Welcome to today’s episode of The Secret Life of entrepreneurs. Today’s guest is going to talk dollars and cents. And as my 14 year old said to me probably a couple of years ago now, isn’t money, really what makes the world go round mum? And I thought, wow, at 12, she already had that insight. So Brendan McGuire from Affinity Credit Union joins us today to talk dollars and cents as a local business. Brendon. Welcome!
Barb, thanks for having me. It’s a pleasure to have you here.
So start off by, you know, tell us a little bit about yourself and your role at Affinity credit union.
Well, I came over to the financial world, I’m going to say 14 years ago now prior to that I was a broadcaster, which is one of my first loves. And I just love talking to people and communicating with people. And then I wanted to learn a little bit more about personal finance. And I moved over and worked for a charter bank for 11 years and realized, you know what, this isn’t so complicated if you just take the time to sit down and learn it and talk these things out. And I’ve always loved communicating with people and customer service. And in 2018, pretty well, exactly three years ago to this episode, I decided I wanted a new challenge. And I took on my current role with affinity Credit Union, as they call this a small and medium enterprise specialist. And now my title is business advisor. But it’s effectively the same thing we deal with small businesses, you name it, farmers, restaurant owners, any kind of retail owner, property owners, anything commercial, we do it and it’s been a fantastic learning experience and a great challenge.
So okay, let’s talk a little bit about the difference between that bank and credit union, because having been in the banking environment, was it a culture shock for you? Or what was some of the very first things that you noticed? When you like, from an employee standpoint? Like, what’s the difference between the two? Really?
You know, I don’t have anything bad to say about charter banks. I mean, I have a lot of friends who still work there, I enjoyed my time working there. But I personally prefer the credit union approach. When you think about the flowchart of who matters with the charter bank, number one, it’s the shareholders. Number two, it’s the profit margin or the bottom line there, sorry, the shareholders and then it’s, the customers come in second.
And then number three, you know, the employees at the bank. With the credit union, it’s all about the members, there’s no shareholders, there’s no dividends that have to be paid out. And everything is very local. So for example, decisions are made out of head office, when I worked for the charter bank, all of the decisions would be made out of Toronto, and Toronto doesn’t exist in their mind it sometimes when you watch them do a newscast, you’ll watch their weatherman go over the weather map, and he’ll talk about BC, he’ll talk about Alberta, he’ll scroll right over Saskatchewan, talk about Manitoba, etc, etc.
So sometimes when you’re talking about, let’s say, for example, you know, a small farm or an oilfield company or something out in a small town, they’re not really all that sympathetic toward what the lending needs are of this business or the viability of that business.
Whereas if you’re accountable, locally, which our head office is based in Saskatoon, it’s a whole different ball of wax. So I found a big, big difference. One thing that I kind of had fun with early on was, I’ve always done podcasting for the Regina Red Sox, their webcasts? Yeah. And I’ve always loved their organization. And I approached the team President Gary Brotzle about, hey, is there a way maybe you could partner with affinity credit union, and he said, we would love to partner with affinity credit union, I took it to our head office or marketing team, they loved the idea. And we were able to strike a partnership. Yeah. I don’t know that that ever would have happened when I was working for the charter bank. So that was certainly a bit of an eye opener for me as well.
You know, and, without knocking the banks, I think you give them too much credit, because I don’t think they would have even heard that proposal, the Regina Red Sox would mean nothing to them. And I think that’s the biggest difference between a bank and a credit union, having the decisions made here. There’s been numerous times in my own corporate career and then even as a small business owner, if a decision has to be made in Toronto, our numbers don’t make sense to them. The fact that we have a population just over a million, like them, that’s nowhere near a viable market for a business. And so they crunch those numbers and they say, oh, there’s no way this business is going to make it. So I think you know, the good old Saskatchewan mentality that we’re pretty hardy here and you know, we do whatever we need to do to survive definitely.
Especially the industries here like agriculture, I think especially because agriculture is a very specific industry very different from pretty well all other industries. And I’m not sure in southern Ontario, they have the same grasp of that as the people making those decisions locally do.
