therefore, typically more staff are consulted and informed about decisions and ideas while they are in the making. However, this draws out the decision process. In comparison, Western companies often have decisions made only by upper management and then the ruling is put into the company as policy. In this Western approach, it is common for staff to learn about the policy only after it is announced. (the net result is often a long time before staff “buy-in” and policy becomes practice). The interesting thing about these two different approaches is that the time spent from contemplating a new idea to company implementation is very similar in both cultures, despite the generally faster decision making that occurs in the West. When one considers staff compliance and conflict avoidance, the Japanese way is better in that more staff are involved in the communication before policy is induced.
Communication: On the other side of staff communication, the Japanese environment does not encourage pro-activity like Western organizations. In fact, to suggest radical alternatives is often considered “rocking the boat” and is not a good career move inside Japanese businesses. In comparison the “Art of War” clearly identifies the need for taking calculated risks to gain intelligence as well as potentially gain ground. In the 1990’s Stephen Covey’s name became famous through the publication of the “The 7 Habits of Highly Effective People”. As many know the “7 habits” are not a group of new concepts but age old approaches to success. They are simply represented in a way that can be clearly applied to modern day personal and corporate development. The same precepts are taught in a number of ancient development and achievement, arts such as: Zen (which is not a religion, but a path for self discovery and growth), the “Art of War” by Sun Tzu, and the Tao de Ching (the “book of change”). Covey’s first “habit” is pro-activity. This is based on recognizing, just as Sun Tzu did, that not taking some calculated short-term risks due to fear of action, is the sure way to long-term failure. In contrast Japanese business behavior is generally very risk adverse. On the flip side, Sun Tsu’s “Art of War” stresses the importance of defense and conservative advancement. It is the balancing of risk and conservative defense that must be strategically planned to ensure victory.
Synergize: The “Art of War” by Sun Tzu, is often superficially viewed as an aggressive approach to victory. However, it is essentially a master text on “Conflict Management” and “Win-Win” scenarios. Again the modern day programs such as Covey’s “7 habits” possess such precepts (“Win-Win”, habit 4 of Stephen Covey and “Synergize”, habit 6). Japanese models of partnering and distribution encompass these ideas.
S.W.O.T: Zen, the “Art of War”, and the book of change (Tao de Ching) are all about self-analysis and understanding. They allow one to understand yourself and your organization’s: strengths and weaknesses, and therefore how to synergize with others to achieve positive outcomes. These things have a direct correlation to Western company S.W.O.T review (strengths, weaknesses, opportunities and threats). A better understanding of how one can approach self and competitior analysis from an “Art of War” business perspective can be found at www.AppliedZen.com. Generally, in comparing the authors dealings with Japanese workers and companies, to many Western organizations, it seems that Japan places more attention on understanding one’s own, and competitor’s, position before acting. Again this relates to setting out a strategic path before embarking on a journey rather than exploring options as you go. Again reflecting on Japanese actions with regard to modern Western corporate trainers, Stephen Covey has said, “begin with the end in mind”(Habit 2 of “The 7 Habits of Highly Effective People).
Training: Continuing to train employee skills and undergo development both in-house and outside a company is essential. As the ancient samurai saying says: “Continually sharpen the sword or it will go blunt!” Generally the Japanese are quite good about providing thorough in-house training for tasks and sales. However, compared to many Western companies, outside training to create new ideas is rare. On the flip side, many Western companies (particularly smaller ones) are often a bit light with regards to in-house development.
Embracing Change: All the above methods (old and new) are about changing base behavior, beliefs and approaches. These are core values, and are far more important than putting band-aids on problems, or approaching things with simply a behavior change. In regard to the ancient philosophies, they of course must be interpreted, and applied, using case studies in a context that matches the modern corporate world. Japan today is a very different place than preached by its ancient philosophical ideals. Japanese businesses and employees are generally not as good as the West at embracing, or coping with change – one of the few things in life which is inevitable. All people and cultures struggle with change and it is openness to it is the subject of the classic Chinese text “Tao de Ching”.
Etiquette: Many people at first glance take the strategic approaches of the “Art of War” to be aggressive. As outlined above Sun Tzu’s work is quite the opposite - avoiding conflict and aggression is in fact the thesis. Etiquette and humanity is absolutely built into all issues, and one obvious connection is the value of partners, networking and not creating enemies. In Japan, the depth of etiquette is very extreme which again provides a similar link to the “Art of War” which has evolved over time.
This article only touches the surface of a few of Sun Tzu’s strategies and lessons. It also eludes to some Japanese behavior in a generalized fashion (in any culture there are always exceptions). The study of Japanese corporate behavior relative to such Asian arts such as Zen and the “Art of War” is a fascinating area of study with lessons that can be applied to doing better business in the Asian environment, or in the West.
Copyright 2005.
By Jason Armstrong, Ph.D.
Sun Tzu’s “Art of War” is considered to provide the most profound lessons for leadership, and victory in East or the West. Today its principles are applied to business all over the world. This classic body of work came from life and death scenarios, which evolved from empire, trade and political struggles. Obviously today’s corporate world does not induce anywhere near as strong a mechanism for change, or success, as the consequences of failure in business are far less than warfare. Nonetheless, the trickle down lessons from the “Art of War” are definitely applicable to any organized effort, project or business. Although Chinese in origin, the “Art of War” and lessons from Zen were adopted by Japanese groups such as the Samurai and Corporate Japan for clarity of mind, decision making and strategy.
