nat_sr_accounting_0513Business leaders today don’t need to be big data gurus to discover new ways to boost revenue and earnings as long as they understand the basic fundamentals of data analysis and have a few minutes to spare. Analyzing your financial statements can reveal a bounty of insightful trends and potential moneymaking opportunities that warrant and inspire a journey into the details.

Executives tend to discount the strategic value of traditional accounting reports like financial statements because they recap prior activity. But when complemented by operational measures, balanced scorecards and strategic performance measurement systems, valuable results may be found.

A dive into financial statements can create a competitive advantage by helping executives proactively identify trends and even predict future demand for products and services, says Kristy Towry, associate professor of accounting for the Goizueta Business School at Emory University.

“Consultants have traditionally used accounting data to make agile, first-mover decisions that are crucial to advancing and sustaining growth,” says Jeff Thomson, CMA, president and CEO of the Institute of Management Accountants. “Executives can follow suit as long as they know where to look and understand how to analyze data.”

Explore your income statement

Even if revenue is growing, a dive into your income statements and its supporting data can help you capitalize on emerging opportunities or head off a looming sales decline.

Which products and services are selling and which ones aren’t? Are customers responding to social media outreach or specific promotions? Are they opting for lower-price items with fewer frills or are they willing to splurge on luxury models? And what do these trends mean for the future?

A review of sales records may reveal an opportunity to sell more products and services to existing customers or shift your product mix without increasing overhead. A review of operational data may highlight areas of excess capacity that can be used to generate additional sales and profits.

“Segmenting your customer base by key demographics and tracking their activity and behaviors can illuminate opportunities to grab additional market share through upselling or by offering current customers discounts for purchasing greater quantities,” Thomson says.

Simply repositioning a product or putting it on the front page of your website can boost sales and profits without raising costs, says Alan Reinstein, professor of accounting at Wayne State University. In fact, storing raw materials and products for an extended period of time can tie up cash and erode profit margins.

“Grocery stores put milk near the back of the store because it forces customers to stroll past higher margin products,” he says. “It doesn’t cost them a dime to evaluate sales data or use the results to craft or validate the efficacy of a product-positioning strategy.”

Since a rise in customer satisfaction increases retention and generally precedes a growth in sales, using a balanced scorecard or dashboard to track revenue, sales activity and customer sentiment can help business leaders interpret the needs of the marketplace and make advantageous moves.

Robert Kaplan and David Norton of the Harvard Business School originated the balanced scorecard to give managers and executives a more poised view of organizational performance by adding strategic, nonfinancial performance measures to traditional financial metrics. A holistic view of the organization allows executives to synthesize multiple data streams and accurately predict future performance, Towry says.

“I’m an advocate of the balanced scorecard because it helps business leaders change course or adjust their strategy on the fly by aggregating financial data and other key metrics and compares them to the goals in their business plan,” she says.

Unearthing moneymaking gems is often just a case of exploring your company’s financial statements

Activity-based analysis and costing is a way for managers to assess the performance of assets on their balance sheet and which products and customers are generating the most revenue and profits. The process also helps managers determine where improvements in quality, efficiency and productivity will yield the best return.

“Comparing costs with activities is common among certified management accountants because it helps management identify key cost drivers and potential savings by allocating direct and indirect costs to every stage in the order, manufacturing and distribution process,” Thomson says.

The analytical methodology often highlights opportunities to increase profit margins by outsourcing distribution or ancillary services to less costly external providers or automating manual manufacturing processes, or it may disclose an opportunity to increase cash flow by offering quick-pay discounts or incentives to major customers.

If reducing costs isn’t an option, business owners may be able to raise prices and margins for a particular product by using a formula to calculate elasticity of demand, which measures how the demand for goods and services varies with changes in price.

Generally speaking, the greater the number of substitute products available, the greater the elasticity will be. Naturally, very high price elasticity means that customers are sensitive to price changes, while very low price elasticity means you can raise the price of a top-selling product without effecting demand.

From a trend perspective, a sudden rise in price elasticity may portend an upcoming decline in sales unless executives initiate discounts or take steps to develop and launch new products.

Business owners often decide to eliminate unprofitable divisions or product lines after conducting an activity-based analysis, but they should proceed with caution, Towry says.

