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About 25 or so years ago, my Dad’s small business suffered from some bad press caused by one of his suppliers. His wasn’t the only business in that industry in our area but he was the only supplier severely impacted by the repercussions of the bad news. Likely because he was the only one willing to be interviewed by the local media about it.
I wasn’t working there are the time, but watched the interview on TV. It felt to me like the media was on a witch hunt and did their darnedest to vilify him and his business (potentially a topic for another discussion on public relations). Unfortunately, I wasn’t the only person to watch the news story—his banker saw it too.
The next morning, much to the chagrin of my father, the bank called in the small business loan he used to purchase his warehouse several years earlier. He had been faithful in meeting his monthly obligations, he had a healthy business, and there was no reason to expect there were any problems—until he went on TV.
We’ve talked before about how bankers are very risk-averse people. Although the dozen or so similar businesses in our area didn’t suffer the same consequences (they didn’t draw attention to themselves by going on TV) he had to spend the next week scrambling to find another loan so he could keep his building.
Over the years I’ve had the opportunity to think about what happened and some of what he could have done to avoid the consequences that could have potentially brought his business down. Unlike his competitors in our area, his business did suffer for a year or two, but fortunately they were able to weather the storm. With the benefit of hindsight, here are a few suggestions that might help your business avoid the kind of challenge faced by his business. I’m convinced it’s critical to foster and maintain a healthy relationship with your banker or other lender so they have something besides the numbers to consider when they think of you and your small business:
With that said, don’t forget your banker is your banker. Although you want a personal and cordial relationship, he or she is not your clergy, your best friend, or your therapist. Don’t air your dirty laundry. Don’t complain about your business. Never whine or moan about how things are going. Remember your banker is part of the team that makes decisions about you and your business. Cordial, personal, and positive, should be the goal.
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Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.
Blog
7 min read • Aug 17, 2022