Past and Present: Modern Asia is now very different from its past. The question is: how much do today’s managers in an environment like Japan apply these principles? In short, the answer is that some components of the “Art of War” are easily spotted broadly across Japanese business culture and other attributes of the text are rare. Looking at specific companies, or managers, one will sometimes see avid followers of the principles of the “Art of War”, and sometimes very little application at all. The roots of almost any good strategic plan can be found in the text the “Art of War” so it’s implementation is also present in Western business (even if it not derived by someone who directly studied the text).
Alliances: Using alliances is a key strategic component of the “Art of War”. This translates to partnering in the business world. Business partnering models and strategies based on the “Art of War” are outlined in detail in a downloadable video series by Applied Zen (www.AppliedZen.com). This article will not go into the details of such strategies but rather relate to their presence in Japanese business today and make comparisons to Western business. The importance of partnering and relationships is apparent to anyone who has done business in Japan. While these may not always portrait the efficiency of Sun Tzu’s “Art of War” strategies, partnering in Japan has permeated almost every aspect of Japanese business to an extreme. Over the years it has evolved to a degree of “middle men” involvement not seen in the West. The benefits, and hindrances, of such a system are often discussed by those doing business in Japan. Strategic partnering if carried out correctly should optimize sales, marketing, reduce operational requirements and create synergies that a company who approaches end point sales cannot. From Sun Tzu’s teachings such partnering strategies should also be put into product development (both the item itself and the marketing of it) as a process – not an after thought once the product is finished. Again, broadly speaking, Japan is rich with examples of this type of implementation.
Leadership and Decisions: The “Art of War” offers many lessons on leadership and people management. After all, if you can create a situation where people are willing to follow you into battle and die, there must be valuable motivation and leadership practices in place. Nowadays in Japan, one can see good examples of team co-operation and communication, and yet also some very bad examples. For example, Japan is a group-oriented society and usually makes decisions on that basis. Therefore, typically more staff are consulted and informed about decisions and ideas while they are in the making. However, this draws out the decision process. In comparison, Western companies often have decisions made only by upper management and then the ruling is put into the company as policy. In this Western approach, it is common for staff to learn about the policy only after it is announced. (the net result is often a long time before staff “buy-in” and policy becomes practice). The interesting thing about these two different approaches is that the time spent from contemplating a new idea to company implementation is very similar in both cultures, despite the generally faster decision making that occurs in the West. When one considers staff compliance and conflict avoidance, the Japanese way is better in that more staff are involved in the communication before policy is induced.
Communication: On the other side of staff communication, the Japanese environment does not encourage pro-activity like Western organizations. In fact, to suggest radical alternatives is often considered “rocking the boat” and is not a good career move inside Japanese businesses. In comparison the “Art of War” clearly identifies the need for taking calculated risks to gain intelligence as well as potentially gain ground. In the 1990’s Stephen Covey’s name became famous through the publication of the “The 7 Habits of Highly Effective People”. As many know the “7 habits” are not a group of new concepts but age old approaches to success. They are simply represented in a way that can be clearly applied to modern day personal and corporate development. The same precepts are taught in a number of ancient development and achievement, arts such as: Zen (which is not a religion, but a path for self discovery and growth), the “Art of War” by Sun Tzu, and the Tao de Ching (the “book of change”). Covey’s first “habit” is pro-activity. This is based on recognizing, just as Sun Tzu did, that not taking some calculated short-term risks due to fear of action, is the sure way to long-term failure. In contrast Japanese business behavior is generally very risk adverse. On the flip side, Sun Tsu’s “Art of War” stresses the importance of defense and conservative advancement. It is the balancing of risk and conservative defense that must be strategically planned to ensure victory.
Synergize: The “Art of War” by Sun Tzu, is often superficially viewed as an aggressive approach to victory. However, it is essentially a master text on “Conflict Management” and “Win-Win” scenarios. Again the modern day programs such as Covey’s “7 habits” possess such precepts (“Win-Win”, habit 4 of Stephen Covey and “Synergize”, habit 6). Japanese models of partnering and distribution encompass these ideas.
S.W.O.T: Zen, the “Art of War”, and the book of change (Tao de Ching) are all about self-analysis and understanding. They allow one to understand yourself and your organization’s: strengths and weaknesses, and therefore how to synergize with others to achieve positive outcomes. These things have a direct correlation to Western company S.W.O.T review (strengths, weaknesses, opportunities and threats). A better understanding of how one can approach self and competitior analysis from an “Art of War” business perspective can be found at www.AppliedZen.com. Generally, in comparing the authors dealings with Japanese workers and companies, to many Western organizations, it seems that Japan places more attention on understanding one’s own, and competitor’s, position before acting. Again this relates to setting out a strategic path before embarking on a journey rather than exploring options as you go. Again reflecting on Japanese actions with regard to modern Western corporate trainers, Stephen Covey has said, “begin with the end in mind”(Habit 2 of “The 7 Habits of Highly Effective People).
Training: Continuing to train employee skills and undergo development both in-house and outside a company is essential. As the ancient samurai saying says: “Continually sharpen the sword or it will go blunt!” Generally the Japanese are quite good about providing thorough in-house training for tasks and sales. However, compared to many Western companies, outside training to create new ideas is rare. On the flip side, many Western companies (particularly smaller ones) are often a bit light with regards to in-house development.
Embracing Change: All the above methods (old and new) are about changing base behavior, beliefs and approaches. These are core values, and are far more important than putting band-aids on problems, or approaching things with simply a behavior change. In regard to the ancient philosophies, they of course must be interpreted, and applied, using case studies in a context that matches the modern corporate world. Japan today is a very different place than preached by its ancient philosophical ideals. Japanese businesses and employees are generally not as good as the West at embracing, or coping with change – one of the few things in life which is inevitable. All people and cultures struggle with change and it is openness to it is the subject of the classic Chinese text “Tao de Ching”.