No, absolutely not, I actually went to university out in southern Ontario. And yeah, it was, it was different, totally different than what I had grown up with here in Saskatchewan. And not better, not worse, just different. And if you’re going to stay there, if you’re going to work there, you just have to be prepared that you, you know, fit into that culture. And, and it wasn’t my thing to, you know, compete that way and stab your buddy in the back just because there was a job. So here I am, and I’ve never looked back. It’s been a very good experience. Definitely. Okay. So you know, let’s dig in a little bit here. Brendon, I, the hope from our show today is that we want to be able to provide a little bit of guidance to local businesses, when they’re thinking about either a starting meeting, financing needing the basics, you know, your business accounts and things like that. Or you know, you’re growing, you’re expanding, you’re looking at changing up your foi or your financial institution. So someone comes in to talk to you, what do you say? How do you help them through this decision?
That’s a great question. So if we get them in all stages, so sometimes we get somebody who just comes in the door with, Hey, I’ve got an idea, what do I do next? Other times, we get people who come in the door and say, I’ve got this, this and this, what else do I need to do, and it really depends on which stage they’re at, I would say if somebody is at Ground Zero, for lack of a better term, we need to see the business plan.
And the business plan is critical, especially for a startup because we don’t have any historical projections, or sorry, historical financials to go off of. So we need future projections. And these projections need to be well written, well presented, they also need to be well thought out and rationalized.
And so what we do is we quite often partner with square one, Saskatchewan, that is a great nonprofit service that is available for all entrepreneurs, and, and Futurpreneur as well, although that is only available to entrepreneurs under the age of 40. And so those are a couple of services and resources that we encourage people who come in the door to us because they can help them refine that business plan. And that’s always the number one thing.
Typically, we like to see a cash flow projection for the first three years. And the big reason why we want to see that is because if we’re not putting together a loan that makes sense, on the surface, at the very beginning, we’re not only putting affinity credit union in a bad spot, but we’re putting the member in a bad spot.
And it would be very irresponsible of us to allow somebody or facilitate somebody to take on a whole bunch of debt, and not having a clear cut path as to how they’re going to pay that off. And then, and then on top of that, we will also have a look at prior earning history just to see what somebody has to fall back on.
Should things maybe not go so well. Or if they plan to keep working while the business is operating. And also we do get a net worth statement and we run a credit check, which is important. Just to have a look, see, you know, at the end of the day, I actually think that’s a big difference.
That’s another difference that I found with working in the credit union system than what I noticed when I worked over at the charter bank, the charter bank, if your credit score wasn’t like close to average, or above average, it was like Sia, you’re out the door. Okay, with the credit union system, it’s a little different. I mean, we have to do our due diligence. So if someone has a long history of delinquencies or issues in the past, we have to figure out a way that they can get started in a very responsible manner. And we have to be very careful if we’re going to lend to that person.
But at the same time, we’re open minded, we’ll have discussions and in a lot of cases, someone’s credit score might not look so good. Because of something that happened in the past or maybe a one off. I even know on my own personal credit bureau about a decade ago or so there was an item marked as in collections.
And I had no idea I called the place. They said, Oh, no, no, that’s marked as paid. And I had to jump through a whole bunch of hoops to get them to notify Equifax and everything else. So I think from that standpoint, I think that’s a big difference between banks and credit unions as well. We’re a lot more open minded and sympathetic toward that.
Yeah. And you’re gonna take the time to support the member and help them where I think, you know, a large financial institution like one of the big banks, they’re just gonna say, No, you’ve got problems here and off you go. So as a credit union, you have members, you have members on the personal side, you have members on the business side. are the folks that you work with on the business side, do they have to be a personal member as well?
They do not. We encourage Because the more stuff they have with us, the easier it is for us to offer them discounts and also to, to service their account, it’s a lot easier to service someone’s account on the business side if we have all of their personal stuff with us as well, in terms of seeing what’s happening with the business, and on the personal so to answer your question, I took the long way around there. No, there’s no rule there. But we definitely encourage it. And we believe it leads to a better member experience for them both on the business and personal side, if they have entered everything under one umbrella.