“Executives assume that eliminating unprofitable segments will increase profits, but the fixed expenses don’t go away,” she says. “They may end up launching a fatal cash crunch or death spiral once the revenue from that discontinued segment is no longer offsetting those fixed expenses.”

By using the financial data from your accounting system and applying alternative costing models, you’ll be able to determine how much overhead is being covered by the sales of each product and whether it makes sense to discontinue a particular segment or service.

Dare to compare

Comparing key ratios and data from your accounting system to similar companies in your industry can highlight opportunities to lower costs, increase efficiencies and improve your company’s bottom line.

Industry associations often provide benchmark data, and sites like Valuation aggregate and provide information, research and analysis for more than 400 industries.

Start by breaking down your company’s accounting and operational data into standard industry measures, such as sales per square foot, same store sales growth or something as simple as the number of gallons of water used per car wash. Then compare your results to the standard for your industry to see where you have a competitive advantage or need to improve.

Major deviations from industry norms should invoke questions and a search for solutions, Reinstein says.

For example, a competitor may have lower selling, general and administrative expenses because they use e-commerce or distributors to push products instead of salespeople. Or they may be experts at using their point-of-sale system to increase loyalty and market share by offering customers incentives or rewards for making additional purchases.

“It’s critical to dive into the details and not ignore the trends, because a svelte, nimble company with ample cash reserves can force a sluggish competitor out of business in a heartbeat in a tepid economic environment,” Reinstein says.

Cash is king

While profits are important, cash is the key to survival for any growing company.

A cash-flow analysis tracks the movement of money in and out of your business by looking at operating, investment and financing activities. It also provides business owners with an accurate picture of their company’s profitability by using noncash items and expenses to adjust profit figures.

Another useful way to spot trends and analyze financial statements is by performing either a horizontal or vertical analysis, which compares numbers from one period to the next. The analytical methodology may point to favorable or unfavorable changes in cash flow that could spell trouble unless they’re corrected.

You’re probably in good shape if your cash is growing, and it accounts for 10 to 20 percent of your assets. If it’s not, then you need to figure out where it’s going. Is it costing you more to manufacture the same products, or have competitive pressures forced you to reduce prices during the last year?

Vertical analysis lets you compare each component of your financial statements over time to determine if and where significant changes have occurred. You may need to focus on collections or stop extending credit to major customers if receivables are growing too quickly, or you may need to reduce inventory if the payments on your short-term line of credit are chewing up cash and affecting your company’s liquidity.

Managing fixed expenses is critical for growing companies, Towry says. Otherwise, a blip in the economy can lead to an insurmountable cash shortage. Don’t just look at expenses when reviewing your financial statements. Break down fixed and variable costs and apply varying revenue forecasts to see how changing circumstances affect your cash position.

“Companies that overinvest in equipment, building leases or inventory can’t manage those costs down when the economy heads south,” Towry says. “Business owners need a cash budget and an awareness of cash in relation to profits because there’s no magic bullet for a major cash crisis.” ?

How to reach: Goizueta Business School at Emory University,; Harvard Business School,; Wayne State University,; Institute of Management Accountants,

Published in National

Instead of calling to check an account balance or to find out if a check has cleared, time-starved executives are finding it easier to focus on sales and profits — through technology.

Online banking customers are the most engaged because they’re using all available channels and tools to drive efficiencies and profits, says Jan Hoyt, senior vice president of business banking product management for PNC Financial Services Group Inc.

“They’re managing cash flow by depositing checks from their smartphones and using electronic invoicing and bill pay to control the inflow and outflow of funds with a few clicks of a mouse from anywhere on the planet,” Hoyt says. “In turn, we’re able to discuss forecasting tools, global expansion or e-commerce solutions instead of routine banking transactions.”

For example, online statements allow business owners to review and print account statements on demand while the bank handles storage and security.

“Business owners can balance their accounts more quickly and can control who has access to their statements just by requesting online statements,” Hoyt says. “And since we archive statements for seven years, it reduces the need for secure document storage and disposal.”

