Marc Cove is the Chief Development Officer at First Resource Bank, a full-service financial institution serving small businesses, entrepreneurs, and individuals. As a seasoned business advisor and commercial business banker, he has over 30 years of experience in the banking industry, focusing on business strategy and optimizing debt and capital architecture. Before First Resource Bank, Marc served as one of the founding partners of Platinum Bank, which he helped scale to over $300 million in assets.
Here’s a glimpse of what you’ll learn:
- Marc Cove’s tenure in banking
- How Marc launched a bank
- Leadership: why it’s not all about you
- The worst mistake Marc made in his journey — and his most influential mentors
- How to acquire capital for business ventures
- Why you need a business exit plan
- What are the new requirements for SBA loans, and how do they impact businesses?
- Marc forecasts the lending climate
In this episode…
Most small-to medium-sized business owners need capital to either kickstart their ventures, expand their companies, or purchase another operation. Yet with so many capital options available, they struggle with the process. What documentation do you need to obtain capital?
With a knack for formulating out-of-the-box ideas, seasoned business banker Marc Cove recommends building a network of professionals, like attorneys, bankers, and accountants, who can be honest with you about your situation and help you through the process. Additionally, you should begin developing a business exit plan upon launch to build intrinsic value and position the company as an attractive option for potential investors. When compiling documentation, include a transparent financial statement containing tax returns, mortgage information, and any past debts.
In this episode of Destination Business Freedom, Marc Cove, the Chief Development Officer at First Resource Bank, joins Pat Mancuso to talk about obtaining capital for long-term business plans. Marc explains why you need to let others lead, how the new SBA loan requirements impact businesses, and the current and future capital market.
Resources Mentioned in this episode
- Pat Mancuso on LinkedIn | Website
- Recover My Tax Credits
- Mancuso Consulting Group
- The Mancuso Method
- Marc Cove on LinkedIn
- Marc Cove’s email: mcove@myfrbank.com | Phone number: 651-430-8609
- First Resource Bank
Sponsor for this episode...
This episode is brought to you by the Mancuso Consulting Group, a go-to resource for entrepreneurs, CEOs, and business owners dedicated to personal and business growth.
Our team of experts has coached, consulted, and trained over 15,000 entrepreneurs, C-suite leaders, and business owners in areas of sales, leadership, organizational development, and personal growth. Additionally, Pat Mancuso has launched multiple multimillion-dollar business ventures, giving him a firsthand understanding of entrepreneurs' daily challenges.
At the Mancuso Consulting Group, we are committed to exploring innovative ways to help businesses and leaders grow their people and improve their bottom lines.
To learn how the Mancuso Consulting Group can help you unlock your full potential, visit www.themancusomethod.com, email us at pat@themancusomethod.com, or call 651-503-7355.
Episode Transcript
Intro 0:02
welcome to Destination Business Freedom, hosted by Pat Mancuso. Join us as we explore success strategies and hacks from leading entrepreneurs, helping you bridge the gap between financial success and personal freedom. Your journey starts here
Pat Mancuso 0:24
Pat Mancuso here I am the host of the Destination Business Freedom podcast. And I'm excited to have you with us today. On our Destination Business Freedom podcast, we interview thought leaders, entrepreneurs and business owners who have exited their business or who are on their way to exiting their business. My goal is to help small to medium sized business owners close that gap between their finances and their freedom. And what I ultimately know is that we help them to arrive at their destination address far too often business owners get into a business they have a desire to grow that business. And at some point exit and many of them never achieve that. So my ultimate goal is to bring talent like we have today to give you the insight to give you the strategies, the systems to be able to make those decisions along that journey so that those decisions aren't being made in silos, but they're actually connected and connected in a way that you get to that destination address as quickly as you can. So before we get started, I introduced this gentleman who I've known for a long time and I'm super excited to have with us today I want to share with your sponsor for our session today. This episode is brought to you by the Mancuso Consulting Group which uses proprietary method called The Mancuso Method. To help entrepreneurs and business owners dedicated to closing their gap between their finances and their freedom. The Mancuso Method was created based upon 30 years of experience by Pat Mancuso in his multiple business ownership as well as consulting 1000s of business owners in their journey. When you go to www.themancusomethod.com, you will take a short assessment and with that assessment, you're going to receive an itemized report, which will help you clarify where you're at in the journey and how you arrive at that destination address sooner. What it will also allow you to do a schedule a call with Pat Mancuso. So we're in that 30 to 45 minute call, he's going to share $10,000 of value with you. And if he doesn't, he will write you a check immediately on their spot for $500. Because that's how strongly believes in the process he's put through the process. That's how strongly he believes in the process that he's created to help small medium sized business owners achieve that destination. www.themancusomethod.com. So let's get started with our interview today with First of all, somebody who is truly amazing. I've known this individual for over 30 years, I consider him to be a friend, a mentor, also a business relationship. And I really excited about what he's going to share today. So Mr. Marc, welcome to the show. Thanks
Marc Cove 3:18
for having me. Oh, man, good to be here. And it's been a pleasure all 30 plus years, you are right, we go back a long
Pat Mancuso 3:24
time. Now seriously, it's well, we will get into that. So first, I want you to know I truly met Mark 30 years ago in my real estate journey and many people know me for that real estate background. But I'm going to share with you Mark's journey because I've been with Mark frog for a long time in that journey as a as a worker as a business owner. And so we're gonna we're gonna drill down on his experience today, but I want to share with you his bio. Marc Cove is the chief development officer and shareholder at First Resource Bank. Marc most admires the bank's laser focus on entrepreneurs and its highly skilled professional banking team. He is a seasoned business adviser and commercial business banker with over 30 years of experience in the industry. Marc was one of the founding partners of a twin cities based commercial bank leading it to over $300 million in assets during his 14 year tenure with the organization. And while while Mark's focus is on business strategy and optimizing debt and capital egg architecture, is a long standing reputation and thinking outside the box and creatively customizing solutions for companies and entrepreneurs. Marc graduated from the University of Minnesota with a degree in economics and marketing. Well not working with his clients. Marc enjoys spending time with his wife Carol and his adult sons Drew and Daniel. In addition, Marc enjoys spending time with his family, extended family, yard work, really yard work and all things go for and why hotkey. Now he says this and then I'm going to share with you one thing I left out he says I love to help. I love helping turn the economic wheel by rolling up my sleeves and working with the backbone of our community. The small business owner. I love that. A strong banking partnership and financial advocate helps hardworking entrepreneurs turn their proverbial wrench each day. So, Cove I'm glad to have you here. I learned something today. Oh, you have a Harley?