Etiquette: Many people at first glance take the strategic approaches of the “Art of War” to be aggressive. As outlined above Sun Tzu’s work is quite the opposite - avoiding conflict and aggression is in fact the thesis. Etiquette and humanity is absolutely built into all issues, and one obvious connection is the value of partners, networking and not creating enemies. In Japan, the depth of etiquette is very extreme which again provides a similar link to the “Art of War” which has evolved over time.
This article only touches the surface of a few of Sun Tzu’s strategies and lessons. It also eludes to some Japanese behavior in a generalized fashion (in any culture there are always exceptions). The study of Japanese corporate behavior relative to such Asian arts such as Zen and the “Art of War” is a fascinating area of study with lessons that can be applied to doing better business in the Asian environment, or in the West.
Copyright 2005.
"As Seen Online" -- Local Businesses Finally Figure Out the Internet (and Newspapers, Yellow Pages May Feel the Pinch)
A catering company in a suburban Connecticut town eliminates its Yellow Pages advertising, which once ran to $12,000 a year, in favor of promoting its website. For a growing number of small businesses, local Internet marketing is proving cheaper, and more successful, than traditional local advertising.
People have talked forever, it seems, about how consumers are searching online for local products and services, and how this will siphon millions in advertising dollars away from print Yellow Pages, newspapers, and other local media. If the story of one caterer, who axed his $12,000 per year Yellow Pages advertising budget in favor of local internet marketing, is anything to go by, the worm may finally have turned.
As recently as 2004, clients of SmallBusinessOnline.net, located in Norwalk, CT, were leery of spending anything in the online sphere. Small Business Online's clients are, for the most part, local businesses serving a local customer base: lawyers, realtors, caterers, small retailers, sailing schools, chiropractors, lumber yards, to give a sample. In 2004, most were happy to get a search engine-optimized website online, and leave it at that. By 2005, a marked change had occurred. Success in the online sphere, for these local businesses, led to more investment in Internet marketing, which led in turn to more success. Examples: the caterer who received so much new business from the Internet that he needed to hire a new employee. A furniture retailer, with a bricks and mortar store, who now gets about 90% of his new business via the Internet. A lumber supplier who is selling $20,000 flooring jobs spurred by his website.
The siphon effect? Two out of these three businesses have already eliminated virtually all of their print Yellow Pages spending – in one case, representing a $12,000 a year loss to the Yellow Pages industry. Their new Internet marketing campaigns are costing these businesses less than their old Yellow Pages or newspaper advertising. The caterer who added a new employee is now spending about $500-600 a month on Internet marketing – the equivalent of a modest Yellow Pages ad or a single newspaper ad. For this, he is getting a steady stream of visitors to his website, with a successful conversion rate into paying customers. For these small businesses, local Internet marketing is proving both cheaper, and more successful, than traditional local advertising.
A new professional niche is emerging to support this growth: the local Internet marketing consultant, or expert on local search marketing, as it is sometimes called, who can put it all together for the local businesses. Such an expert is essential. The field is strewn with ill-advised offers and products from companies promising to simplify the process and bring tons of new customers to the local business. Some examples of "get rich quick" schemes for internet marketing include mass submissions to search engines (useless); affiliate linking schemes that will boost search engine rankings (this one may result in a website actually being dropped by a search engine); "guaranteed" search engine placement (no-one can guarantee this) to name just a few. Also questionable are "packaged leads" whereby a vendor provides traffic to a website for a flat fee. Successful Internet marketing depends on an integrated approach, from lead acquisition to sales conversion. It is useless to drive traffic to a poorly-designed, single webpage. The business ends up paying for leads that don't convert into customers. Contrary to what some marketers may say, the online space can be complex, and a local business must maximize its Internet marketing with a careful strategy.
Done properly, local Internet marketing views each business as unique, and creates an affordable, ongoing marketing plan that fits the business. Successful elements of the mix include such things as optimization of the website both for search engines and for customer conversion; carefully-planned pay-per-click campaigns, that deliver quality, rather than quantity, of leads; online publicity; appropriate linking campaigns; submission to local and vertical directories; special website promotions; customer email-marketing, and more. The secret is in getting the mix just right for each business, and maintaining an ongoing program to keep the business's website front and center before the local audience. When carefully-planned and executed it can bring big dividends to a small business.
For many local businesses, the question is no longer whether they should begin to market in the local online space, but when. Currently, as Neil Street, sales and marketing director of Small Business Online sees it, incredible opportunities are being missed, as consumers search online for local products and services, but the businesses do not have an effective online presence to serve those customers. But as success stories such as the caterer's, or the furniture retailer's, begin to spread, that gap will close, and significant advertising dollars may soon shift to local online marketing.
Competition is always in your face
Competition is always in your face. You are Defending too much. But that could be counter productive. Be prepare to attack also.
What do most companies do when one of their major brands is hit by a price attack?The classis response is “wait and see.”
Wait and see if it affects our sales. Wait and see if the competitor can hang in there financially for the long haul. Wait and see if our customers come back after trying the low-priced alternative.
What would your company do if a major competitor suddenly cut its price substantially? Be prepared. The leader should be emotionally ready to strike back. What would you do? Are you sure?As the battle for Migraine Mountain proved, there would have been plenty of business for both Johnson & Johnson’s high-priced Tylenol and Bristol-Myer’s low-priced Datril. But it would not have been good strategy for Johnson & Johnson to share the market.
A live-and-let-live philosophy has no place in warfare. Companies like Johnson & Johnson and Procter & Gamble take no prisoners.
What do most companies do when one of their major brands is hit by a price attack?The classis response is “wait and see.”
Wait and see if it affects our sales. Wait and see if the competitor can hang in there financially for the long haul. Wait and see if our customers come back after trying the low-priced alternative.