Instead of purchasing hardware and software, smaller businesses can save money by using PNC’s treasury management, account alert and online payroll services. Many transactions can be processed by the bank’s computers, a process that not only saves time but also reduces the need for IT staff and infrastructure.

In addition, having a relationship with a major bank and using its invoicing and online payment system may boost a company’s credibility and stature with clients and prospects.

“Just as having a strong Web and social media presence levels the playing field for small and midsize businesses, banking in the cloud gives growing companies access to the same services as large companies without increasing overhead,” Hoyt says.

How to reach: PNC Financial Services Group Inc., or (888) 762-2265


Also see: Unearthing moneymaking gems is often just a case of exploring your company's financial   statements

Published in National

A trusted adviser can help you track data and review ways to boost profit. Mark Van Benschoten, a principal at Rea & Associates Inc., lists some things to consider in discussions with your accountant.

Q. What accounting missteps might lead to decreased profitability? 

A. Not having timely and accurate monthly financial statements can hurt a business. Within a few days of month’s end, you should have a current income statement, cash flow statement and balance sheet. A trusted adviser, like a CPA, banker or CFO, can help you understand how each of these reports reflects how your business is performing.

Q. What accounting tools could prove most valuable to business owners? 

A. It does not matter how large or small your business is, a budget will help you keep your eye on the things that are most important. Compare your actual results each month to your budget, giving you an indication of how your business is performing in key areas like sales, margins, overhead and cash flow.

Q. What do businesses commonly overlook that can pose problems?

A. Many businesses don’t have a good handle on the true cost of a product. This leads to underpricing and potentially critical losses. In addition, many business owners will cave into lower price points for larger clients without evaluating the impact of shrinking margins. You also need to review your current pricing. You cannot set prices for an extended period of time without considering price increases in raw materials.

Q. How does risk affect company value?

A. There is an inverse relationship between your business value and the amount of risk associated with your business. Why does risk lower value? It is because risk causes uncertainty about the future cash flows. Once you understand how specific risk factors impact your value, you will be motivated to set a plan of action to reduce your business risks.

Mark Van Benschoten, CPA, is a principal at Rea & Associates Inc. Reach him at (614) 889-8725 or

Published in Columbus

Accountants can do much more than prepare your taxes. Stephen W. Christian, managing director at Kreischer Miller, offers some ways to work with your accountant to increase profits and grow your business.

Q: Can your accountant add value and help you increase your profitability?

A. Do you consider your accounting fees to be overhead or an investment? One stereotype of an accountant — bean counter, scorekeeper, tax preparer — deserves its connection with minimal value overhead. But the right accountant takes the historical numbers and information available and helps you navigate a path to increased profitability and a return on your investment.

Accounting firms add value in many ways, but one that C-suite executives are reaping the most benefit from revolves around determining and accessing the right information with which to make timely, informed decisions. Think of all the information embedded in a company’s systems — production statistics, time and productivity information, supplier and customer data, margin analyses, etc. Your accounting firm can assist you in harnessing it.

First, determine the information that would put you in the best position to make decisions and monitor activities. What are the key performance indicators? Your accountant can assist you in determining the appropriate indicators. You can then develop the type of dashboard report you would like to review.

Your accounting and technology teams can assist in automatically populating the dashboard reports. You will be able to review critical information on a daily, weekly or monthly basis from any smartphone, tablet or computer. Stop wasting time with the incredible amount of useless information available to all of us. Work with your accountant to focus on utilizing only the relevant data, putting you on a path toward timely, better decisions that lead to improved profitability.

Stephen W. Christian is a managing director at Kreischer Miller. Reach him at (215) 441-4600 or

Published in Philadelphia

The enterprise risk management process helps businesses identify hidden dangers. If used correctly, it could also uncover opportunity. James P. Martin, managing director for Cendrowski Corporate Advisors LLC, shares how risk management is beneficial.

Q. How might risk affect company value?

A. Risks are uncertainties in the business environment. Alone, they do not degrade a company’s value. Degradation of value often comes from management making poor decisions based on incomplete or erroneous information. Sometimes, this is from long-standing assumptions about the business or the competitive environment that are not founded in fact.

The objective of enterprise risk management is to engage the entire organization in a continuous and proactive discussion about risk, about what could go wrong, and to proactively plan to mitigate risk and perhaps even capitalize on risk events.