Marc Cove 3:30
I do. You didn't know that.
Pat Mancuso 5:34
I Marc 30 years. I like are you kidding me? Like you are a Harley rider.
Marc Cove 5:39
I would say you know, am I a hardcore do i do i go to Sturgis, Sturgis. I do not. That would be a long ride. I enjoy it. And for me, it's the 530 at night stress reliever. I love it. I'm home from the day you spend 30 minutes and you've you you've got you know, all of God's treats out there. You've got wind and sun and, and sounds and all that and it just blows against you. And it's fabulous. But not asleep. You got to sleeveless leather vest, no, no sleeveless, but I do have the Harley gear both Carol and I have a closet full of Harley. It's called the Harley tacks. And so and I had a Honda I had a Honda VTX 1300. Before the Harley. Yeah. And I owned it since it was new. And I sold it a decade later, and it had 4700 miles on it. So it shows you how little I rode that the Harley I ride more, but I only put about 1500 miles on a season. So it's not, not a lot all
Pat Mancuso 6:36
the years that I've known you I had no idea. Well, so So here's what I want to do, Marc first we're going to talk about your journey as a business owner. And you know, I've been able to experience that interaction. And you know, what it looks like to be on the other side of the table. So of course, I have a lot of bias. But my my really my second part having you here today is to our goal in this in our podcast is to help business owners to to exit their businesses, whatever that looks like for them. And what I've discovered in this journey in my certainly my career and my ownership of multiple businesses, is that many times people don't have the advisors around them. Number one, the right advisors with the skill level, the knowledge, the expertise, but then those business advisors are talking with each other. So what happens is business owners are making decisions each and every day that may or may not be getting them closer to that destination or taking them away from it. And you've got an amazing background that we're going to drill into. Because not only are you involved in banking, but you're also involved in the banking industry, not just in production, but in you know, I'd say activism from the standpoint of really being proactive in the industry. And you're also very active in in the political world, from the standpoint of the industry. So I love all those pieces. But let me let me start with this. So you've been in banking for how long?
Marc Cove 8:07
This will be your 35 I want to say, wow, how did you learn it? And yeah, did that was hard time in college. I mean, I it was that was a job to pay the bills and started at a bank that no longer exists was on white bear after this bank called Mid America bank was right off a white bear. And right next to all the Terina
Pat Mancuso 8:29
pretty sure that America is where I got my first mortgage. I don't know I might,
Marc Cove 8:33
it would have been because we had a common friend. Yeah. Stephanie skrela Afeni. Yep. I remember in America bank at the time, that's where I go. That's where it was. Yeah, that would have been Mid America bank. And that was, again, it was to pay the bills, what I loved about banking back then it's not like it is today. Totally. It was. It was, you know, I didn't necessarily intend to stay in in the craft, but I knew community was important to me, you mentioned the quote about turning the economic wheel. That's what I went to school to do, trying to put facets of community business. And people together, they don't always all talk and banking ended up being a natural fit to do what I like to do. And that was somehow combine all three of those elements. In mid American bank back in the day, you had to know everything. Well, there was not a lot of computers, we had a few in the building. You know, you had to learn every facet of the business, you weren't siloed. And so hard work is what got advanced you. And that's the rest was history, I guess, never left.
Pat Mancuso 9:35
So let's talk about so I want to focus here on your journey as a business owner and then a leader within that organization. So I know a little bit of the story, but give me the short version. You're working at a local bank, and all sudden a group of people come together and you're like you You're gonna launch a bank. And you know, most people think that, you know, well, that's just like opening a grocery store. It is not. So just how did that come together? Yeah,
Marc Cove 10:08
you know, I mean, it was interesting I was I was very happy where I was at the time, I could have retired. In my, in another connection mentioned, the Bank of bank sold and is gone now. But that was western bank of St. Paul. The sands family really knew how to put together a product, they were the gold standard. Yeah. And I was blessed to work with that group. I was blessed to work for a bank president Steve Burton passed away a little over a year ago now, I think, oh, you know, he was just, he was an amazing man. And so, you know, part of your journey is not, and you said it about partnerships, and exiting part of your journey is not about how well you do, or the skills you bring. It's about the happenstance of running across people in partnerships. It's that fork in the road theory, it's just by chance, I got to work with these, these great people that somehow had faith in me when I was younger, right. And also, let me do what I did. And then I and gave me a platform to do it. So in turn, there came that opportunity, all of a sudden, my phone started to ring and said, Hey, we know you'll love it. We know you'd retire at western bank. But, you know, we want to put another bank up. And there was a group of investors that were trying to get a group of insiders to do that. I said no, many a time probably for two and a half years. I said I'm comfortable, you know, because, as you know, the entrepreneurial risk is different than anything else on the planet. That's, you don't get that w two paycheck. You know, you have to really dive and say, Does this make sense and, and, and the story for me actually comes back to my father, who, who, you know, when I was telling him these stories, he mentioned to me, he was a longtime three M executive and spent his career at 3am in St. Paul, and he said, you know, the bank's gonna love you for leading with your heart. And you are clearly loyal. And some of the traits I loved about myself, I still do, I love that I'm a loyal creature of loyalty. And I think I wish more people were I wish more people took time to be loyal, because I think there is a benefit. But he went on about how loyalty to the Western and working hard and resisting that he says, But and he had a big, but he says, But one time in your life, you should use that brain. I love you lead with your heart, but use your brain that opportunities only going to come around so often. That really stuck with me. And the opposite of why am I sitting here I, I did love the bank, but I didn't own it, and I wasn't gonna own it. And there's only one or two opportunities on behalf of my life to actuate. That, and in banking, it's not about an individual. So when you say that, you know, as a business owner, I was one of many, you know, my my foray into owning a bank. And I was a shareholder. And I was a, a meaningful one. But it was a team. Yeah, that bank made it because it was a team of people. You know, it was 1015 really, really, really smart people. And we just got lucky, because we built the bank with a lot of smart people, I had the benefit of naming it my basement, the servers for the company, were in my house for a while I programmed the systems checking accounts in my dining room, you know, there was stuff that you'd never do, you'd never realize in the banking space. And there's only been three banks in Minnesota since that 115, you know, 1718 years ago now. So
Pat Mancuso 13:22
wait, wait a minute, wait a minute. So the servers that had my information and my money and my accounts were in your basement,
Marc Cove 13:29
as pre organization. Setting up? The federal government has a little issue with
Pat Mancuso 13:34
that. I was just gonna say I was just gonna say yeah.