What would your company do if a major competitor suddenly cut its price substantially? Be prepared. The leader should be emotionally ready to strike back. What would you do? Are you sure?As the battle for Migraine Mountain proved, there would have been plenty of business for both Johnson & Johnson’s high-priced Tylenol and Bristol-Myer’s low-priced Datril. But it would not have been good strategy for Johnson & Johnson to share the market.
A live-and-let-live philosophy has no place in warfare. Companies like Johnson & Johnson and Procter & Gamble take no prisoners.
The Comfort Zone
You may think you want to be comfortable, but watch out... Comfort kills! Learn how staying outside your comfort zone can actually be the best thing you can do for your business.
The Comfort Zone
I have a friend named Gene, a serial entrepreneur who currently runs a software business. Like many people, last year was a tough one for his company. They survived largely by providing add-on services to existing customers - a decent response to difficult circumstances. They even grew revenues a bit. But here's something else that happened: They got comfortable. They decided they could exist on their base of customers, and then they "realized" there would be no new ones.
Is that bad? Isn't that just accepting reality as it is?
It might not be bad, except that Gene's people got used to the idea of "no new customers", and it stuck with them. They've continued to draw revenues from this satisfied base, but lead generation and prospecting has remained almost nil. They are now looking at an empty pipeline, and unless things change soon, I'd say the forecast for the future is not bright.
There is a state of mind I'd like to acquaint you with known as the comfort zone. Perhaps you are already familiar with this insidious disposition. Did I say insidious? How can comfort be insidious?
You know, don't you.
You get seduced by the status quo. You think things are pretty good the way they are. You like it this way, and you don't really want anything to change. When I was a young pup at General Electric we called this state of being "fat, dumb, and happy". And after a while, your progress grinds to a halt.
Comfort is defined as a condition or feeling of pleasurable ease.
You can become comfortable with all sorts of things - good and bad. You can become comfortable with your existing level of business - even if it is not quite as much business as you'd like. You know how to handle it, you can keep your staff size level - and you know how much profit you can earn from it.
Or you can become comfortable with your sources of business - even when your niche is shrinking. After all, you understand these types of customers. You know their personalities. You are familiar with how these particular people will react to your ideas. Isn't this great, you think.
You can become comfortable with your competition - even if they are bigger or more nimble or just plain better than you. At least you know where you stand, right? And since you think their moves are predictable, you perceive a measure of safety.
And of course - as you can easily see - each of these situations is fraught with danger. If not right now, then soon.
What is so comfortable about the comfort zone?
It goes all the way back to pre-history. Human beings like regularity and predictability. Change is bad. Consider the existence of a hunter-gatherer - living life in the wild - every change in the weather...every change in the environment...every new sound in the night...new people...new animals. Every one represents a mortal threat.
As modern, civilized people, we still prefer it when things remain constant and stable. We've learned the right responses so we feel adequate to the challenge. We know how to gauge our efforts, so we don't have to work too hard for acceptable results. And we can make predictions about the future, so we generally feel safe.
And it just feels so good.
The weird part is we can be comfortable even when we shouldn't.
Look at Gene's company. These people got so used to others saying no to them, they just stopped looking for new business. At least it was something they understood, right?
Wrong!
Staying in the comfort zone will kill your business, just as surely as it will kill Gene's.
Why? "My company isn't like his. Our business is sound", you say. What's wrong with being comfortable, as long as it's the 'good' kind of comfort?
On the face of it, nothing.
Except that things change.
When you are in the comfort zone - that place of pleasurable ease - it means you have accepted the status quo. You like it, and you hope things are going to remain just the way they are. You aren't changing with the changes. You aren't making progress. You have probably lost sight of your vision, and you are doing things you've done over and over and over...
You've become fat, dumb and happy.
And the precipice you are rushing towards is just out of sight around the bend.
What to do about these nice-feeling but dire circumstances?
There are 5 steps to getting out of the comfort zone.
One: Recognize that you are in the C-zone.
Have you become used to the way things are? Have you stopped pushing your business forward? Have you ceased looking for new opportunities? Have you given up taking new ground? Have you taken your eye off the ball? Have you started to let certain things - things that used to be important - slide? Have you become comfortable with your current circumstances?
If you have more than one yes - or even one - you are probably in the comfort zone.
Two: Re-commit to your vision.
Do you have a vision? Are you passionate about it? When was the last time you thought about it? Is what you see in your future the place you really want to take your life?
If you don't think you have a vision, or are no longer feel strongly about the vision you have, then it's time to do some vision work.
Three: Set new goals and objectives.
Where does your newly resurrected vision lead you? What goals do you want to achieve along the way to realizing it? Be specific. Be concrete. (You don't have to do a whole strategic plan here - just get the motor running again.)
Four: Examine the consequences
If you remain in the comfort zone, what is likely to happen next? What are the consequences of you maintaining your personal or corporate status quo while the world around you changes? Be brutally honest. If things truly look rosy, wonderful. Good for you. But if they don't...
Five: Time to take action
The stuff that used to work, well it don't work now*
In the end, the only thing that really makes a difference is action. Whether you need a shift in what you do or a shift in who you are, either way you need to take action for something to happen. And you may not be used to action - you may have lost the habit.
Here's the short solution to busting out of the comfort zone: set five new actions which will move things forward.
Pick one and execute it right away. Start today. The best time would be as soon as you're done reading this. Then pick another and do that. And so on.
It sounds simple - and it is! The hard part is lifting off that easy chair and getting started.
Things feel so good the way they are, don't they?
Don't they?
*Apologies to Warren Zevon.