Yes. And if I put my own credit union hat on, and I’m not a member with Affinity with a different credit union, but if I put my hat on, it’s a heck of a lot easier when things are in one place, whether I’m going in for personal and going in for business, I can do everything in one fell swoop. So again, we all pay for convenience, right? So when you talked a couple minutes ago, we talked a little bit about lending and looking at that whole picture. For some small businesses, when they get started, I’m assuming that not everyone needs a loan to get started. Maybe I’m naive about that. And there’s a significant, you know, portion that does, but just kind of tell me about that startup picture. And what does it look like when a member or customer comes in and says, Brendan, I’ve got this bright idea. And here’s what I need: it could be as simple as a bank account could be much more complex and look like a loan. But tell me about that experience?
Yeah, no, for sure I’m having them come in is a very exciting time for them. Because you can tell this is not a business that they’re talking about, this is a dream that they want to get started. And that’s what’s really exciting about it, because it could be as simple as the service that they get, like, you know, I always argue the thing that credit unions can really hang their hat on and usually will really hang their hat on and especially affinity is service at the end of the day, you can look at 20 Different lenders.
And once in a while you’re gonna find somebody who might grind a little bit lower on pricing with affinity, we’re very competitive with our pricing. But the thing that will knock anybody or I guess knock out of the park, certainly with any charter bank, is the service level, because it could be as simple as someone coming in and talking about how they need to structure their business, and who needs to have access to business online banking? And what kind of access? What level of access do they have? How do we track who’s got money coming in?
If I’m just opening a personal account for Barb, that’s pretty simple. When you’re opening a bank account for business, that’s a whole different ball of wax, because you’re determining who has access, who’s allowed to have access, who can sign who can view, what kind of payments can they make, etc, then sometimes it’s just as simple as having that face to face meeting to really hash out what they’re looking for. And so I think at the end of the day, there’s no better feeling than helping somebody get financing for that startup business, when you see that business go up, and they’re happy, and it’s operating successfully. But at the same time, like you said, it doesn’t necessarily have to be financing, where the service comes in, and to make that dream, or the system that they need to get their enterprise started a reality.
Yeah, you know, one of the things that I most appreciated when I had to set up all of my banking for the business was, you know, you get all this information, and well, do you need this package or that package? Or what do you need? And I’m like, I have no clue I’m starting, I have no clue if I’m going to do one transaction a month, or 1000. And so the number one thing that I found was I needed flexibility. And if I wrong sized myself, I needed to be able to get back out of that, so that I could write ties myself. And I think that, you know, those are the kind of decisions. They don’t they don’t impact the success or failure of the business. But they’re the things that you can get stuck on. Or, you know, find yourself being kept awake at night, because I don’t know, there’s just so much when you’re getting started that you don’t know, right?
I would throw in there, too, that does impact the success of the business because the amount of time that you’re spending on small things, impacts what you can put to other things, what is the 80/20 rule, we spend 80% of our time on 20% of the stuff that we need to get done.
Exactly 20% of the activities that are going to help us earn revenue. Yes. It’s funny that you say that we’ve been having that conversation a lot in our business lately. Because we’re small, there’s only four or five of us and you know, trying to get the stuff done. The more I spend on admin, the less I spend with students in our get found program or you know, with clients and getting work done. So, yeah, I’m trying to do a little bit of offloading. And everybody else is feeling the delegating thing.
I enjoyed the episode that you had with the fellow from Virtus because with so many of my members, you know, they’ll ask me advice on what they should do. And, you know, the advice that I can offer is very limited more to just financial services, there’s a lot of advice I’m not qualified to give on how to run their specific business, but I like to tell them, do not cheap out on admin, and do not cheap out on accounting, bookkeeping. You know, those are things that will absolutely keep you up at night and drain all of your time. Unless, of course, I mean, if you have a CPA designation, or you have some sort of accounting designation, play to your strengths, you know, do things that you’re good at, that you’re proven to be good at, and outsource all the other stuff? Yes, exactly.
You know, one of the things that I often talk about with my clients is, building that solid foundation makes everything else in the future so much easier. Where you’re right, if you’ve cheaped out on this, that or the other, all of a sudden, you’re, you know, needing a whole bunch of website fix, or you’re, you know, needing to get a different accountant, because things didn’t work out for you. I have a visitor coming in behind me here. Oh, very cool. Yes. Okay, so, um, you said the word dream. And you know, as a business owner, absolutely. I have a vision for what, what I want my business to look like that dog doesn’t want to leave. I have a vision for what I want my business to look like. And I expect most people do. There’s times where I know you have to say no to someone and it’s their dream. How do you do that? How do you try to steer them in another direction? So they can, you know, maybe have a different dream? Or at least finance that dream differently? How do you do that?
