Lessons in lending from the moon
As a boy, I was in awe of the space shuttle (yes, I was born a few years late for the moon landing). I followed Columbia’s first mission into space every day, it was like Star Wars and Battleship Galactica coming real.
Pretty much like all my friends, I wanted to be an astronaut. Somehow, many years later I ended up in finance with my amazement of space remaining. Now, 50 years on from Apollo 11 I can relive things.
Which brings me to the point of this post. There are lessons companies can learn about borrowing from the surface of the moon.
Let me explain.
The men who walked on the moon found that their eyesight was far better than ever, that shadows were exact and sharp images. On Earth, our eyesight is clouded by the atmosphere. This causes shadows to be blurred images and the clarity of our vision is impaired.
I guess the analogy is that on Earth we see in standard definition, on the moon, it is in ultra HD.
It is a strange concept, but one that applies itself well to my world of commercial lending.
If you remove the atmosphere you get greater clarity.
Removing the atmosphere
We have all worked in an environment where there is an atmosphere that impinges creativity, is negative and restricts our ability to work. When that atmosphere is removed the workforce is happier, more productive and more efficient.
When it comes to lending, the borrower and lender see life very differently.
Too often the borrower is clouded by their own beliefs, caught up in their own hype or confidence. They look at what they are doing through an atmosphere, it clouds their clarity.
This means that too often key points are missed. These key points are commonly the difference between raising finance successfully and being declined.
If there are three key things I would encourage every borrower to address within any lending proposal it would be;
- Don’t ignore risk. Accept it exists and explain how you will mitigate it
- Don’t be vague. Be specific about what you are doing, the problem you solve and how you solve it
- Stress your difference. Pubs fail, the high street is struggling. True, but not true for everyone. Stress why you are different from your peers, be exact, be honest, demonstrate it
All these points require clarity of thought and a large slice of admitting home truths. All factors which can easily be clouded if viewed through at atmosphere.
These are all small steps that help when seeking borrowing but is commonly the small steps that make the biggest difference, or to quote the most famous man to walk on the moon, ‘one small step…’
By Dave Farmer
For any questions regarding commercial finance, or to chat about space, then please get in touch.