Marc Cove 13:38
Okay, so I'm actually building the servers were in my house that yeah, that's funny.
Pat Mancuso 13:42
So I'm going to correct you a little bit and you won't like it. But you've known me well enough to know that I'm going to do it anyways. Yeah, you had 15 other people and you had a team, but you're you're an owner, because at the end of the day, if that bank wasn't making money, you were writing another check. True or False. True
Marc Cove 13:59
in the early years, yes. I mean, yeah, that's my point. Yeah, we had to raise capital banking is unlike any other business banking, you can't start you can't get your FDIC black. Got one in my office way behind me. And I've got the background, so you can't see it. But the the FDIC plaque, you need to have so much capital raised, right. We raised a little over $12 million to start that bank. So now it's but that's all friends that those investments, a lot of them were friends, longtime clients, co workers, anybody I could, you know, talk to you about putting cap on the bank. That was a very hard sell.
Pat Mancuso 14:37
Right? Right. Yeah. Does because I mean, you know, banks do make money but it's also an interesting deal. Right? For sure. For so I want to ask you
Marc Cove 14:46
lose money. Just real quick. The first handful years we absolutely lost money. Yeah. Yeah. That was part of the model. And that's something else about entrepreneurship is you know, sometimes in order to get off the ground, you have to lose money. It's not Yeah, everything's not right. was right out of the gate. You know, what?
Pat Mancuso 15:05
I'm sorry, Marc, you know, what's interesting about that is, is what I find is a lot of entrepreneurs is starting in business, they don't even know that they're losing money, because they're not doing their financials, they're not watching cash flow, they think because they have money in the bank, they're profitable. So so, you know, in your realm, you didn't have a choice, because you had certain guidelines that you had to meet for requirements for banking, and your government related regulations and all that type of stuff. So for you as a, you know, and I'm gonna, I'm gonna preface everything, I'm gonna ask you moving forward as an owner slash leader, because you obviously, were a shareholder, as an owner in the business and a leader, what's what do you feel was your personal biggest struggle in that role in, in the bank? Um,
Marc Cove 15:54
I think my biggest personal struggle was sometimes ignoring what I thought, my own opinion of what my ideas were, as being the only way to do things. You know, I think what you find in people that what I, you know, and I still struggle with that today, I might have a strong opinion on, this is how you get from point A to point B, right? I had a hard time as often several my partners did, divorcing my idea for that of a collective idea. Because I wasn't always right. In fact, I was wrong. In fact, I learned more from my mistakes, and I've ever learned from my successes, right? And I embrace that. But you know, so I think as a leader, the hardest part is allowing other people around you to do stuff and lead. And in the case of a bank, it's a co lead situation, I can't stress enough, that's the way that right? You know, you wouldn't want any one person running a bank, you'd want it done as a team. And there's, there's a hierarchy, but it is still a groupthink process. And it's, it's we all are better, because we all have our own discipline to put our stuff in there. But I had a hard time adjusting to when the team deviated from what I wanted to do. Yeah. And I think that that was some of my biggest struggles, where if I would have, just take a deep breath and say, You know what, this one's not my fight. This one's not my strength, let somebody else lead it. And I probably would have been more even more productive over time. I've done pretty well. And I'm not saying that. But I mean, it's I think that's a hard lesson for a leader. Yep. To learn that sometimes they have employees, and it's okay. To have coworkers, peers, even superiors be smarter than you want things. Right.
Pat Mancuso 17:31
It's okay. The checks and balances around you. Yeah. Um, so what do you think, as in your role, again, is the biggest mistake that you've made in your journey?
Marc Cove 17:45
Um, boy, that's, uh, I actually, you know, I actually think everything's happened for a reason. Right? You know, I think the biggest mistake I made, I think, was probably getting sometimes to personally engaged with the clients I was serving. And I mean, that's not necessarily a bad thing. It's not a bad thing. But at times, you have to think like a business leader, you have to think of I mean, I have spent and I will never regret this, I still do it to this day, I spend time on things that are not to say, a creative to my employer that's paying the bill for me to do that work. Right. And I think as a business owner, you have to sometimes say, sometimes those weak links at the bottom, you're just better off saying, Hey, we just need to, we've done some business, let's move on. And kind of focus on the things that could have been more creative to wealth building.
