Thursday, May 7, 2009

Credit in a wayward world; what you need to get a loan…

Yes my name is Michael and I work for IKON; I wanted to stop by and introduce myself. Can I get a fully completed credit application, your personal guarantee and social security card and a copy of your driver's license and maybe 1 or 2 years of your most currently audited financials?

Does this sound like you initial cold call in the frozen tundra of your business landscape? Well it will soon, or should. How do you expect to get any business done talking to decision makers of well intentioned companies that have plenty of needs but no cash or credit? Everyone I talk to tells the same story, ya I had to walk away from 3 deals this month as I couldn't get them approved. I have had deals take weeks when the company and principal had great credit with no negative information.

When the daily news looks like this: Xerox forecast down 80%, Kodak alying off 18% of their global workforce, Konica Minolta laying off 600, Cenveo shuts down plant, Vertis Communications consolidating, Consolidated Graphics Reports Loss on Quarter, RR Donnelley Q1 Net Down 92% On Changes, Southwest Color Graphics closes doors, United Graphic Equipment no longer, U.S. Postal Service posts $1.9 billion loss, Quad/Graphics to lay off another 140 employees, Domtar Reports Loss of $45 million, Kodak First-Quarter Sales Decline 29%, Additional Cuts. It is not hard to understand why no one with money wants to hand it out to our capital equipment investments.

In this day and age you had better have perfect credit, audited financials and a very strong personal guarantee (750+) if you really think someone is going to loan you anything especially if you sic code is something like 2752! Although commercial printers are not the only ones being picked on, it seems like no one is immune to the credit FREEZE. It is like the ice age after a nuclear holocaust. Everyone has put all their supplies together and are waiting it out. Each hoping that the other will go out and see if the radiation is gone, just to look at the window and see another drop from poisoning.

We are not out of the woods yet, in fact it looks like 12-18 months if we are lucky to see some light at the end of the tunnel, and that may even be too optimistic. Companies are slashing employees, cutting benefits/pay/travel, outsourcing everything, and looking for a sign that everything they are doing is working. The atmosphere at the office has become uber competitive, where anyone even the secretary could be plotting against you just to lengthen her job by a week.

I hope for all of our sakes that I am wrong. I hope that the headlines start to read, "Companies expanding, spending money and handing out pay raises to beat inflation and the cost of living!" But I fear that we are not there yet,,,

Any comments?

Pirate Mike..

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