When implementing an enterprise risk management process, it’s important to include participants from all levels of the organization — people throughout the organization will have a different perspective on risk and about how things really operate. Senior management will tend to focus on strategic issues, while process operators will tend to focus on process anomalies and nonconformances. The enterprise risk management process should bring these perspectives together.

For example, senior management may have a strategic initiative to increase customer satisfaction scores by a certain percent. The process operators with direct knowledge of customer order fulfillment, including knowledge of complaints and processing issues, would have vital information to help accomplish the strategic initiative. Too often, without a process to gather, analyze and organize such information, companies overlook the wealth of information they have within their own organization. The enterprise risk management system should help facilitate this information flow and allow everyone within the organization to understand their role in accomplishing organizational objectives.

James P. Martin, CMA, CIA, CFE, is managing director for Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or

Published in Chicago

Social media tools provide an accessible and inexpensive way for businesses to expand their market footprint. But failure to protect and enforce intellectual property rights may quickly turn a great resource into a major headache, whether or not social media is part of a corporate marketing program, says Alexis Dillett Isztwan of Semanoff Ormsby Greenberg & Torchia LLC.

Together, social media and intellectual property pose internal and external issues. Internally, a business must monitor and control employee use of intellectual property. Given social media’s accessibility, problems can arise and grow rapidly. Imagine an employee prematurely tweeting about a new product launch or information never intended for the public. To reduce risk, businesses should establish a written social media policy that:

?  Sets clear guidelines for appropriate topics to be posted on any media, including company and employee personal accounts.

?  Identifies personnel permitted to post and the posting approval process.

?  Addresses use of third-party trademarks or copyrights or names of individuals or competitors.

?  Is clearly and regularly communicated and taught through annual training.

Externally, businesses should police unauthorized use of their intellectual property on social media sites. Defamatory comments can take on a life of their own. Businesses must also contend with trademark misuse or infringement, from someone using your trademark as its domain name to assuming your brand identity online, an aggressive practice called “brand-jacking.” To combat these challenges, businesses should:

?  Monitor social media for use of company trademarks.

?  Obtain formal protection for intellectual property, e.g., trademark registrations.

?  Avoid overreaction; weigh impact of potential negative backlash online against severity of misuse.

?  Consider availing itself of the social media site’s enforcement policies.

Alexis Dillett Isztwan, a member at Semanoff Ormsby Greenberg & Torchia LLC, concentrates on intellectual property and technology law.

Published in Philadelphia

The term “intellectual property” applies to more than just a copyright. Here are some questions for companies to consider about their IP when security is a concern.

Q. What is considered intellectual property but is often overlooked when deciding what to protect?

A. When people think of intellectual property, they most often think ’patent’ or ‘copyright.’ There are other forms. One that’s often overlooked is trade secrets.

As noted in an influential restatement of the law, a ‘trade secret is any information that can be used in the operation of a business … that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.’ They take a wide variety of forms, including product formulas, data compilations, customer lists, manufacturing techniques and other types of business know-how.

Q. How might a company’s trade secrets be vulnerable?

A. A business has to identify its trade secrets before it can protect them. Common sense goes a long way here. Business owners should start by asking, ‘What does my business do better than the competition, which the competition doesn’t know about?’ The answer might qualify as a trade secret.

Q. What policies or procedures should a company put in place to protect its trade secrets?

A. There are no hard and fast rules, but a business must take ‘reasonable steps’ to protect its secrets. This could include password-protecting computers, limiting access on a need-to-know basis, keeping documents under lock and key, and/or requiring employees to maintain secrecy during and after employment.

Q. How has social media affected a company’s ability to protect its trade secrets?

A. It has made it more difficult for businesses to argue that it has trade secrets — a point underscored in Sasqua Group Inc. v. Courtney, No. 10-528, 2010 WL 3613855 (E.D.N.Y. Aug. 2, 2010), where the court held that compiled customer data was not a trade secret because the information was also available on the Internet and social media sites.

There are no easy answers, but one thing seems clear: Businesses must take care when posting to social media sites and educate employees about using social media sites.