Pat Mancuso 18:42
I remember when you read your former banco, you know, I remember those conversations, right? And it's okay. And yet, here's what I know about you. And the reason that I am gonna kind of go where I'm gonna go with this is that you're investing in relationships and people and that's what you do in mind, from my perspective really well, and at a really high level and so that impact is what people remember. And whether they do business with you or not, maybe they come in contact with somebody that you know could benefit from what you do
Marc Cove 19:16
and it's interesting because I think it's it's it's instinct a lot of bankers have are able just to kind of stay on the guard rails and do a very good job they're very smart. But they also learn when to you know, this this battle this one's just a tough business to fight. Right? I sometimes struggle with understand learning that that 35 years in because I do value relationships. I love helping people. Right? Yeah, and but sometimes that leads me to not sleeping tonight because I can't help but think about boy, what could I have done for Pat Mancuso better show where you can't turn that off. Yeah. That's where it's it's not always a service sometimes the Marc Cove way of doing things so custom My eyes that times, right also been a hindrance, because then when it's time to graduate from that it's just it's a, it's a structure that no other bank would have recognized. Right, you know? So change the thing. I mean, if you're asking me what's, uh, what's something that I should have done different? Or, you know, I probably there should have been 5060 times I said, I just can't go down that path this time. Right? Because I got to know who you are online and other things.
Pat Mancuso 20:27
Yeah, that's not who you are. Give me a mentor to in your journey that maybe people would recognize their names. And maybe these are mentors that you have a personal relationship with? Or a distance mentor that may be impacted you through a book or something? Yeah,
Marc Cove 20:46
I mean, that's an easy answer right off the bat, that gentleman by the name of Mark lumen who? Sorry, I, you know, he was he was everything to me in western bank. Yeah, he took a chance on me when I was 24 years old. And he was he embodied everything that's good in banking. Yeah, hard working, going to going to go to the end of the earth for their client, going to make sure that it's buttoned down that the company is also protected. So I've lived by that motto, he's been gone now seven, eight years, it's almost hard to believe but and he, you know, he was with me on the journey in the ownership of the bank, before this one. And I there's nobody that made more of an impact to me on life, love and happiness than than Mark lumen. His and He was his name was pretty synonymous in the Twin Cities. So people in the last 25 years, there's a lot of people that worked with him or knew him he, he just, you know, he was he, he would say this, if he was scenario, was he the smartest guy? Absolutely not. Was he? You know, was he always right? Absolutely not. But he had humility. He had, he had the ability to be with the people. He was just he just, he knew how to bring the best out of everybody that worked with him or for him. And I, you know, that that, to me, probably was the maybe the single largest impact human beings. And I'd probably say next to it, you know, if I'm sticking in into that space, right? If I'm sticking into the bank is basically I could, you know, I could name so many people. But I know I mentioned the word all the former president of western bank. You know, he just from from the from the seat I was in that day, you know, well underneath him on an org chart, right? I just watched and learn how to do business. And he embodied that because he understood both sides, because banking is unique, you have that you have that, you know, you're not nonprofit, we still have to make money. Right, right can't exist. And so that means sometimes delivering some hard messages to people, you can always help. And he just did it in such a good way. He just was. He was brilliant. And those are probably the two most people in my 35 years and I've run across a lot of people along the way that I'll tell you, I've been fabulous.
Pat Mancuso 23:05
Any, any, any people you follow in the world that have impacted you from a personal perspective, you know, like somebody might say, Tony Robbins, is there anybody that jumps out at you that you really pour into? You know,
Marc Cove 23:21
I actually really liked the Harvey Mackay stories. Oh, yeah. You know, I mean, and that's, you know, I'm not a big I'm not a big, I hate to say Tony Robbins type guy. I'm not a self help type of. Right, right. But Harvey Mackay as a business person was fascinating story, maybe because I got interested in him because he was kind of Minnesotan, and sure he was here. But you know, his, and he's still got three or four books out. And what I loved the bottom is it just it showed that so much was gained by some of the most little moments in companies. Yeah. And because of that, I think that's been and I've always been a believer in the Disney model. When we started the former Bank, we made sure we very carefully understood that you can't have an empty Pepsi can on your step when you walk in. Yeah, it doesn't matter how good your services once you walk in. Nobody's going to not remember subconsciously that empty Pepsi can laying on the ground if the company is too lazy to pick up trash. How can they help you?
Pat Mancuso 24:21
Absolutely. Absolutely. So So one last question. And then we're going to transition. So what attracted you to First Resource Bank?