(c) Paul Lemberg. All rights reserved
Article Tags: Comfort Zone, Become Comfortable
The Comfort Zone
I have a friend named Gene, a serial entrepreneur who currently runs a software business. Like many people, last year was a tough one for his company. They survived largely by providing add-on services to existing customers - a decent response to difficult circumstances. They even grew revenues a bit. But here's something else that happened: They got comfortable. They decided they could exist on their base of customers, and then they "realized" there would be no new ones.
Is that bad? Isn't that just accepting reality as it is?
It might not be bad, except that Gene's people got used to the idea of "no new customers", and it stuck with them. They've continued to draw revenues from this satisfied base, but lead generation and prospecting has remained almost nil. They are now looking at an empty pipeline, and unless things change soon, I'd say the forecast for the future is not bright.
There is a state of mind I'd like to acquaint you with known as the comfort zone. Perhaps you are already familiar with this insidious disposition. Did I say insidious? How can comfort be insidious?
You know, don't you.
You get seduced by the status quo. You think things are pretty good the way they are. You like it this way, and you don't really want anything to change. When I was a young pup at General Electric we called this state of being "fat, dumb, and happy". And after a while, your progress grinds to a halt.
Comfort is defined as a condition or feeling of pleasurable ease.
You can become comfortable with all sorts of things - good and bad. You can become comfortable with your existing level of business - even if it is not quite as much business as you'd like. You know how to handle it, you can keep your staff size level - and you know how much profit you can earn from it.
Or you can become comfortable with your sources of business - even when your niche is shrinking. After all, you understand these types of customers. You know their personalities. You are familiar with how these particular people will react to your ideas. Isn't this great, you think.
You can become comfortable with your competition - even if they are bigger or more nimble or just plain better than you. At least you know where you stand, right? And since you think their moves are predictable, you perceive a measure of safety.
And of course - as you can easily see - each of these situations is fraught with danger. If not right now, then soon.
What is so comfortable about the comfort zone?
It goes all the way back to pre-history. Human beings like regularity and predictability. Change is bad. Consider the existence of a hunter-gatherer - living life in the wild - every change in the weather...every change in the environment...every new sound in the night...new people...new animals. Every one represents a mortal threat.
As modern, civilized people, we still prefer it when things remain constant and stable. We've learned the right responses so we feel adequate to the challenge. We know how to gauge our efforts, so we don't have to work too hard for acceptable results. And we can make predictions about the future, so we generally feel safe.
And it just feels so good.
The weird part is we can be comfortable even when we shouldn't.
Look at Gene's company. These people got so used to others saying no to them, they just stopped looking for new business. At least it was something they understood, right?
Wrong!
Staying in the comfort zone will kill your business, just as surely as it will kill Gene's.
Why? "My company isn't like his. Our business is sound", you say. What's wrong with being comfortable, as long as it's the 'good' kind of comfort?
On the face of it, nothing.
Except that things change.
When you are in the comfort zone - that place of pleasurable ease - it means you have accepted the status quo. You like it, and you hope things are going to remain just the way they are. You aren't changing with the changes. You aren't making progress. You have probably lost sight of your vision, and you are doing things you've done over and over and over...
You've become fat, dumb and happy.
And the precipice you are rushing towards is just out of sight around the bend.
What to do about these nice-feeling but dire circumstances?
There are 5 steps to getting out of the comfort zone.
One: Recognize that you are in the C-zone.
Have you become used to the way things are? Have you stopped pushing your business forward? Have you ceased looking for new opportunities? Have you given up taking new ground? Have you taken your eye off the ball? Have you started to let certain things - things that used to be important - slide? Have you become comfortable with your current circumstances?
If you have more than one yes - or even one - you are probably in the comfort zone.
Two: Re-commit to your vision.
Do you have a vision? Are you passionate about it? When was the last time you thought about it? Is what you see in your future the place you really want to take your life?
If you don't think you have a vision, or are no longer feel strongly about the vision you have, then it's time to do some vision work.
Three: Set new goals and objectives.
Where does your newly resurrected vision lead you? What goals do you want to achieve along the way to realizing it? Be specific. Be concrete. (You don't have to do a whole strategic plan here - just get the motor running again.)
Four: Examine the consequences
If you remain in the comfort zone, what is likely to happen next? What are the consequences of you maintaining your personal or corporate status quo while the world around you changes? Be brutally honest. If things truly look rosy, wonderful. Good for you. But if they don't...
Five: Time to take action
The stuff that used to work, well it don't work now*
In the end, the only thing that really makes a difference is action. Whether you need a shift in what you do or a shift in who you are, either way you need to take action for something to happen. And you may not be used to action - you may have lost the habit.
Here's the short solution to busting out of the comfort zone: set five new actions which will move things forward.
Pick one and execute it right away. Start today. The best time would be as soon as you're done reading this. Then pick another and do that. And so on.
It sounds simple - and it is! The hard part is lifting off that easy chair and getting started.
Things feel so good the way they are, don't they?
Don't they?
*Apologies to Warren Zevon.
(c) Paul Lemberg. All rights reserved
Article Tags: Comfort Zone, Become Comfortable
Applying for a Business Loan
Learn the procedures involved in applying for a loan. There are many elements to be considered and preparations to be done. That still does not mean that your loan will be accepted.
The process of applying for a business loan is a stringent one as compared to the standard procedures in obtaining a home mortgage loan or a personal loan. This is probably due to the fact that business loans contain a greater risk element as compared to other loans. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender.
The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
Article Tags: Business Loan, Loan Proposal, Loan Application
The process of applying for a business loan is a stringent one as compared to the standard procedures in obtaining a home mortgage loan or a personal loan. This is probably due to the fact that business loans contain a greater risk element as compared to other loans. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.
With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender.
The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.
It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.
The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.
