Evolutionary Business Planning For Lenders – Part Three

In this, the third blog in our educational series, Taking an Evolutionary Approach to Business Planning, our intent is to help your lenders modify their 2016 business plans, based on what they have learned from the analysis of their 2015 activities and results.

Plan Your Work; Work Your Plan…Why Don’t More Lenders Do This?

Production Process on the Mechanism of Metal Gears.

Production Process on the Mechanism of Metal Gears.

At the start of every year, an extremely high percentage of business plan conversations take place between sales managers and lenders beginning exactly the same way.  The conversation begins with the lender telling their sales manager, ”I want to bring in $ X,000,000 of loans” or “My goal this year is to bring in $X,000,000 of loans and deposits.”  Wanting to produce a result is great, having a goal is important.  The real question becomes how are your lenders going to produce the specified result?  For many lenders there is a vast difference between what they say they are going to do in their business plan and what they actually do blog in and blog out.  Why is that?  Why don’t more lenders follow their plans?  The answer is fairly obvious, no accountability to the business plan by either the lender or their sales manager.  Much of the responsibility for lenders not following their business plans falls on the shoulders of their sales managers.

The banking industry is filled with top sales producers who were promoted into sales management roles.  Every bank has them.  The challenge is that these sales managers were never given any formal training and development on how to be an effective sales manager and sales coach.  The skill set to be a high performing sales manager is very different from the skill set needed to be a top sales producer.  Does anybody see a problem here?  As I stated earlier, part of the reason business plans are marginally effective at driving lender behavior falls squarely on the shoulders of their sales manager!  The sales manager is not using the business plan to manage sales strategies or sales activities!  We’ll be discussing the subject of effective sales management a great deal in 2016, so please keep an eye out for this installment. 

Increase Your Commitment, Increase Your Production

There is a direct correlation between commitment levels, activities and results. Everything starts with commitment.  There are six reasons sales managers and lenders would benefit by increasing their commitment to working closely from a business plan:

1. Removes a Lot of the Randomness and Luck Out of Production Goal Attainment

The goal for lenders and sales managers alike should be to build a repeatable set of processes and behaviors that create greater sales performance predictability.  Once a lender understands their  prior year’s sales formula (activity numbers, deal averages and conversion ratios) they know exactly the type and level of blogly activity needed to hit their goals.

2. Staying Focused

It’s natural for sales people to get lulled into fantasy land in a number of ways.  One example of fantasy land is placing a higher probability on your pipeline closing and backing off of your calling activities because you expect to be ahead of plan. Then after several months of working your deals you expected to close, several went south and now you find yourself behind plan.  If reviewed regularly, a business plan will provide a sobering reality and serve as your compass keeping you focused and motivated.

3. Realistically Gage Activity Levels for Both Quantity and Quality – Stay Accountable

It’s so easy for lenders to get pulled in different directions and to confuse efforts with results.  A high percentage of lenders stay very busy chasing deals and yet are dissappointed with their year-end results.  They approach each year with good intentions and the desire to stay focused, but their actions don’t mirror their intentions or their business plan.  Your business plan will help you gage both the quality and quantity of activities needed to hit your goals.  One of the most powerfull aspects of a business plan are the decisions made about the types of deals a lender is no longer going to work on. 

A very common real world example is a lender who closes six deals in 2015 for a total of $3.5M in new loan production when their annual goal was $10M.  With an average deal size of nearly $600K, this lender will have to dramatically ramp up their calling activity if their deal size remains the same in 2016 as it was in 2015.  However, through my coaching, this lender made the following decisions that were documented in their 2016 business plan :

1. To not call on companies with less that $15M in revenues
2. To not work on deals that were less than $1M. 

These two decisions will dramatically alter how this lenders invests their time and will empower them to realiscally gage activity levels for both quality and quantity.

4. Make Adjustments As Needed

A business plan should be fluid and adjusted as the year progresses.  Just as an airplane is off-course 98% of the time, yet with numerous course corrections, the plane lands at its intended destination.   Business plans should be adjusted as the year goes by.  One of the reasons lenders don’t look at their business plans throughout the year is the fear and self-judgement that often result from seeing how far off their activites and results are from their plan.  Setting quarterly production targets is crucial to making adjustments to your strategies, processes and activities.  A $10M production goal could be broken into $2.5M quarterly targets.  How many times have you seen lenders needing a ‘Hail Mary’ late in the fourth quarter to meet their sales goals?  The pressure of needing a deal late in the year could be avoided if the lender had made adjustments to various aspects of their business plan much earlier in their year.

Having a well-developed business plan doesn’t guarantee success, but it certainly increases your odds!  With a solid yet flexible roadmap to follow, you will enjoy the year and experience less stress because you have greater clarity around what it takes to hit your goals.

What Did Your Lender’s 2015 Sales Formula Reveal?success_blog

In our last blog we presented a new idea that is really quite powerful for diagnosing and improving sales performance.  Our goal is to help more lenders hit their annual sales goals and work smarter, not harder.  The following are several revelations that could have come from determining your 2015 sales formula.

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1. Calling on companies that are too small


2. Average deal size is too small deals.


3. Not enough initial prospect calls


4. Not enough warm introductions


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Establish a revenue minimum for prospective companies such as $15M and don’t go below

Establish a minimum deal size for new prospects such as $1M and try to avoid working on smaller

Set blogly goals to both give and ask for one warm introduction per blog

Set blogly meeting goals with existing customers and colleagues from your network


We are all familiar with the Albert Einstein quote, “The definition of insanity is doing the same thing and expecting a different result.”  Hopefully, our blogs are inspiring you to take a fresh perspective on learning from your 2015 activities and results in an effort to be more efficient and effective in 2016.

Building Your 2016 Ideal Year of Business Blueprint

In our final blog of the Taking an Evolutionary Approach to Business Planning series, we will be taking a fresh, evolutionary approach to the actual business plan format (what should be included in the plan) including changing the actual name of the document.  We believe lenders are just too familiar with the whole concept of business plans and as such very little value is created year in and year out around the business planning process.  Familiarity breeds laziness!  Familiarity stymies growth and development!  Without a doubt, familiarity fosters comfort in our old habits. 

As is obvious, we at BTI Growth Advisors are dedicated to helping bankers evolve, grow and change with the times.  To accomplish this, bankers have to be willing to be stretched outside of their comfort zones to discover new, more effective means of bringing new business to the bank, and to help sales managers be more effective at leading and managing sales teams. 

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