Marc Cove 24:32
You know, it's interesting because I you know, I could have stayed where I like to build things. I realized I was getting a lancy After almost 15 years. Yep. At the prior shop, but and even though I founded the company, but also I knew I had a in-person fact I'm gonna use a Harley story. I was on a Harley ride with a good friend of mine that was a was a CEO. He's now retired. And we'd every summer we go hit a couple of bars. As you know, just, you know, drinking Cokes, believe it or not, but we were just to take a countryside have a Coca Cola and iced tea, you know, whether it's through Victoria or you know, and we're on this ride. And he, you know, I know them. I had known him for almost a decade, and he kept referring to my three children. And I didn't correct him. So I have two kids. You mentioned that at the start. Yep. And so I'm like, well, that's kind of weird. I don't know how he doesn't know. He should know better than that. I think by the time we hit our third stop, and he said, Yeah, I just, you gotta be like, Hey, let's get back to you gotta be so proud of how those three kids of yours are to it. And so I finally said, Well, I got to bring it up now, because it's the third time he said it. And his name was Thomas Thomas said, I just got to bring up and so you know, I got Drew is my oldest Daniels, my youngest. And I said, I don't have a third. He said, Oh, I know. And I said, Well, you've been talking about my three children. And he says, he says, yeah, he says, you have two kids, he says, But you have a third. And it's time to let that third child go. And he wasn't referring to one of my kids, right? He was referring to it that you know what, it was time to move out of life. And I had an eye you know, when you start a company, this is what a lot of business owners get. They have an unhealthy relationship with the entity as a almost as it's a human being. Yeah, yeah. Like it's a mistress
in some cases. And I considered, you know,
I loved it. I love the people. I still do. I still have a ton of conversations with my old friends at that shop. We didn't leave on bad terms. It was anything but read. It was time. You know how you just know that you're, it was time for not just me, but it was time for them. Because I think they could grow better. Without me. I was probably becoming a little bit of a roadblock to some of the success because sometimes owners just get this is how we do it. Right. That's why good managers like Ron Gunn Gardenhire. Right. And he was a great manager for the twins, but it was his time. Yep. And, and, and I still remember to this day, walking out of that place for the last time, and I just was telling myself, make it to the car. Yeah, make it to the, because I was I saw my car looked like it was eight miles away. And it was really 30 feet. Sure. And I just thought I was gonna pass out and die. It was it was, it was a painful moment. But it was a needed moment. And so how I got here is, you know, I just I had known several of the team members here prior, because all of us in the banking space know each other. fact, quite honestly, we made a play for my managing partner here to come join us at the other bank. And so that's how that kind of happened. We built up a relationship. We had several lunches and breakfasts over the years, talking about life. And I he picked up it was time for me to go. Yeah, so he just turned the table said you need to come over here, we'd love to have you. And I was blessed. I had 12 to 13 opportunities. But this was one that felt like home. It wasn't where I was gonna get the richest it wasn't. But it was where I could do things the way I like to do them and actually be a valuable member of a collective management team. Yeah, so. And it's I haven't looked back. And it's just as an FYI, it's three years tomorrow. So it's crazy. So it seems like Time flies. But yeah, I know, this is my last stop in this business I did I just pointed out, I've been 30 If I just do the math, I don't, I only have so many years left to do this. I want one more ride. And I've been a part of a team that's helped grow this bank nearly double it since I walked in the door. I'm not taking credit for that. It's again, a team effort. But when you everybody puts their specialties together in their mix of expertise together. It's amazing what you can do. And this bank has a ton of really, really, really good people that culture. So
Pat Mancuso 28:48
I want to transition Marc the biggest, you know, I love your story. And obviously I've been with you on this whole journey. One of the reasons I wanted to have you on is I think people really struggle in as a small to medium sized business owner, sometimes they need capital. And you know that capital might be to meet payroll it might be to expand it might be to buy another operation. There's many reasons people need capital. But they struggle with the process. You know, there's the traditional capital model, then there's the non traditional capital model. What I've always loved about you, and the the process, if you may, is that you're not inside the box, you're outside the box, but you're outside the box within the box that you need to be in because, you know, frankly, banking is in a box right? And there's certain things you can do and certain things you can't do and so so the first thing I want to do before I get started is make sure that people understand you know you're in Minnesota, I'm in Minnesota and first thought would people would Be is there, you're hearing you and go, Well, you're in Minnesota, you can't help me in my market. And that's not true. Correct? Correct. Yeah. I
Marc Cove 30:07
mean, it used to be. Banks used to be even regulated for that. If you were if you were sitting in Stillwater, Minnesota or downtown Minneapolis or line or lakes or Oakdale, I don't care, you name the community. You kind of had your your, your your territory was five miles plus or minus your door. Right. So it was if you think back to the Andy Griffith the his puppet show, you know, Mayberry is where they banked it's where the, you know, the the cafe, the cafe only got people from that town. It is that is blown out of the equation. Some banks still choose to be local or stay in states, but Right, this one doesn't. If it's if we have, you know, we'd like to have some connection. I don't necessarily. It's not, it's pretty rare. Somebody will call me from Colorado, just out of the blue say, hey, help me here, right? That'll give me a little bit of a okay, what why aren't you? Why can't you be held under anchoring? It's a little closer. But we have projects, and I don't say every state but probably pretty close. I've got, I've got some of my best customers in Dallas, Seattle, Washington. Lots in Florida. We're back. We're doing a ton of concentrated business in Florida. So yep. I'm flying down there almost every couple of weeks just to meet with some of our existing clients and some new ones.
Pat Mancuso 31:17
And so you do commercial you do business baking? And you do residential? Correct? The
Marc Cove 31:24
bank does? I don't know, I know. I'm not nearly smart enough to do anything residential. Personally, I just, I'm a business banker, true and true. So we have we have we have a team of people that do all those, all those things. Okay. It's a management company that we have, you know, we have a division of the bank called on point that specializes in nothing but Hoa, management and association business. And that's, that's what's so
Pat Mancuso 31:51
so let's talk about from your perspective. So you interact with business owners, entrepreneurs, small to medium sized companies every day, and you've been doing it for 30 plus years. What do you see from your chair is the biggest challenge that those business owners have? You know, the
Marc Cove 32:11
biggest challenges is I think, and and everybody's so focused on their day to day that they neglect sometimes to realize how important that professional network around them is. Yep. And that is, and when I mean a professional network, I don't mean just having an accountant, just an attorney, or just a banker, the people you need to have on your network are people that that don't tell you what you want to hear. Right? They tell you what you need to hear. And sometimes in in a banker, that's tough. I've had people come in here saying, I want to, I'd love 2 million for X, X and X. You know what this is? In my opinion, I hate doing it, because I think it's the dumbest idea you've had. And I mean, that a good way. And we probably say it that negatively, but it's it, but those customers of mine that have been with me for 30 years count on that, right? They want that sounding board, they don't want the you know, okay, here's how we're going to accommodate you and have the neck, the hairs on the back of my neck stand up. It's it's so it's at competent advisors, where people aren't using an account just to prepare a financial statement to give to a bank. People have an accounting relationship. So that information tells them how to manage and run their business. And ultimately, per your starting conversation about exit. Everybody should be thinking about exit from the time they start their business to the middle, you should always be thinking about what this looks like when I have to leave the picture. Because I've had people have such good businesses and sell it for zero, because there's no value beyond the people that are right front center, they did not take the time to build intrinsic value along the way.