In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.
If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.
On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.
If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.
Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.
Article Tags: Business Loan, Loan Proposal, Loan Application
Angel Investors: Who They Are & When Are They Appropriate
Angel investors are individuals who invest in emerging business ventures. Angels typically provide both capital and know-how to companies who are in either their start-up or expansion phases. To reflect the increased risk of investing in such firms, angels seek a higher rate of return versus traditional public stock investments.
Angel investors fulfill the financing need that exists between capital provided by friends and family and capital provided by venture capitalists. Individual angel investors often write checks from $25,000 to $100,000. Recently, angel investing has become more organized, and angel groups often invest from $250,000 to $500,000 at a time to deserving ventures.
Angel investors often have similar financing criteria as venture capitalists. They want to see proprietary intellectual property, a large market size, management team members with expertise and experience and a current valuation that allows for a good return on investment.
In identifying and attracting an angel investor, companies should seek angel groups that are located in their region. For instance, the Tech Coast Angels have funded over 85 Southern California-based companies since 1997. When seeking individual angel investors, it is critical to network in order to create a personal connection between yourself and the angel. Also, ideally the individual has experience within your specific field so he/she can provide industry contacts and operational expertise in addition to capital.
Article Tags: Angel Investors
Angel investors fulfill the financing need that exists between capital provided by friends and family and capital provided by venture capitalists. Individual angel investors often write checks from $25,000 to $100,000. Recently, angel investing has become more organized, and angel groups often invest from $250,000 to $500,000 at a time to deserving ventures.
Angel investors often have similar financing criteria as venture capitalists. They want to see proprietary intellectual property, a large market size, management team members with expertise and experience and a current valuation that allows for a good return on investment.
In identifying and attracting an angel investor, companies should seek angel groups that are located in their region. For instance, the Tech Coast Angels have funded over 85 Southern California-based companies since 1997. When seeking individual angel investors, it is critical to network in order to create a personal connection between yourself and the angel. Also, ideally the individual has experience within your specific field so he/she can provide industry contacts and operational expertise in addition to capital.
Article Tags: Angel Investors
Analyzing Your Key Performance Indicator
With the advent and exponential growth enjoyed by the internet, not a single company can afford to ignore the possibilities the internet offers. In many ways the internet levels the playing field for ...
With the advent and exponential growth enjoyed by the internet, not a single company can afford to ignore the possibilities the internet offers. In many ways the internet levels the playing field for all competitors, making it just as easy to acquire new customers whether you are based in a remote country location or are headquartered in a major metropolitan area. If you are both doing business on the internet, both of you have the same opportunity to go after the consumer base that exists online.
To take advantage of the opportunities afforded by the Web, you should understand the importance of a key performance indicator. A key performance indicator refers to vital elements or measurables that tend to demonstrate or explain the performance of your company. From an internet marketing standpoint, one key performance indicator might involve the keywords your company uses. For instance, if one key word is driving all your sales, then you should certainly be tracking the performance of this keyword. Once it has been identified as a key performance indicator, you can analyze why it is so successful and apply what you learn to your other keywords.
Obviously there will be ample data related to the key performance indicator you have chosen to analyze and you will need a tool to visually display the data. Data visualization tools are important because they assist us in interpreting complex data sets. One recommended data visualization solution makes use of dashboard software. dashboard software allows for multiple inputs of complex data sets. It will then output your data in very simple, yet powerful format in a digital dashboard like manner.
We can think of digital dashboards like we think of the dashboard of a car. A car’s dashboard displays all the pertinent and important information the driver or passenger of a car could ever need to know. Thus, with one quick glance at the car dashboard we can easily find out what we need to know. Digital dashboards offer a similar solution, but on a much larger scale. Employing dashboard software, digital dashboards can output all the information a C-level executive could ever want to know about their key performance indicator.
Digital dashboards also assist in interpreting the complex data set by displaying trends and patterns found within the data. This can prove extremely beneficial to executives who find themselves in high pressure situation where decisions are needed now based on huge databases of information. Dashboard software analyzes the data for the executive, and then pushes the results to digital dashboards. A top notch executive that is used to pressure situations can easily glance at such a dashboard and interpret the charts, graphs, and trends as needed so he can formulate his decision quickly and confidently.
Taking a business to the next level requires a great amount of research. Key performance indicators must be studied exhaustively. Once this has occurred and all the data has been gathered, one must interpret the data. Without dashboard software driving the visual display of such exhaustive research and data, one would be hard pressed to interpret the data appropriately. Fortunately there are a variety of digital dashboards that will fit your business needs and help you continue increasing the growth of your business.
With the advent and exponential growth enjoyed by the internet, not a single company can afford to ignore the possibilities the internet offers. In many ways the internet levels the playing field for all competitors, making it just as easy to acquire new customers whether you are based in a remote country location or are headquartered in a major metropolitan area. If you are both doing business on the internet, both of you have the same opportunity to go after the consumer base that exists online.
To take advantage of the opportunities afforded by the Web, you should understand the importance of a key performance indicator. A key performance indicator refers to vital elements or measurables that tend to demonstrate or explain the performance of your company. From an internet marketing standpoint, one key performance indicator might involve the keywords your company uses. For instance, if one key word is driving all your sales, then you should certainly be tracking the performance of this keyword. Once it has been identified as a key performance indicator, you can analyze why it is so successful and apply what you learn to your other keywords.
Obviously there will be ample data related to the key performance indicator you have chosen to analyze and you will need a tool to visually display the data. Data visualization tools are important because they assist us in interpreting complex data sets. One recommended data visualization solution makes use of dashboard software. dashboard software allows for multiple inputs of complex data sets. It will then output your data in very simple, yet powerful format in a digital dashboard like manner.