P. Andrew Fleming is a partner with Novack and Macey LLP. He represents individuals and small, midsize and large companies in complex commercial litigation.

Published in Chicago
Wednesday, 31 October 2012 20:00

Wholesale changes

The wholesale distribution business in the United States is changing at warp speed. The recession hit wholesalers hard; only the most robust, best-capitalized distributors made it through the downturn in good fighting shape, and now that they have emerged, they’re facing a flurry of new competitors and new technologies.

The biggest, strongest and smartest distributors — let’s call them the lucky few — are making the investments needed to keep pace with the changes. Many other distributors are looking for more affordable ways to stay relevant. And some are cashing in their chips and finding something else to do.

“Distributors’ customers’ demands are changing,” says Brent Grover, managing partner with Evergreen Consulting LLC in Cleveland. “They want to be able to call you or access your website and find out three things immediately: ‘Do you have the product I need?’, ‘What’s the price?’ and ‘When can I get it?’ And they don’t want to wait around for somebody to fumble through their system and figure out what the price is supposed to be.”

Sophisticated online sellers with roots in retail, such as Amazon and Staples, have starting moving into some wholesale markets, and those sellers’ technological expertise has upped the ante for traditional distributors.

“Keeping up with those companies and their advanced systems requires a big investment in information technology,” Grover says. “The traditional ERP [enterprise resource planning] systems that distributors have been using don’t necessarily have the capability to provide all of these options to the customer. So distributors have to change their business processes and their support systems to make that happen. And it requires an investment in IT that some distributors may not be able or willing to make.

“But I think most of them will decide that they like adaptation a whole lot more than they like becoming irrelevant.”

The new technological requirements are forcing distributors to come up with answers to difficult questions and make tough decisions.

“It takes capital and management acumen to make these types of changes happen,” Grover says. “In the wholesale distribution business, the companies that are not big and well-capitalized have three choices in front of them: get bigger so they have the ability to afford these IT investments, get very specialized so customers will deal with them for reasons that don’t have to do with technology but because the customer needs their specialized knowledge, or get out — in other words, sell your business.

“All of this pressure, coupled with the low interest rates we’ve been seeing and the fact that banks have money to lend, has led to a lot of merger and acquisition activity in wholesale distribution.”

Guy Blissett, a wholesale industry expert with the IBM Institute for Business Value and a fellow with the National Association of Wholesaler-Distributors’ Institute for Distribution Excellence, underscores Grover’s points about the technological and economic shakeout taking place in the wholesale distribution business.

“We’ve seen the economic crisis drive many distributors out of business and damage others to the point where they’re struggling to grow now that the economy is starting to turn around,” Blissett says. “Unfortunately, some of those distributors now are not in a position to make the investments that they’ve been deferring.

“The key challenge that wholesaler-distributors face is simply continuing to drive their relevance in the supply chain. The traditional source of their value proposition — the ability to stock all the products their customers want and get those products into their hands quickly and efficiently — is still critically important, but it’s no longer enough. There’s so much transparency now with product pricing, product availability and individual company capabilities that distributors are having to think very differently about what will differentiate them over the next five to 10 years.”

The game changers

Amazon and Staples are the two most visible new players in the wholesale distribution market, and their technological sophistication is changing the rules of the game.

“, in particular, has definitely had an effect on people’s psyche,” Grover says. “It’s not that they’re stealing everybody’s business, at least not so far. Our view of is that it’s really for unplanned purchases of maintenance, repair and operating supplies for the noncontractor segment.

“Is going to decimate anybody’s business? Probably not. Was it reasonable that the stocks of distributors, such as Grainger and Fastenal and MSC Industrial, took a hit when the news about the launch of AmazonSupply came out in April? No, it really didn’t make a lot of sense.”

Sensible or not, those distributors’ stocks did take a dive when the online giant came on the scene.

“When was announced, the splash was that here was a business-to-consumer-style website appearing in the distribution world — and we all know about the bells and whistles Amazon has,” Grover says.

“Here they were repositioning themselves as a distributor, coming on-stream with prices that weren’t really low, but they were decent prices, and they were offering free two-day shipping for orders of $50 and up, which, I mean, that’s crazy, and a 365-day return privilege — a new feature. And they were offering a toll-free number to call during business hours for support, so you could actually talk to somebody at Amazon. That was a new thing. They’ve emerged with 14 different product lines and a half-million items in stock.”