Pat Mancuso 33:55
Well, in markets, it's why we're doing what we're doing at our company, because, you know, I think I might have shared this story with you about two months ago, it it validates almost every day, but about two months ago, Diane comes home in in the place that she had been getting her hair done for the last 15 years. And you know, I'm sure Carol experiences this as well, like they're there. The hair is a big deal for you. And I it's not a big deal. But she comes home and she says she says they're closing the shop, and I went, Well, where are you going to go? And she said, Well, you know, so and so is going to find another place to go and I said well, why is the person closing this shop and well, she's 69 years old, and she just doesn't want to do it anymore. And I that day there was another story about a $4 million construction company that I heard that close their doors. And I think about those stories every day and I go that wasn't their intention to close the doors. That that was not their intention for 35 years of running a hair salon to close To the doors, because you're not either making any money, you don't have a succession plan or, you know, there's no real strategy around that. And so I 100% agree with that your your premise there that they don't define what that exists, you literally have to define it, it's no different than, you know, I know you travel to Florida a lot is I'm gonna get in the car and go to Florida. Well, the first thing I do is put in the address, I'm going to Florida so that the car can take me there as quick as possible unless I'm on a, you know, one month journey. But if I don't know the address, then I'm making decisions that are either going to take me farther away or closer, and therefore I may never get there. And so So yeah, you're absolutely right.
Marc Cove 35:41
One, there's a quick story of a gentleman I helped write in 2007, late 2007 2008, I won't mention the company I will mention the name. He was out to buy a company met with me brought all of his financial data in brought all in and really like a sponge Mark, what do I need to know about banking? What do I need to know about? You know, so we walked through the basics that people blow up on all the time, people will come in, not have their personal financial statements filled out correctly, they don't care, they don't realize that how bad of a look that is, when they can't fill out their own statement. Yeah, people come in, and I'm not going to guarantee this Well, then. So what you're telling people is, you want the bank to take the risk, but you're not comfortable in the risk of the business here. So there's a some clues you can give people to say, here's how to be better prepared to get financing. And this guy came in and just actually soaked it all up, we built a really nice file, everything tied together. And we were thinking we were gonna find him a business and about a million to 1,000,005 range, because that's about the capital he had. Well, he came across a business that was almost 4 million. And it's like, boy, I saw liked his approach he already talked about my plan is to buy it, figure out where I can do verticals and expand, figure out where it's like, you know, where I can make it better. And then in a decade, sell it. And, and so we took a chance, because I had a brilliant, chief credit officer at the time, Steve marchek, I'll give him a plug one of the best people in this business. Just there's nobody brighter, anyhow, so we figured out this really unique way to help this guy literally left 25 grand, maybe in his collective checking account, he had four, let's just say he had $425,000, he put 400 in and 25. That's a bad formula today, you want to you know, but he was the right guy. So we just did this chance. And two or three years in, he expanded the business to include a service element that didn't exist, knowing he was going to lose, probably for three or four years from doing that, because it was going to take that long to even break even or make money. But he knew that if I ever want to sell the company, right now, I've got a continued ticket, right? Yeah, if you sell if I sell these mugs, it's one and done, right? If I sell these lids and these replacement parts, as maybe some continued business. And so moral of the story, long story short, that business turned into that service piece turned around, he had doubled and tripled the base of that business, bought it for 4 million put $400,000 in 11. and a half years later sold the company for $54.6 million. And that crazy, because he was thinking about that accent and had the right, the team around him from the day one and everything. He did have to have this element. Yeah. And he turned 400,000 of his personal cash into 55,000,050 $5 million. Yeah. Now, I did say to him, I said, if you want to really thank the guy that helped you because he said we couldn't have done it if you didn't really go out of the box. Give me half. You didn't do that, though. No, no, no, no.
Pat Mancuso 38:42
But But your point is this is that you've got to have the address, or at least the general vicinity of the address. And then you create it allows you to create the roadmap and then decisions along the way. What do you think the biggest mistake of business owners and entrepreneurs is
Marc Cove 39:02
the biggest mistake is is not letting cutting the anchor line on something that's not working like they plant. Sometimes they just it's such a personal brainchild that really are to them is personal. And you got to be willing to cut you if you have an anchor because you got it in the water, you have this new product. If the signs are that this isn't going to work cut cut ties now. On the flip side, people don't take enough chances sometime not say monetarily, but you know, again, thinking about what's next. They might have a great few years. And so they're like just leaning back in their chair, taking it easy. You have to constantly be thinking about tomorrow. Yeah, you have to be servicing those that you have today. And you have to be constantly thinking about tomorrow. And again, that's where you know, I my favorite business owners are the ones that I probably hear from every month or two and say what are you seeing what are you hearing and they're having that same conversation with their attorney their account there Financial Planner, they've circled themselves with a bunch of people that can give them all these tidbits that that'll help them cut that anchor line if something's not working, but also not to fear that failure, don't you know, you can't recess yourself into, Oh, my God, I just did this this business unit, my company lost a half a million bucks. You can't do that if you don't have the capital to make that work. But sometimes, it takes a while to hit Pader.