We can think of digital dashboards like we think of the dashboard of a car. A car’s dashboard displays all the pertinent and important information the driver or passenger of a car could ever need to know. Thus, with one quick glance at the car dashboard we can easily find out what we need to know. Digital dashboards offer a similar solution, but on a much larger scale. Employing dashboard software, digital dashboards can output all the information a C-level executive could ever want to know about their key performance indicator.
Digital dashboards also assist in interpreting the complex data set by displaying trends and patterns found within the data. This can prove extremely beneficial to executives who find themselves in high pressure situation where decisions are needed now based on huge databases of information. Dashboard software analyzes the data for the executive, and then pushes the results to digital dashboards. A top notch executive that is used to pressure situations can easily glance at such a dashboard and interpret the charts, graphs, and trends as needed so he can formulate his decision quickly and confidently.
Taking a business to the next level requires a great amount of research. Key performance indicators must be studied exhaustively. Once this has occurred and all the data has been gathered, one must interpret the data. Without dashboard software driving the visual display of such exhaustive research and data, one would be hard pressed to interpret the data appropriately. Fortunately there are a variety of digital dashboards that will fit your business needs and help you continue increasing the growth of your business.
Analyzing Customers in Your Business Plan
The Customer Analysis section of the business plan assesses the customer segments that the company serves. In it, the company must 1) identify its target customers, 2) convey the needs of these customers, and 3) show how its products and services satisfy these needs.
The first step of the Customer Analysis is to define exactly which customers the company is serving. This requires specificity. It is not adequate to say the company is targeting small businesses, for example, because there are several million of these types of customers. Rather, the plan must identify precisely the customers it is serving, such as small businesses with 10 to 50 employees based in large metropolitan cities on the West Coast.
Once the plan has clearly identified and defined the company’s target customers, it is necessary to explain the demographics of these customers. Questions to be answered include: 1) how many potential customers fit the given definition? is this customer base growing or decreasing? 2) what is the average revenues/income of these customers? and 3) where are these customers geographically based?
After explaining customer demographics, the plan must detail the needs of these customers. Conveying customer needs could take the form of past actions (X% have purchased a similar product in the past), future projections (when interviewed, X% said that they would purchase product/service Y) and/or implications (because X% use a product/service which our product/service enhances/replaces, then X% need our product/service).
The business plan must also detail the drivers of customer decision-making. Sample questions to answer include: 1) Do customers find price to be more important than the quality of the product or service? and 2) are customers looking for the highest level of reliability, or will they have their own support and just seek a basic level of service?
There is one last critical step in the Customer Analysis -- showing an understanding of the actual decision-making process. Examples of questions to be answered here include: 1) will the customer consult others in their organization/family before making a decision?, 2) will the customer seek multiple bids? and 3) will the product/service require significant operational changes (e.g., will the customer have to invest time to learn new technologies? will the product/service cause other members within the organization to lose their jobs? etc.).
It is essential to truly understand customers to develop a successful business and marketing strategy. As such, sophisticated investors require comprehensive profiles of a company’s target customers. By spending the time to research and analyze your target customers, you will develop both enhance your business strategy and funding success.
The first step of the Customer Analysis is to define exactly which customers the company is serving. This requires specificity. It is not adequate to say the company is targeting small businesses, for example, because there are several million of these types of customers. Rather, the plan must identify precisely the customers it is serving, such as small businesses with 10 to 50 employees based in large metropolitan cities on the West Coast.
Once the plan has clearly identified and defined the company’s target customers, it is necessary to explain the demographics of these customers. Questions to be answered include: 1) how many potential customers fit the given definition? is this customer base growing or decreasing? 2) what is the average revenues/income of these customers? and 3) where are these customers geographically based?
After explaining customer demographics, the plan must detail the needs of these customers. Conveying customer needs could take the form of past actions (X% have purchased a similar product in the past), future projections (when interviewed, X% said that they would purchase product/service Y) and/or implications (because X% use a product/service which our product/service enhances/replaces, then X% need our product/service).
The business plan must also detail the drivers of customer decision-making. Sample questions to answer include: 1) Do customers find price to be more important than the quality of the product or service? and 2) are customers looking for the highest level of reliability, or will they have their own support and just seek a basic level of service?
There is one last critical step in the Customer Analysis -- showing an understanding of the actual decision-making process. Examples of questions to be answered here include: 1) will the customer consult others in their organization/family before making a decision?, 2) will the customer seek multiple bids? and 3) will the product/service require significant operational changes (e.g., will the customer have to invest time to learn new technologies? will the product/service cause other members within the organization to lose their jobs? etc.).
It is essential to truly understand customers to develop a successful business and marketing strategy. As such, sophisticated investors require comprehensive profiles of a company’s target customers. By spending the time to research and analyze your target customers, you will develop both enhance your business strategy and funding success.
Analyzing an Investment Property
The real estate market is huge in the United States right now. Almost anywhere you go, you will hear about the appreciation in investment properties and the great equity owners have built in their rea...
The real estate market is huge in the United States right now. Almost anywhere you go, you will hear about the appreciation in investment properties and the great equity owners have built in their real estate investments. Make no mistake, a good investment property can make you a very wealthy person. Let’s take a look at some important things that should be considered when considering and analyzing an investment property.
1. Risk – No investment property comes without risk. Businessmen inherently understand that the most profitable investments are typically accompanied by the highest amounts of risk. There is a common belief that real estate is continuously appreciating. This is just not true. When there are downturns in the economy the value of your investment property will suffer. Over the long run the value of your investment property will likely return and even exceed its previous state. When you invest in real estate property you take a real risk by exposing yourself to the health of the economy. Investment properties also pose liquidity risks. Should you need to sell your property for financial reasons, you will have to take whatever price you can get. That price may not always be favorable, and even if it is it may still take quite awhile to sell it.