I’m glad you asked that. Because one thing, again, another difference in working at the credit union when I worked at the charter bank, you might call me up and apply for a loan we’ve never met before, I’ll be on the phone with you 20 minutes max. And if it’s a decline at the end of it, it’s oh, sorry, we can’t help you see you goodbye. Okay. It’s really, really easy for the lender, not such a great experience for the customer.
In the credit union world, it’s very different. I mean, we do get some requests, obviously from people who don’t necessarily have their financial services with affinity. But after our long, thorough review, we are able to say no, but there’s a lot of requests that we get from people who are already existing members, maybe on the personal side, maybe they have a business, but as their account manager, I’m still accountable to them going forward.
So if I have to give them a no, it’s not just a quick conversation. And that’s that, you know, they can come see me face to face, and etc. So you’re a lot more accountable to the members in the credit union world. That is one of the biggest challenges I think that any lender faces is how do you say no to someone? And I learned early on that if you just say no and you walk away, that customer is liable to be upset and unhappy with the experience. That’s right. If you articulate why the answer is no, and what can be changed to get to yes, that makes a big difference, as long as you’re rational, and you’re detailed, and you articulate it properly. So for example, let’s say I get somebody who comes in the door, and we just can’t help them because they don’t have the risk tolerance to take on this enterprise. I always try to identify some kind of roadmap to get them there. So for example, do you have a family member?
Do you have a friend who would maybe partner with you on this, somebody who could give a personal guarantee who would vouch or something of that nature, because at the end of the day, I’m a big believer that there always are solutions, at least 95% of the time anyways, and they may not even be realistic solutions for some, but at least if you if you present the reason for the decline fairly. And you also present the solution that’s out there, you’ve at least provided them with some kind of a roadmap and an understanding as to what stands between them and their dream.
Yeah, exactly. You know what I like about how you present that. So I talk with my students all the time about solutions. And when you start to think about anything you’re working on as having a solution. You know, maybe a son who wants to start a business can go to mum for financing, or for help with financing or as you say, co-signing the loan, things like that. I remember a number of years ago, I had friends who had, I want to say signed over their parents house as collateral for a loan. And of course I think we all know where that was. Went it didn’t turn out. So like, is that still a thing? You know, are people allowed to turn over someone else’s property with their permission to, to hold as collateral on them alone? Or has that changed?
You can, you can do that. But you better be very responsible if you’re going to do that. You know, I’ll give you an example. I had one member come in and had a business that was failing. We had granted several loans, and some of them on the basis that we had a government guarantee to support the loan. Okay. And, you know, that’s another thing that credit unions do a great job of, I think, is partnering with government entities that can help different organizations that will provide grants, loans, etc.
But this fellow was coming in, and he kept re approaching us on the basis that his mother owned a lot of property and had guaranteed loans for him in the past. And so I didn’t end like I mean, his mother was, you know, in her 70s, maybe early 80s. So I didn’t bother calling his mother to verify this, I said, Look, you’ve got my number. If your mother wants to guarantee this for you, she can contact me, and we’ll talk. So I think if you’re getting into those kinds of situations, just be very careful that whoever’s involved, number one understands what they’re turning over. Yeah.
And number two, that if this goes sideways, this is not going to put whoever is putting up property as collateral in a serious bind. If if you have an uncle who’s worth millions of dollars, and he has a small cottage that he’s willing to pledge because he wants you to have your dream, that would be a lot more acceptable than maybe someone’s mother who is on a fixed income, and has their house paid for and putting a lien on that property. You know, so it’s, you know, again, I took the long way around there, there’s no direct answer to that. But you better be very careful if you’re going to allow someone else to put up their property for someone’s enterprise that looks risky at best. And, and in the same token, if the enterprise doesn’t look good, and we don’t have some level of confidence that this loan is going to go, well, we’re not going to grant the loan strictly on the basis that there’s collateral there. It’s a major, major problem for Affinity or any other organization to have to seize collateral. And we’re not really in the business of doing that, unless absolutely necessary anyway.