Pat Mancuso 40:25
Yeah, yeah. Well, it does. You know, I mean, some of the things you're talking about are, you know, where, where I'm going at what we're doing with some of the things we're doing. You know it, I hear you now again. And so. So that's pretty cool. So I'm, I'm a business owner. So scenario, I'm a business owner, and I need capital. Okay, tell me the two or three things that I really need to be prepared for, if I show up at your show up to the bank, or your bank, or any bank, what are the two or three things that I really need to be prepared to have to be able to have any chance of having a conversation,
Marc Cove 41:09
you know, the absolute best thing you can have is just a clear financial package the day you walk in the door. Number one, but I would back that up, the best thing you can possibly do with the bank is to build the relationship with the bank and the banker long before you need them. I love that. And I don't know, people just don't do that. And you know, because if I you know, if I know Pat man Cousteau for 30 years, and you come up with a new idea, I'm likely much more interested, okay, how can I help you get there, then if you walked off the street, and I have to start from scratch. So when people walk off the street, which is fine, you know, and usually got a referral, or somebody said, Hey, call this guy, he is at least half competent, he knows what he's doing. I love when people walk in with financial statements at foot with each other, they understand they have to give me data, and they do their research ahead of time to know what data they need to provide, right? I know, I'm gonna have to give you tax returns, I know I'm gonna have to give you a business. And I don't care about a fancy business plan. I tell people, they can write it on a napkin. It just has to show that it's got thought and substance to it. So the best thing when people walk into me or when I say me, I'm gonna say any bank, we're like this have a really good personal financial statement, you actually probably have copies of your liquid accounts to back it. You might even have a copy of a mortgage statement to back what your house is out. And then you've got your tax returns. And you got it in a format that I don't have to on hermetically seal some sealskin wax binding, because you know, I have to scan little things. Yeah. And maybe you even have an accountant letter that says, Hey, I've reviewed my client stuff. This is all good. Wow, this person is taking some extra and then the business plan to meet can be on a post it note. Here's what we've got. Here's the sales I have today. Here's what I want to do. And here's why I know, you know, I already I'm going to start this electrical business. And I've already got the seven builders look at the letters. They're committed to using me. And they all say they're going to use it. Chi, you have enough right here that's going to pay your debt. Well, then they've given me all the reason right on the front to say yes to that doesn't mean we always will. Right. But it said that they've thought it through. And it's not where boy, I just got fired from my last job. I want to start a business. I don't know quite what it is, oh, you need stuff. You need a tax return. You know, you don't say body language is everything. Yeah, you know, because I've had plenty of people sit in my chair saying, you know, I have an attorney friend that says I shouldn't need to personally guarantee anything. That's for me, that's just uh, that's it. That's the deal killer. Yeah, I will help them and I tell them, right, there's, hey, I'd love to look at your business plan. I can no longer be your banker, because you've already said, Well, no, no, they always back off that. But you know, you don't realize what that says. It just says that they're not confident enough to sign on their own deal. Sure. And they want the banks not an equity player, the bank's a debtor. Right. And so we don't have like the example I told you the foreign 1000 That turned into 55 million. I didn't have a play for that we just got paid a fixed rate of interest for taking the risk when it was the riskiest, right. So, you know, I don't have I'm not in it for an ownership stake. So I didn't get half the cut when that business sold. So being a debtor, it just shows that you have to be really confident show you've done your work and not fear telling the banker the bad information. Sure. It was somebody comes in and says hey, I had a really hard time four years ago, I had a medical issue. I didn't pay bills for five months. Great. I tell me upfront and don't hide from it, then I'm gonna immediately know do expect it and I can pass I likely can probably work around it. Makes
Pat Mancuso 44:41
sense. So I only need a napkin for Andy. That's all I need
Marc Cove 44:47
it just a napkin. You know, I say that in jest we've actually had that happen. I just appreciate a well thought through napkin than 100 pages of flow that they did right.
Pat Mancuso 44:57
I love it. He's getting a napkin from he's good. We have had people come
Marc Cove 45:00
in with a business plan that they've never even looked at, they need to do it. And it really wasn't first of all, that scares the crap out of me. I'd rather have that hard thought in a little piece of paper than show up at the background there, baby. Makes sense. Makes sense.
Pat Mancuso 45:14
Okay, so I want to ask you a couple of questions here before we close out. So in the banking world today, like I don't know, if you've had it, I'm sure you I'm sure. So when I say what I was gonna say, I was gonna say, I'm sure you haven't had a chance to look at this. But I saw an article this morning that SBA is changing some things. So in a nutshell, if somebody's listening to this, what are they changing? What are the pluses the minuses to that?
Marc Cove 45:39
My inbox? You would bring that up? I have not looked at the I do know, some of the changes are they're expanding their export programs. They're gonna they're gonna start making it a little easier on some seven eight programs. Yep. And expanding some expanding some limitations. Yeah, because they really want to get money out.
Pat Mancuso 45:58
And that's what I that's what I gathered, Mark is that it looks like it's gonna be there. They're giving you guys as the bank's doing the SBAS they're giving you a little bit more flexibility is what it really given us a
Marc Cove 46:10
little flexibility. And what that rate range because rates skyrocket, you know, let's be honest, 2023 was awful for interest rates. Yeah, most people think banks love that that the opposite. We don't mind steady increase our steady decrease, we can't have fast increase or fast decrease, because it blows the formulas up. So right. You can't, when you have when you have rates go up 4%. In six months time, you don't have the ability for your loans to reprice, like I can't call up all my fixed loan saying, Hey, dude, it just raised three points, we change the loan rate, not the way it works. So
Pat Mancuso 46:43
So So in that vein, before I kind of asked you a couple of closing questions, from your perspective, as a banker, as a shareholder in a bank, as somebody who's very active politically, both locally and nationally, where do you see things going relative to the economy and district perspective?