2. Cash Flow – Once you have analyzed the risk of investing in real estate and have decided to forge ahead, you will then want to analyze the cash flows of the investment. For example, if your investment property is an apartment complex you need to examine the revenues and expenses associated with ownership. How much revenue can you expect each month from monthly rental payments? What is the monthly mortgage payment on the apartment complex? Hopefully, the difference between these two streams of cash results in a positive cash flow. Once you have determined the annual net cash flow from the project you would be wise to discount these streams of income back to the present value. A positive net present value offers a good representation of the current value of the investment and will assist you in deciding whether to take ownership of the investment property.
3. Exit Value – In all likelihood, your plan with this investment property is to sell if off after a certain number years, say 10. In the final year of ownership of the investment property you will experience one very large cash flow due to the sale of the property. Determining the expected value of the investment property will also help you decide if this property is worthy of your investment. The sale of the investment property will allow you to cash in on the equity you have built over the years.
After performing this analysis you will have a better idea whether this investment property is worth your time. If it provides strong net cash flow from monthly rental payments and the sale of the property at the end of the investment term represents a substantial increase in value, then you would do well to consider the investment property .
The real estate market is huge in the United States right now. Almost anywhere you go, you will hear about the appreciation in investment properties and the great equity owners have built in their real estate investments. Make no mistake, a good investment property can make you a very wealthy person. Let’s take a look at some important things that should be considered when considering and analyzing an investment property.
1. Risk – No investment property comes without risk. Businessmen inherently understand that the most profitable investments are typically accompanied by the highest amounts of risk. There is a common belief that real estate is continuously appreciating. This is just not true. When there are downturns in the economy the value of your investment property will suffer. Over the long run the value of your investment property will likely return and even exceed its previous state. When you invest in real estate property you take a real risk by exposing yourself to the health of the economy. Investment properties also pose liquidity risks. Should you need to sell your property for financial reasons, you will have to take whatever price you can get. That price may not always be favorable, and even if it is it may still take quite awhile to sell it.
2. Cash Flow – Once you have analyzed the risk of investing in real estate and have decided to forge ahead, you will then want to analyze the cash flows of the investment. For example, if your investment property is an apartment complex you need to examine the revenues and expenses associated with ownership. How much revenue can you expect each month from monthly rental payments? What is the monthly mortgage payment on the apartment complex? Hopefully, the difference between these two streams of cash results in a positive cash flow. Once you have determined the annual net cash flow from the project you would be wise to discount these streams of income back to the present value. A positive net present value offers a good representation of the current value of the investment and will assist you in deciding whether to take ownership of the investment property.
3. Exit Value – In all likelihood, your plan with this investment property is to sell if off after a certain number years, say 10. In the final year of ownership of the investment property you will experience one very large cash flow due to the sale of the property. Determining the expected value of the investment property will also help you decide if this property is worthy of your investment. The sale of the investment property will allow you to cash in on the equity you have built over the years.
After performing this analysis you will have a better idea whether this investment property is worth your time. If it provides strong net cash flow from monthly rental payments and the sale of the property at the end of the investment term represents a substantial increase in value, then you would do well to consider the investment property .
An Introduction to Recruiting Software
There has been a lot of talk in recent years about recruiting software. Recruiting software helps companies find suitable employees, and works in a number of ways. It can manage the employment section of a company’s website, keep track of any company responses to applicants, and help organize all information on potential employees in a comprehensive database.
A major function of recruiting software programs is that they can make use of the employment part of a company’s website. The software can make a list of jobs available with the company. Web surfers can click on jobs they are interested in and immediately be taken to a description of the job. The software can also be used to create electronic applications that can be completed and submitted on the Internet.
Another function of recruiting software is to keep track of any company responses to the applicants. The software allows users to create custom letters acknowledging that the company received the applicant’s resume, interview requests and appointment reminders, among others.
Recruiting software is perfect for creating an applicant database. This function lets users keep track of the people who have applied for positions within the company. The database stores information on people who have completed an application or submitted a resume. Many programs assign ID numbers to applicants, making it easier to keep track of the applicants. The software can also be used to check if an applicant has previously applied to work for the company. Recruiting software applicant databases are also able to keep track of what sources the applicants came from, allowing the company to see how its various recruitment tools are working. This lets the company know if newspaper ads, websites, employment agencies, or other sources are supplying a stream of qualified applicants.
Recruiting software can be expensive and complicated, but it usually saves company money in the long run, and the organizational aspects of the software make hiring new employees much easier.
A major function of recruiting software programs is that they can make use of the employment part of a company’s website. The software can make a list of jobs available with the company. Web surfers can click on jobs they are interested in and immediately be taken to a description of the job. The software can also be used to create electronic applications that can be completed and submitted on the Internet.
Another function of recruiting software is to keep track of any company responses to the applicants. The software allows users to create custom letters acknowledging that the company received the applicant’s resume, interview requests and appointment reminders, among others.
Recruiting software is perfect for creating an applicant database. This function lets users keep track of the people who have applied for positions within the company. The database stores information on people who have completed an application or submitted a resume. Many programs assign ID numbers to applicants, making it easier to keep track of the applicants. The software can also be used to check if an applicant has previously applied to work for the company. Recruiting software applicant databases are also able to keep track of what sources the applicants came from, allowing the company to see how its various recruitment tools are working. This lets the company know if newspaper ads, websites, employment agencies, or other sources are supplying a stream of qualified applicants.
Recruiting software can be expensive and complicated, but it usually saves company money in the long run, and the organizational aspects of the software make hiring new employees much easier.
