The Green Sheet Online Edition

March 13, 2017 • Issue 17:03:01

Street Smarts^SM

The Wolf of Sterling Heights, Michigan?

By John Tucker
1st Capital Loans LLC

From networking with industry professionals (newcomers and vets), it appears a significant amount of the action in our industry occurs in or around New York City, especially in the financial district of Manhattan. It's in this lower slice of Manhattan where Wall Street resides.

Since January 2007, I have operated a one-man-show sales office predominately from my business and home offices in Michigan. I reside in a suburban area called Clinton Township, which is located right next to Sterling Heights. I'm often approached to work directly for larger ISOs and other industry players, but they usually want me to move to or around New York, which in most cases, includes working in the lower slice of Manhattan. Is this a good opportunity or not?

With that question in mind, I think it's time to discuss cost of living, purchasing power and recommendations for new office structuring here in the 21st century.

"The cost of living is going up and the chance of living is going down," said the late Flip Wilson, former host of The Flip Wilson Show. One thing that isn't discussed in our industry is the very high cost of living merchant level salespeople (MLSs) contend with when living and working in an area such as lower Manhattan. An income level that provides a solidly middle class lifestyle just about anywhere else in America, would fall far short in Manhattan.

Income divisions top to bottom

An individual making $80,000 a year in Sterling Heights is considered to be upper middle class, and in the top 8 percent of all individual income earners nationwide, based on various economic reports, including U.S. Census statistics.

The U.S. individual income earner measurements (based on individual, not household income) for the top 20 percent are as follows:

• 1 percent of all individual income earners make over $250,000 per year; people in this category are considered to be rich.
• 2 to 4 percent of all individual income earners make $100,000 to $220,000 per year; those in this category are considered to be higher class.
• 5 to 15 percent of all individual income earners make $37,000 to $90,000 per year; people in this category are considered to be middle class.

Individual income earner measurements for the bottom 80 percent are as follows:

• 16 to 30 percent of all individual income earners make $27,000 to $35,000 per year, which is considered the U.S. median income range. Being in this category puts you in the working class.
• 35 percent of all individual income earners make from about $15,000 to $25,000 per year; people in this category are considered to be among the lower class.
• 15 percent of all individual income earners make anywhere from $0 to approximately $12,000 per year; people in this category are considered to be living at or below the poverty level

Diminished purchasing power

Despite standard labels, earning $80,000 annually in Manhattan would not support a middle class lifestyle. To rent a one-bedroom apartment alone might cost $4,000 a month ($48,000 a year) in Manhattan, which is over half of your annual compensation before taxes. CNN Money has an excellent tool for comparing the type of compensation you would have to make in another locale to sustain the lifestyle you enjoy in the city where you currently reside. You can find it at money.cnn.com/calculator/pf/cost-of-living/.

Using this tool, I entered Detroit, the listing closest to where I reside. Then I entered Manhattan. I set the compensation in Detroit at $80,000 and found I would need to make $188,954 in Manhattan to maintain the same standard of living I could enjoy on $80,000 in the Detroit metropolitan area.

A possible solution

I believe globalization and technology will continue to fundamentally change our industry, so much so that many lower level MLSs might eventually be displaced by technology and cheap global labor. Through the Internet, we can communicate with workers across the globe using numerous communication tools – from web-based predictive dialers, to virtual chat rooms, to live web cams. Given this, why not do away with the traditional brick-and-mortar sales office and implement virtual teams across the board?

What does an inside sales agent need to perform his or her job? I believe they just need the following:

• A predictive dialer
• Sales pipeline/leads and prospecting data
• Information on the products and services being sold
• Direct contact information to sales and underwriting managers
• Standard telephone line, email account and online fax account

All of these can be provided virtually today, so why does an inside sales agent need to be at a traditional office location? Of course, this doesn't just go for the inside sales agents; it goes for just about the entire team, including underwriters, merchant support team members and more.

In terms of tracking team members to ensure they remain productive, why not use the various tracking devices, live web cam technology, and mechanisms available to document activities, record all calls, etc.? This would allow your agents the luxury to move to lower cost of living areas across the country and not be subjected to living in areas where the cost of living is out of control.

Advantages to virtual teams

Implementing a virtual team comes with a number of operational benefits and perks. Among them are:

• Reduced turnover: Your agents wouldn't have to make $150,000 per year (which the majority of those in our industry don't come close to earning) to survive when required to live in or near New York City. They could move to areas comparable to Sterling Heights, which has a low cost of living and provides quality suburban living with low crime, good public schools and good economic standing.

  They could earn $65,000 a year and live solidly in the middle class, instead of living paycheck to paycheck on the same amount in New York. Agents would reduce their costs on gas, childcare, clothing and more, which would also help increase loyalty, boost morale and reduce turnover.

• Reduced operational costs: Think about how much you spend to lease office space and the costs of office furniture, computers, etc. You could save a significant amount by reducing these expenses.
• Increased productivity, revenues and profits: Your team could now start work earlier as well as work longer hours, since they would be working from the comfort of their home offices. This increased productivity would increase revenues and profits.
• More efficient hiring: Your hiring procedures could be more efficient because you could hire qualified employees from anywhere in the country (or world), instead of limiting your hiring pool to those who live close by or are willing to move to a high-cost area.

21st century work life

We can do just about everything online today, including but not limited to: banking, dating, completing college degrees and providing small business financing to merchants in rapid time. So why are so many ISOs operating like we are still in the 1980s and 1990s?

It's time to step into the 21st century and convert all or a significant portion of your team into virtual teams. It's time to stop subjecting people to extreme costs of living by forcing them to move to places like lower Manhattan, when they could perform the same duties somewhere cheaper and on a virtual basis. Such a conversion would be a win for all sides.

John Tucker has over 10 years of professional experience in commercial finance and business development. He is also an M.B.A. graduate and holder of three bachelor's degrees in accounting, business management and journalism. To connect with John, please send him a connection invite via LinkedIn at www.linkedin.com/in/johntucker99 or email him at tucker@1stcapitalloans.com.

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