Exactly. Yep. So without putting you on the spot too much. You may have already thought about this before we did our show today. So can you tell us a story or two about, you know, a business that maybe you financed them, and it didn’t work or a business that you didn’t finance and it really worked? Can you share a couple of those stories? Obviously, you know, keeping lots of information private?
Yeah, for sure. I remember we did finance one business that we had good confidence in, and the business seemed to go okay. But then there was a marital breakdown. That happened. Yeah. And so things went sideways, and everything went delinquent, etc.
And, you know, I’m sitting there thinking about this, like, what could I have done differently? Should I have done this differently? And the answer that I came up with was, well, I, we did the best with the information that we had at the time.
And it made sense at the time, and Sometimes life happens. Yeah, nobody expected COVID-19 to have, um, you know, so you just have to always look at your process, think about the fundamentals about your decision making, and the system that you utilize, and you want to be constantly reviewing that, because one of the great hallmarks of a credit union is that we can customize things.
It’s not a one size fits all type of setup, but no, I have seen that happen. I would say I have two examples where I’ve granted the funding. And on one of them we’re having challenges with and on the other. They’re making their payments, but they’re always a little bit late.
And that was more of an example of somebody who, you know, they were very, very pushy. They were very, very aggressive. They had an accounting background, and I maybe rushed it through because of the fact that I thought this was a slam dunk, and the business plan was okay, but what I should have looked at was just how pushy they were to get the money, they needed the money yesterday kind of thing.
So I think that’s another thing to be mindful of, especially if you’re a lender is just because someone is putting a lot of pressure on you to push a loan over the finish line. That, you know, don’t ever be swayed by that there could be a reason for that, that could be a sign of financial duress that maybe they are under. And you always want to be very, very objective at every loan application that you look at. And as far as somebody who we didn’t finance who did well, I can’t think of any examples. And again, my commercial lending career is still fairly young. But we did have a member who I was very, very worried about.
Right, exactly. Brendan, we have totally gotten carried away with time. So we are actually working overtime. So I’m gonna do some special editing to the radio version of it. They’re done that Yeah, exactly. You know what, honestly, it’s like the hardest part for me. I’m like, what, I have to stop talking already.
And we even thought about D marketing at one point. And their business has actually gone very, very well, since then. So it was another helpful reminder that it’s okay to not give up on a member either. And me. And when I speak about D marketing, that’s another thing. That’s a big difference between the charter banks and the credit unions as well. There’s a lot of D marketing, where if the charter bank sees that your financial statements are not doing well, and they’re worried about this account, they will demand that you hand the keys over with the credit union and will still review the account. But if it’s not going well, most of the time, rather than demanding someone turn over the keys, we try to hammer out a solution.
Brendon, any final comments before I wrap us up today?
No, other than just, we love dealing with young entrepreneurs, even people who aren’t yet entrepreneurs, and even people who just want to talk about being entrepreneurs, or need help with their banking or their financial services. What we do come see us at any one of our affinity credit union locations in Regina, Saskatoon, or elsewhere in the province. We’d love to help.
Awesome, and how would folks find your website and social channels? If you know them off the top of your head?
Yes, yes, we can be found. We have our own Facebook page, we have our own website, we have our own contact center, we get a lot of requests, people who call into our contact center, and are routed that way. And if you want to speak with me directly, just ask Brendan. And we’ll take it from there.
That sounds good. Thank you so much, Brendan, for being with us here today, talking about Affinity Credit Union and talking about the difference between the big banks and a local credit union, where decisions are made and you actually get to know the people that you’re working with and build a relationship. It’s a lot harder to say no when you start to build a relationship with someone. So thank you for really appreciating those tidbits. If you’d like to be a guest on the show. You can email me at Barb@abovethefold.live, or reach out on our Facebook and Instagram page @Abovethefold. ca. And just a reminder, you can even submit questions in advance of our live show when live actually works. I’m your host Barb McGrath, local business owner and GoogleGirl. Remember you worked hard for your success. Don’t keep it a secret. Bye for now.
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Have you ever wondered how to select a financial institution for business banking? Or what factors are most important to consider?
Maybe you’re curious about what the benefits of working with a credit union are? Or what questions should a business owner ask, before setting up accounts and financing?
Stay tuned, we’ll be discussing all the ins and outs of banking with a Credit Union on today’s episode.
Connect with Brendan @ Affinity Credit Union