An interview with David T. Banfield - President of The Interface Financial Group

1. David, can you describe what type of person tends to do well in this business?
“Perhaps the most important thing to remember is that this is a people business long before it is a money business. In order to make this business work, we have to deal with people. Therefore, we seek candidates who have the skill to deal with people at all levels, such as bankers, accountants, small business owners, CEOs, CFOs, or general managers. The one trait shared by anyone who is successful in this business is the ability to communicate. It is absolutely essential.

Second, because this business is financial in nature with a focus on small business, we seek people with good business acumen. The ability to say, 'been there, done that' is a very important asset. For example, having been a small business owner is very helpful because one can relate to clients based on real life experiences. However, being a corporate executive with small business interaction, such as a buyer of goods and services, would also be very beneficial.

Naturally, another compatible skill set comes from seasoned financial professionals. Bankers, lenders, accountants, consultants and financial advisors make good sense in this business, as they know from direct experience some of the difficulties faced by entrepreneurs and growing businesses.

As you can see, these three scenarios encompass a tremendous range of professional experiences, but bear in mind that regardless of which of these backgrounds a person may have, I will again say people skills are paramount.“

2. David, is this a risky business?
“If there was no risk there would be no reward. Every business has a degree of risk associated with it. What is important is how that risk is managed.

At Interface, we have a proven risk management system that has been honed to its present level over almost 40 years. I will share the 'Colonel's secret recipe', if you will, as regards Interface. There are three main areas in our risk management system. First, we only do business with companies who are creditworthy. This may sound obvious, but it is important not to lose sight of this fact. Second, we only do business on a recourse basis. This means that when we buy an invoice from a client, our client contracts with us in writing that, in the event that we do not collect within a predetermined time frame, our client must buy back the invoice at 100% of the face value. Third, we require that the owner of our client company provide us with a personal guarantee.

Therefore, we have a very tightly controlled risk management system that, coupled with the overall Interface system, enables licensees to work in a well-controlled environment.“

3. What happens if a customer just doesn't have the money to pay?

“This situation does happen, but it is the exception rather than the rule. Before we undertake any transaction we always complete the appropriate due diligence.

Because we operate on a recourse basis with our clients, it becomes the responsibility of the client to take care of the payment. This will happen either by re-purchase of the unpaid invoice or through an exchange mechanism that we have developed. Either way licensees will always earn their discount.“

4. What is the expected loss ratio?
“I am not aware of any franchisees or licensees that have used our system and lost any money. Of course, the key words are 'have used our system'. We provide a proven system, but that does not guarantee that abuse or complacency will not result in potential difficulty. However, if you look after the system, the system will look after you.“

5. Where do I get my clients?
“We have a professional approach to marketing designed to solicit business from professionals. We have found, through surveys of our franchisees and licensees, that approximately 60%+ of all business is the result of referrals. Therefore, our number one (and the initial) marketing thrust is to have our franchisees and licensees develop a lead source referral group.

That group consists of professionals such as loan officers at the bank, non-bank lenders, and CAs. As part of your initial training, we will work with you on a one-on-one basis to develop a block of referrals, and we do this in your location as practical, hands-on marketing training. An Interface senior executive goes into the community with you and begins talking to the types of people I just mentioned.

I want to say that it is important to stay focused on the size of the portfolio that you are trying to create. Remember that this is a capital-driven business, and that means you can only do as much business as your capital will permit. Here's an example based on historical fact. If you come into this business with a capital base of 100,000, I can tell you now that you will be servicing the needs of two to three clients only. If you increase your capital base to 250,000, you will be servicing about six clients.”

6. How about repeat business?
“Feedback from franchisees and licensees indicates that a typical Interface client utilises our service for a period of 12-18 months.“

7. How much money do I need to get started in this business, and what will it be used for?
“We encourage all franchisees/licensees to start in a 'modest' way as this is a business where you benefit from learning as you go. Therefore, initial working capital of say 50K over and above the franchise fee is appropriate. You will then add to this as your comfort, experience, and client level grow.

Your other needs to get started with Interface consist of a telephone; fax machine, and computer with high-speed Internet access. You will need to put gas in your car to visit clients as they DO NOT come to you - this facilitates a home-based business environment. Your other cash flow requirements will be a limited amount that you choose to invest in marketing - probably a maximum of 2,000 is a good budget figure.“

8. I have read where Interface has been described as a 'lifestyle' venture. Please explain what that means, and help me understand what the pros and cons might be in a 'lifestyle' business.
“As we have stated, this can easily be a 'home-based' business. Another important feature of an Interface franchise is that, as it is capital driven, a typical franchise/license with say 250K of working capital will probably service only 4-6 clients and so only a limited time budget is required. This size of the portfolio, once it has been created, might require a time expenditure of approximately 20-35 hours per month.

It is important to always remember that your 'working' environment is with professionals and business owners. Helping small businesses grow is very rewarding both financially and from a 'job satisfaction' viewpoint“.

9. How quickly can I get started?
“Here is a basic chronology. Once you make the decision to go forward, you will sign the license agreement and pay your license fee. Approximately one week later you will receive your Operations Manual by courier. This is an 11-volume set, which consists of over 1,000 pages of information. These volumes cover every conceivable part of the business. As part of your self-directed training we require that you study, review and absorb this material. Our experience says that there are at least two full days' worth of work to complete this process, but we also know that it takes about two to four weeks to accomplish this task. Therefore, approximately four weeks after receiving your manuals, we arrange your Formal Training at our Training Center, and then a senior IFG executive comes to your location for Field Training to make calls on local banks and other referral sources. At the end of that training period, you are ‘open for business’“.

10. How do you assist me?
“From a ‘getting started’ point of view, there is the training and marketing assistance that we have already discussed. However, it is important to remember that training never ends. We provide a personalized coaching program, web-based training, transaction guidance and review to name just a few. We strive to provide whatever assistance you need to make your license successful.“

11. Do I get a territory?
“To a certain extent the nature of this business is non-territorial. If you have a friend, relative or business acquaintance across the country that wants your service, we have no problem with that, and as a matter of fact, we cannot by law deny that relationship. However, from a practical point of view, you will want to do business with referral sources and ultimately clients that are close to your location.“

12. Are there regular meetings or other forms of interaction for licensees?
“We maintain contact via corporate telephone, emails, and newsletters. Our Annual Conference is designed to broaden industry and knowledge and give franchisees and licensees the opportunity to meet and network with their counterparts, as well as the IFG management team.

13. What do you mean by sense of community?
“This is a franchise and licenese that thrives on interaction between franchisees/licensees and the franchisor/licensor. Just because you happen to be a lone franchisee/licensee in a particular area, you should not think of yourself as operating in a vacuum. You, in fact, are part of a team that is interested in you, your ideas, your suggestions, and your needs. We believe that we are a personable organization interested not only in your professional activities, but in you as a person.“

14. OK, what do I do next?
“Now that I have provided you with additional information, I need some additional information from you. If you would complete our Personal Data Questionnaire form, that would help us to evaluate a potential fit. Should you have any questions or concerns about the Personal Data Questionnaire form or its contents, call Rafael Garcia at 0052 55 1105 08690052 55 1105 0869. After receipt, review, and acceptance of this information we will contact you to start the process.“

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