As many of you know, we had the privilege of having Michael Schrader join our team nearly a year ago.  Michael brings with him a wealth of knowledge and experience, and the ability to identify what is important to the small business person, as he himself is one.  As such, he always has a great perspective of why what we do here at Enterprise is important to the people we have an opportunity to help.  He demonstrates this time and again, as he did in this email response where a small business owner requested information on the SBA 504 loan program: 


"Thank you for the email.  The Real Estate Advantage Loan (SBA 504) is a great long-term financing option for most borrowers, especially first time buyers.  The process is pretty simple and easy to understand.  We work with a bank of your choosing, so two loans are required.  The bank makes a loan for 50% of the project cost.  We loan 40% and the borrower comes up with 10% (assuming this is not a start-up, which requires an extra 5% down payment).   Even though this is an SBA loan, the bureaucracy is not imposing and the paperwork is not terrible.  We guide you through the entire process and make it as pain-free as possible.  By the way, we are not part of the federal government.  We are a very small not-for-profit whose sole task is to help borrowers and lenders with SBA financing.  What is great about the 504 loan is the small down payment (10% as opposed to the normal 20%) and the long-term (20 years) fixed interest rate.  The rate right now is right at 5%.  It also hedges some of the bank’s risk, which makes them more likely to make the loan.  A borrower seeking $1,000,0000 can expect to save approximately $60,000 over the term of the loan using the 504 program.

 There are some negatives.  Origination fees are 3% (these are rolled into loan, so they do not have to come out of working capital), which are higher than conventional bank fees, and there is a pre-payment penalty.  The penalty is quite onerous in the beginning, but lessens to zero after year 10.  It is also not the best loan for any deal under $200,000.  However, borrowers in for the long-term can enjoy substantial savings when compared to conventional loans, despite the upfront fees and pre-payment penalties.  For more information, go to our website at www.entdevcorp.org. "  

My daughter and I travel a fair amount to soccer tournaments throughout the Midwest.  We decided to take a chance at the last tournament we were in and stay at budget hotel, rather than at a higher end, better-known chain like we usually do.  I have stayed in “budget hotels” where required dress was a flak jacket, but the price was AWESOME.  Though I thought this “budget hotel” was moderately expensive, I chose it for one reason, proximity to the fields.  Price did not worry me.  This place was within five minutes of our destination, so there was no stress in the morning getting to the game on time.  Regarding the hotels amenities, our experience was quite good.  The rooms were clean and updated.  The pool looked nice.  The free morning breakfast was decent.  Everything seemed fine and I did not have to worry about rushing and getting lost before a 7:00 am game. 

Our best friends on the team also stayed at the same hotel.  When I asked them about their night, it sounded like they were staying at a completely different place. The beds were uncomfortable, the hallways were dirty, the pool was gross and the grounds keeping was terrible.   After hearing this, I visited their room… and it was absolutely identical to ours.  I thought… how is it possible that two families from very similar demographic backgrounds, sharing an identical environment, have such radically different experiences? 

I chewed on this for a while and decided it comes down to two things: perceptions and expectations.  For me, the most important thing was location.  I was able to overlook a few things, including the price, the shoddy grounds keeping, the slightly green pool water and the paper-thin walls.  The location met my expectation and clouded my perceptions.  Regarding my friends, the price made raised their expectations and made them much more aware of perceived (or real) flaws.  Who was right?  The answer is, of course, “I was…”…. Fine….Ok…. and they were two.  It is not a matter of who was right or who was wrong.  It boils down to meeting the customer’s needs.  This is not a customer service problem; we both agreed the service was fine.  This issue relates to understanding and meeting customer needs while managing expectations.  For me the location was critical, so I refused to perceive the flaws.  For him, price was critical, so he refused to perceive the benefits. 

By the way, if you have not already seen the invisible gorilla video about perception and expectations, check it out at http://www.youtube.com/watch?v=IGQmdoK_ZfY&list=PLB228A1652CD49370.  It is pretty cool.

This made me think; do we, as business people, do a very good job managing perceptions and expectations.  What else could we do to help guarantee a good customer experience for everyone without dumbing down our messages so much that no one is happy? 

For example, I think sometimes I get too caught up in the deal to manage the customer’s expectations.  Where is the flaw in their plan?  What part of their business is vulnerable?  What could put the kibosh on this loan? 

Managing expectations is hard because it requires some very crucial conversations with customers that we may not want to have, but must have to control perceptions and expectations.  Managing customer expectations and perceptions is far more important than putting a big smile on your face and offering the customer a Diet Coke.  It is about getting to know your customer and making upfront contracts regarding behavior and expectations (I even use this method when buying cars.  You would be amazed at how the upfront contract equalizes the power structure in the negotiation).  Doing this allows the business person to better manage perceptions, or at least determine what perceptions might be clouding expectations.  Gather information from the customer and then tell them what they need to know, not what they want to hear.  Sometimes that news might be bad, but by managing expectations and perceptions, their experience with you may not be negative.  The worst they can say is “The business was honest and did not string me along.”  If that was the worst review I ever got, I would be pretty happy.  By the way, we won two and lost one in that tournament (on a bad call, which is always the case when we loseJ).  I think the proximity to the fields made me a better fan.  The price just made my friend grumpy.