Preparing the Bank to Help Your Business Finances

B2B Partner, Andy Anderson posted this wonderful article on seeking help from a bank to help with business finances.
Andy Anderson

Lose the entitlement thinking of being a good, long-term customer and make the case for your business’ viability and the return on investment to the bank to get your loan. 

I’ve covered a novice business owner’s trip to their bank to initiate a discussion on getting a loan and the point-of-view of the banker in response to your request for a loan in this series. Now I want to share how you can prepare your pitch for a loan.

Your company’s growth is dependent on your banker!

Here’s something to think about.  If during your company’s existence, you’ve only used the bank for checking, savings and other normal banking activities, your company is not reaching its potential.  Banks are in the business to help companies grow.  As your company grows, so does the bank.  You want to help your banker grow and become stronger because by doing so, you are helping your company grow and become stronger.

Building a relationship with your banker.

When you first walk into a bank as a business owner, regardless of how long you have had your checking and savings accounts with the bank, assume they have no idea who you are.  They may greet you by name and ask about your children or grandchildren, giving you the impression they know you, but they don’t.  This is casual conversation and helps make seem them personable to you.  But as a business owner, you are unknown.  So what do you do?  Here are some suggestions based on the phases of building a relationship with your banker.

When first starting the relationship (setting up your checking, savings, etc.):

  • Tell them you own a business and ask about any services they have for businesses
  • Ask to whom you should speak to if you ever need a loan
  • Get an introduction and invite that person to lunch, breakfast or get a cup of coffee, i.e., get them out of their office

Getting your banker’s buy-in:

  • Prepare for your meeting with your banker.  You need to sell them on the business.  Treat them as a valuable customer, because they are!
  • Give them an overview of your business in general terms. What it does, the perfect customer, the ideal vendor, how many employees, etc.
  • Communicate your company’s SWOT Analysis with your banker (read my poston how toprepare a SWOT analysis)
    • What your business has done (strengths)Where you feel uncomfortable (weaknesses)
    • Where you see your company going in the next few years (opportunities)
    • What are the primary concerns that threaten your business (threats)
    • Share your sales promotion material and general marketing strategies.  Show what you give potential customers and generally discuss your sales pitch.
    • Present current financial statements – at least an income statement and balance sheet.
      • If the meeting is after March, then financial statements for the prior year.
      • If the meeting is after April, then the financial statements for last year and current year-to-date statements.
      • If you have CPA prepared statements – audit, review or compilation – bring those.  Otherwise internally prepared financials are ok.
      • Disclose cash flow forecast covering the next eight weeks at a minimum.  Longer is better.

Want to really impress the banker?  Bring your CFO.

The banker will know you are serious about the financial health of your business because you have engaged a financial professional.  Don’t have a CFO but you do have a CPA?  See my blog post series on CFO vs CPA.  Know the difference and how your CFO can greatly help your business be more profitable, grow and more successful.

Don’t be that “doe in headlights” when it comes to business finances. Proactively establish the relationship with your banker ahead of time so that if or when you need a loan, you aren’t going in cold.

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