I’ve spent my entire career of over thirty years in small business—I’ve even spent a fair amount of time nurturing what Michael Gerber calls the entrepreneurial seizure. Like most of you, I’ve experienced the realities of bootstrapping a Main Street business and the challenges of operating with limited cash flow. It would have been a lot easier if I’d had access to some of the alternative lending products that are available today or if I’d had a better understanding of what bankers were looking for before they told me “No.”
I recently wrote about a one-branch community bank, Holladay Bank & Trust, and what they were doing to help the small business owners in their community. I’m a big believer in the value of community bankers that do more than talk about how they build relationships—they actually do stuff to build relationships. But a healthy relationship with your banker isn’t the sole responsibility of the banker.
Here are a couple of suggestions that might help you foster the type of relationship with your banker that is a win/win for both of you:
- Make it a point to regularly visit with your banker: If you’re as lucky as we were, you’ll have a banker who makes a regular visit to see what’s going on. If not, an occasional email or a phone call might be an option. The goal is to make sure he or she understands that your business is doing well. Add your banker to your PR distribution list so whenever there’s a big announcement about you and your company, he or she sees it. If this is new to them, it might feel a little weird at first, but over time they’ll look forward to the announcements and will appreciate your willingness to treat them like a partner.
- Invite your banker to visit: Many businesses will occasionally hold a BBQ or other event to build relationships with their customers. Once in a while we’d fire up the grill and throw on a few hamburgers in the warehouse. These are great excuses to invite your banker to stop by. A few years ago I read something Kraft’s Dana Anderson published advocating the importance of creating cross-departmental collaboration by having your collaboration partners spend time on your turf. The idea was to share what you’re doing with colleagues outside of your department, build rapport, and invite buy-in. I think this is relevant within the context of building a better relationship with your banker. I think meeting us on our turf helped our banker better understand what we were doing. He watched us answer the phones, talk to our customers, and witnessed first hand the positive relationships we had built with them.
- Don’t forget the special occasions: Birthdays and holidays are a great excuse to set your business apart from the rest of his or her banking customers. If for no other reason than nobody else is doing it, it’s a great chance to keep you and your small business on his or her mind. The few minutes it takes could pay off down the road.
- Don’t fudge: Even if you have a great relationship, never give your banker bogus financial information. Even a relatively small misrepresentation on your P&L can wreak havoc down the road. You want your banker to be your advocate when it’s time for a loan. If he’s gun-shy because he can’t trust the financial data you share with him to be accurate, he or she will not stick their neck out for you.
- Nobody wants to be the last to know: If there’s bad news about you or your company that has the potential of making your banker nervous, make sure he or she hears it from you. Don’t let them find out in the newspaper or on the local evening news. Years ago, one of my dad’s suppliers was distributing faulty products to their network of distributors. This drew the attention of the media and my dad found himself on the news. Because his banker watched this transpire on his television, he panicked, assumed the worst, and called a loan due immediately. I can’t help but wonder if my dad had contacted the banker and given him some warning about the events taking place, along with what he was doing to mitigate the damage, if the banker would have remained calm. Don’t let your banker be the last to know.
Granted, before you get a small business loan your banker will still want to look at your credit score, your time in business, your annual revenues, and any collateral you might have. It’s up to you to give him or her a reason to ask for more.