“But what’s his story?”
I used to hear this back when I was a young financial analyst at one of the largest banking groups in Chicago. I knew how to crunch the numbers a million different ways and created loan committee reports dissecting everything about the financial aspects of the company, project and future growth probabilities. Yet, the senior decision makers in the loan committee always asked about the principals and company story. There was very little space on the loan committee report for stories and we were never trained to tell or write about stories.
But the more I wrote my reports and attended loan committee meetings, I began to learn that stories were as or more important than the number crunching, a.k.a. data dump. So much so that when final decisions were made on loan approval I believe it was based on a “feeling” more than what the numbers revealed, and admittingly so by the decision makers. They would say things like, “I have a good feeling this project will succeed.” Or “he’s a good guy, committed to his business, has had solid performance...”
Does your financing proposal communicate the right feeling?
Sure, appraisals have to check out, and the company and its principals should have a history of execution. But in the end it’s always a feeling about the person and the project. Appraisals don’t always come in perfect, previous execution doesn’t always equal future success, financial statements may not be so strong and the greatest market studies in the world can even be wrong. We all know this, that’s why a properly crafted story can strengthen your case and sway decision makers.
Neuroscience confirms we make decisions based on emotion and justify with logic.
You must provide an experience that creates the emotion, and that can be done through story. When helping clients obtain financing my understanding of this is clear. I help tell their story with the goal to create a feeling of future success and accomplishment. A feeling that inspires a financing source to want to be a part of their future growth.
As a builder & developer for many years, I gained a better understanding of story. There was no choice but to craft a great story, especially if you’re not always highly liquid or your worth is mostly in real estate.
Most of the project summaries I receive from builders & developers who seek financing lack depth about themselves and their team. What’s the whole story? What details from your story can be used to successfully finance your project? I usually have to ask builders many questions to discover some key points that I would never have known. Many times the stories and backgrounds of partners, development team and employees aren’t emphasized or even mentioned when I speak with builders. Use your team to bolster your story. Financing sources recognize the fact that a good developer is the leader and manager of a team. A strong team, partner, their experience and story can help a builder create a feeling of success.
If they feel your story and connect with you on a human level it creates a higher probability of financing success.
Storytelling is even more important today than it was when I was an analyst. Most builders & developers who were around before the recession felt its repercussions, and lenders are aware of this. Express what you’ve learned, precautions you’ve implemented, ways you’re operating now with more efficiency and less risk. These are positives and combined with expertise and knowledge is the type of builder/developer that private capital groups, family offices, equity investors, institutions, and other financing sources I work with want to lend to or invest in.
People don’t just invest in what you do, they invest in why you do it. Tell your why. Are you passionate about your business and the homebuilding industry? Of course you are, but the background information or bio’s I receive sure don’t show it. Share your passion, the reader or listener will feel it and ideally connect with it, and it does make a difference. Be prepared to verbalize your story as well, the feeling can change on a dime after a good story told enthusiastically. Knowledge and experience come to the forefront when presented verbally and builders are usually great as selling themselves given their emotional and financial investment.
Try to answer some of these questions when communicating your story:
- Give background on the project, not just the numbers. Why did you pick that market, product & location?
- Give background on your company. What’s the key to your company’s many successful projects? What differentiates your company from others in your market?
- Give background on yourself. Why did you get into the builder/development business? How did you get started? What/Who is instrumental in your personal & professional success? What are your strengths?
- How did the economic downturn affect you and how did you overcome the obstacles and re-establish your company? What did you learn and implement?
- What motivates you to create beautiful homes and projects?
- What interesting new technologies have you invested in to benefit your company and customers?
- How are you able to acquire some of the best properties in your market?
- What are your company goals? Why?
Authentic stories with passion and purpose help connect to your audience.
The home building industry is exciting, full of drama and stories, and financing decision makers want to feel that excitement as well. There are private capital groups and alternative financing sources for both debt and equity that want a good builder/developer with a sound project and a compelling story, more than perfect financial statements. Make your loan proposal stand out from the crowd with a purposeful story!
