Tuesday, April 20, 2010

BloggeRhythms 4/20/2010

Another day, but quite different. Because, though I know the people quite well who commented here yesterday, the important thing is they responded.

To the first one I apologize for misconstruing a comment he'd made and will try harder to be more accurate in the future. In the case of the second responder, here again I guess my writing just didn't make my point. Because, I wasn't trying to say that self-education is the best thing for everybody and the educational system that exists be ignored, but rather that depending on that system alone today most often isn't enough, because it's been so drastically watered down. Thus, I believe that to insure the best chance of success, people ought take every opportunity they can to educate themselves.

Now, going back to something the first responder wrote, he mentioned the name Jeffrey Immelt. And that reminded me of my former life.

I spent considerable time in the finance business during my career, and most of that focused on equipment leasing. And, if nothing else, providing leasing services is a highly competitive business. Most creditworthy businesses have many alternatives available to them when it comes to paying for needed equipment. Cash purchase or borrowing funds from a bank where they have established a good relationship are two quite common examples. Beyond that, equipment suppliers themselves often offer some kind of financing plan.

Now, in the majority of competitive situations the alternatives I just mentioned are almost always considered by prospective customers. But, beyond those choices there are countless alternative providers, too. Such as other banks, finance companies, financial brokers, other types of lenders and then a seemingly endless number of equipment leasing providers.

If readers are getting a picture of extensive competition in the field of providing equipment financing, that's exactly my point, the battle for new customers is fierce. Oddly enough though, in spite of the myriad alternatives most transactions fall within parameters set by current financial markets, because to remain viable and in business, financing providers must be certain their offerings make financial sense to both their customers and themselves.

Well, however many years ago with all the afore-mentioned battles for business being waged in equipment financing markets, quite fierce among providers, along came another player. This one's name was GE. The entry of a new source of financing wasn't so odd in and of itself, providers came and went all the time. But, this one had mega-dollars.

For quite some time, wherever this player showed up to compete a new dimension was added to the sales mix and a new question was asked more and more at the outset by prospective clients: What are your rates? The reason the question was so odd was, most alternative providers of financing, except for banks, rarely, if ever, mentioned costs until they had to. Because, until all of the facts of customer's situations were analyzed, ordinarily done later on, providers most often didn't know what to quote. They simply didn't have enough facts about the situation.

In not too long a time, pricing became more and more the primary issue for prospective clients, eventually altering the sales approach. Because putting financing costs on the table at the outset of sales presentations tends to muddy most situations, since the human nature of salespeople is to immediately offer their most favorable pricing. Then, when all things in prospective transactions are eventually analyzed, in the majority of situations what's been quoted at the start turns out to be too low. And, you don't have to know a thing about financing, or money markets, or equipment or creditworthiness to realize that it's very difficult, if not impossible in many cases to go back and adjust prices upward. Customers just won't allow it.

So, after that long story, when I was talking to my friend the other day he mentioned Jeffry Immelt. When he did so, I thought of GE Credit and said, “Gee I love that man.” My friend asked why and I replied because although it's taken all these years, someone's finally come along and disintegrated GE Finance. And, watching them crash and burn has to make folks like me happy, because he's done something from within that none of us could accomplish as competitors. And we've been trying for years and years.

That's it for today folks.

Adios

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