Analysts who follow the stocks of publicly traded distributors overreacted to the news, Grover says.

“They reacted like, ‘Boy, this is terrible news for these distributors and is going to come in and crush everybody,’” he says. “My personal view is I think that while is the real deal and they’re going to be here for the long run, they’re not going to destroy anybody’s world, at least not right away.”

While Amazon is not expected to immediately cut a swathe across the old-line distributors’ business, the deep-pocketed gatecrasher has raised the technological stakes in the industry, and the other distributors will have to step up their games to compete effectively.

“The issue for distributors is that if they have an online portal, it’s probably something fairly rudimentary, a typical business-to-business-type Web experience,” Grover says. “The bar has definitely been raised by bringing a business-to-consumer electronic commerce experience and putting it out there. For all of the other distributors, if they don’t have a good e-commerce portal, it’s going to make whatever they have look pretty bad. So they have to step it up.”

Blissett agrees that distributors will have to make serious investments to improve their e-commerce sites if they hope to compete with the new competitors moving in.

“Distributors have to ask themselves, ‘How do I sell my products to my existing customers, as well as new customers, using mobility, using the Web, using other channels of distribution?’” Blissett says.

“In some ways, customers’ demands are the same as they’ve always been — they’re just more acute now. So pricing continues to be key. Customers demand low prices. The difference now, I think, is that with more products being able to be purchased over the Web, price transparency has become a much more real tool that customers can use against distributors — if pricing is what they’re primarily focusing on.”

New ways to compete

There are several strategies that wholesale distributors are hatching to differentiate themselves in the new competitive landscape. An interesting new tactic is the use of vending machines to distribute supplies.

“This is a trend that’s just starting to emerge,” Grover says. “Distributors are placing vending machines in their customers’ industrial plants or in hospitals for nursing staff supplies. The employees use an ID card to get the needed supplies out of the vending machine.

“For example, in an industrial plant, let’s say a worker needs some safety goggles or some gloves. Instead of going all the way to the tool crib or having to fill out a requisition form, they can just go to the vending machine near their workstation and put their ID card in, and they can pick what they need out of the machine.

“It tracks who got the item and when they got it, and it also electronically signals the distributor when it’s time to replenish the machine.”

Blissett points to the use of data analytics as an exciting untapped opportunity for distributors to serve their customers in a new way in the future.

“Some distributors are looking at their role in the supply chain and the tremendous amount of information and data that flows through their organization and they’re realizing that can be a potential source of differentiation going forward,” Blissett says.

“They’re looking for ways to capture that data, do some analytics on it and turn it into something meaningful for their customers and suppliers. They’re starting to wake up to this potential and invest in it.”

Some distributors are envisioning that within the next five years they could reposition themselves as an information provider for their line of trade similar to companies such as IHS Global Insight and IRI Nielsen, Blissett says.

“They would be able to aggregate information from suppliers, information about customer interactions, as well as macroeconomic data and other information that they have access to,” he says.

“Their ability to pull all of that together, do some analytics on it and make some sophisticated forecasts and projections about where the overall economy is going and where individual facets of the economy and particular commodity prices are going — they could provide a lot valuable information by doing this.”

Economic modeling is just one area among many in which distributors could apply data analytics to create useful information for customers and suppliers.

“It’s essential, now more than ever, for distributors to understand their cost structure and all of the different activity-based costing elements of their supply chain and to be able to drive down the cost as much as possible, and then be able to go to their customers and have a fact-based conversation about that,” Blissett says.

“That allows a distributor to go in to a customer armed with a great deal of information and insight about their own cost structure and how things work, and they can use that to surface some inefficiencies in their customer’s supply chain that the customer might not even have been thinking about.”

Whether it’s in the supply chain, pricing, labor management, fleet optimization or customer segmentation, the opportunities for distributors to drive revenue to the bottom line via the application of analytics are many.

“We’re seeing many distributors make investments in this area,” Blissett says.