Marc Cove 47:08
If I was, you know, again, we all know that we if we all had that crystal ball, we'd all have million understand. I do think this year, you're gonna see still some rate decreases. I think that's still been tempered a bit, because inflation still remains an issue. Right? And I know, it depends on who you talk to. And they say that you could find 40% of population to say it's not an issue than 40%. To say, it's a huge issue. And then there's 20% in the middle. There is there's no question there's there's price inflation when there's when when when a nugget meal in California cost you $27 There's something wrong, so Right, right, and typically, rate increases help bring down inflation. So that's why I think when you're not going to see the steadily decline in rates, until that's in check a little better. Right. I do still think banks banks are healthy. Yeah, I an industry rule. We don't have a lot of delinquencies today. So this is not like it was in 2010. In 2010, the banks just had a ton of payment problems. Real Estate, no question is the Mets your you know, you know, that space as good as anybody. Values haven't changed much. I mean, have values come down a bit, you bet. But right now, if you have a $250,000 house you put on the market, you're going to sell it in 24 hours and 50 offers pretty appears just right now, there's a shortage of supply. In 2010, there was a gluttony of supply, it was the opposite there was there was developments all over the place in various states of it. So that's what fueled a different world then. So I do still think I do still think we're going to have a situation where the economic conditions probably are favorable for people to still get money for sensible well thought through well capitalized projects. If somebody's coming to the bank door today, with minimal cash and not much left, that's going to be a hard sell. Yeah, banks. And you know, it's, it's no different than anything else. If I have, if I have only one pen, and it cost me 50 cents to make. And I've got four people willing to pay me $4 for it, and somebody else is willing to pay $1 Well, it's still profitable to buck, but I'm gonna sell to where this for when there's a lack. When there is a lower supply, which there is today, it's going to be more selective. And I'd argue that's actually better for the economy, because there is more turning to probably more sensible projects. So I do still think bank is going to keep moving. You have to cash flow at a higher interest rate. I mean, that's the one thing I tell somebody walking in the door today to test your project on 10%. Even if you're not going to pay it showed the bank you can cover it. Yeah, with 10%. You know, whatever that looks like. It's it's so
Pat Mancuso 49:35
I'm going to ask you for final thought in a second. But I do I do want to you and I've had conversations around this right now. Banks are fighting for deposits, correct? Correct. Good. Not every bank. Not every bank. I get it. But I'll
Marc Cove 49:49
tell you it's an interesting story. The banks that are fighting for deposits are the healthy banks. And I know that sounds that's my point. Yeah. If banks are still active and lending and engaged in their commute Unity, they need money to fund that activity. Right? Right. So if a bank is choosing to sit back not lend money, I don't need new deposits. Right. So you know, if you see a bank, you know, hungry for deposits don't look at that as being Oh, they must be in trouble. The opposite is, because they're there. They're engaged now that
Pat Mancuso 50:17
that's my whole point of bringing this up, because you and I've had these conversations is you people look at a bank for loans, but they don't necessarily understand the side other side of that, which could benefit them that there is a competitiveness out there in the marketplace for deposits. And you guys are certainly playing in that space, because you're still lending at a very strong level. And so even if somebody is hearing this and is saying, hey, you know, I don't need any loans, right now, it certainly may behoove them to look at their current relationship in terms of what are they getting a return on their, you know, million dollars that's running through that bank as a business owner. And so that's the real reason I brought that up. And
Marc Cove 50:59
they should always call a bank. And I'll tell you what I said about 15 minutes ago, if even if you don't need to, you don't need to have loans today in your in your bailiwick, your deposits should still be at the bank, that you're building a relationship and most likely to lend you money down the road. Right? I can tell you the approval rate on loans that people have deposits pre existing in the bank is a lot higher than the other way around. It makes sense. I mean, so. And if you call that bank and talk to that bank, they'll usually customize bro, they're not going to give you a rate that's unheard of if you if you have somebody giving you a rate that too, sounds too good to be true. There's usually strings, and it's usually short lived. If there is the opposite of having, you know, maybe you get paid a few a quarter point or 30 basis points less. Yep, you know, it, but that's human nature.
Pat Mancuso 51:47
Right. Thanks a lot. Thanks a lot that I wasn't
Marc Cove 51:49
referring to you on that. But now I know your oil. So I know.
Pat Mancuso 51:52
It's fun. It's all good. Okay, so Mr. Cole, before I ask you for your final thought, where and how would somebody get in touch with you if they wanted to, you know, speak with you? Is the start of relationship building with you. How would they get in touch with you?
Marc Cove 52:08
I've got all the technical things on the planet, but I love a phone call. You know, so I'm not this, this, this this robot that's online and give you my email. But I'd say 651-430-8609 Is my direct dial that rings to my cell phone rings to my office. And you know what, I just like to have a human conversation. Yeah, people really want to send an email that it's mcove@myfrbank.com. But that's impersonal pick up the call, I'd love you know, I'm going to take time to talk to you. And if I am busy, can't I you know,
Pat Mancuso 52:44
you call back. I know that. I know that. Okay, so give us a final thought and anywhere you want to go.
Marc Cove 52:51
Final thought is remember as a community to support your local and small businesses. That's the engine that keeps things rolling. And I love when I see people band together and realize that we can all make a difference and economic wheel maybe the bankers part of it, maybe the consulting groups part of it, but it's to me, it's just you know, stick with people you're gonna have a relationship with even if you think you can do a little better in this social media app online phone world, you're never going to do better than somebody you can pick up a phone and have a conversation with. Absolutely.
Pat Mancuso 53:30
Well, Mr. Cove. It truly was my honor to have you on today. You've obviously been on this journey with me as a business owner for 30 plus years. And I appreciate everything you've done. I appreciate what you shared today, and what you'll continue to do and all the great things that you do so thank you so much for being here today, my
Marc Cove 53:50
friend. And Pat, thank you. Always my pleasure. Appreciate the friendship and business all throughout the years.
Pat Mancuso 54:00
My pleasure. My pleasure. Thanks so much everybody for being here. Please don't hesitate to share anything and everything about our podcast destination business freedom.com And then can be found and also all your social media platforms. Thanks so much. If you're an entrepreneur, remember this, we want to help you define that destination address, go to www dot the Mancuso method.com and take that quick assessment and schedule a call with me. We'd love to talk with you. Take care everyone have a great day. If you have a bye bye bye.
Outro 54:32
Thank you for joining Destination Business Freedom with Pat Mancuso sell me the insights and strategies shared guide you towards financial prosperity and personal freedom. Continue to navigate boldly. Until next time, keep transforming challenges into achievements. Farewell and stay the course
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