“As they get their basic data and their core IT infrastructure in place and they have either a packaged or a homegrown ERP system that’s robust and comprehensive and they can start to do some analytics on top of that, we’re seeing some exciting examples where distributors are challenging long-held perceptions about how to most efficiently move products through the supply chain and how to do things differently and capture a significant value along the way.

“Analytics is a potentially huge source of differentiation for wholesale distributors. Going forward, that type of role for these companies is pretty exciting.” <<

How to reach: National Association of Wholesaler-Distributors,; IBM Institute for Business Value,; Evergreen Consulting LLC,

Published in National
Wednesday, 31 October 2012 20:00

Small biz, wholesale loan growth slows

The growth rate of bank loans has slowed over the last three months for small to midsized businesses in general and for wholesale distributors in particular as economic and political uncertainties cause business leaders to ease up on their growth accelerators.

“We started to see a slowdown in the summer,” says Jordan Peterson, senior vice president and business banking credit manager at PNC Bank. “In July, we started seeing a lower volume of applications for loans. We’ve been talking with our bankers about what they’re seeing out on the street. It mirrors what we’ve been seeing in the economic outlook surveys, and it’s also in sync with what we’ve been hearing from our customers. They’re hesitant right now. They’re concerned about the economy.

“And they’re looking at the upcoming election and wondering what government is going to do to help small business.”

Post-recession business has resumed for some wholesale companies in some sectors, but the recovery for wholesalers has been spotty.

“Whether they’re feeling optimistic and looking to grow depends on the type of wholesaler they are and the type of industry they service,” Peterson says. “Some are doing well and are optimistic. Others are still waiting for things to improve. An example would be wholesalers that sell building construction materials. They are still waiting for things to recover and get back to normal.”

Peterson says wholesalers and other businesses looking to take out loans to grow their businesses should take a dim view of recent reports that banks are currently in a tight-fisted frame of mind when it comes to lending.

“Wholesalers and others have probably heard on the radio or seen in the papers that banks are hesitant to lend right now,” he says. “But they should know that, in fact, banks are anxious to lend to them, as long as they qualify and they’re a good candidate to borrow — as long as they have good financial information and can show that what they’re selling has good value and can clearly demonstrate how much they need to borrow and why.” <<

How to reach: PNC Business Loans and Credit, (800) 762-5684 or

Published in National
Wednesday, 31 October 2012 20:00

Wholesaling books for CEOs

? The Little Black Book of Strategic Planning for Distributors

Brent Grover

Modern Distribution Management/Gale Media, 128 pages

Grover’s “Little Black Book” covers the critical pieces of creating a strategic plan for a wholesale distribution company, including case studies, exhibits and end-of-chapter questions for the wholesaler-distributor’s management team. These days companies are almost always focused on “the now,” and the recession exacerbated that tendency. This book will help shift that mindset. Its insights will help distributors organize a strategic planning project, gather the needed information and build a one-page plan. Execution is the final step, and that is where many distributors fail. This book gives distributors what they need to put their plan into action.

? 5 Fundamentals for the Wholesale Distribution Branch Manager

Jim Ambrose

Amazon Digital, 149 pages

“5 Fundamentals” is a guide for wholesale distribution branch managers to help improve their business and leadership skills. Ambrose asserts that the branch manager is the key to success for wholesaler-distributors. Expectations for managers’ performance are higher than ever, and the traditional advancement from inside sales to outside sales to branch manager is no longer the assumed track. The branch manager who follows this track with no leadership skills will struggle as companies push for improved performance at the branch level. Regardless of the company’s structure, the branch manager will need the fundamentals outlined here to keep the company profitable and provide the best value for customers.

? 2012 Wholesale Distribution Economic Factbook

Modern Distribution Management

Gale Media, 192 pages

MDM’s “Wholesale Distribution Economic Factbook” is widely regarded as the best source for accurate statistics about the wholesale distribution industry, including segment and overall industry revenue trends, inventory levels, 2012 sales forecasts and other critical benchmark data. Executives who manage, sell to or invest in wholesale distribution companies can use this report to stay on top of key economic and market trends. The report is produced by MDM, which has been researching and reporting on the wholesale distribution industry since 1967. MDM uses that experience to compile an accurate, comprehensive picture of the wholesale distribution industry in this report.

Published in National
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