Even in a down economy, small businesses can seize opportunities to buck a broader trend and achieve great performance. In partnering with a good business bank, savvy business owners give themselves a competitive edge. A successful banking relationship gives you an experienced advisor who can help you weather bumps in the road and assist in growing your business.
The key that unlocks all the potential of a good business banking relationship is regular and honest communication. When a bank knows you and understands your business, you realize valuable benefits. In our bank, we strive to develop long-term personalized relationships, which allow us to provide each customer with unique solutions and advice. The trust built through a close working relationship also allows us to be more flexible when things may progress differently than you expected. Since bankers at Leaders have banking tenure measured in decades, we’ve seen many business situations that we can assist with, that our customers may be encountering for the first time.
When economic conditions are tough, a good business bank can help you find ways to control your expenses. It can also help you achieve a better cash position with efficient processes such as optimally-timed payments and faster conversion of receivables to cash. Additionally, a good business bank can help you iron out your business plan.
The reality though, is that not all banks value an open and active customer relationship. In fact, a survey by J.D. Power and Associates found that an astonishing 1 in 3 businesses with annual sales of $10 million reported having no contact from their bank. The survey also found that business owners actually want to be contacted several times a year by their bank to receive economic and financial advice and tips on partnering with other businesses and expanding operations.
In the case of Leaders Bank, bankers proactively reach out to customers. Leaders invests in relationships. The best way for us to strengthen relationships is to always know what’s important to you, so we can assist with both your short- and long-term goals.
Another way that a good business bank provides an edge is through its network. Your bank should be able to identify opportunities and introduce you to other businesses that may eventually become your customer, vendor, or even the purchaser of your business. In addition to offering possibilities with greater efficiency and profitability, a bank’s network can help in other areas. We have numerous contacts in many specialties such as family business consulting, tax planning and wealth management. Networking is one of the most valuable benefits that we can provide our customers.
There are also ways to work efficiently with a business bank if you’re seeking financing, especially if the economy is sluggish. You’re in the best position for a loan process when you understand the “5 Cs” of credit: Capacity, Capital, Collateral, Conditions and Character. Capacity is your ability to repay. Capital is what you have invested in the business. Collateral is additional loan support over and above cash flow, and Conditions include the purpose of the loan, the economic condition of your industry, and the condition of the economy. The last of the 5 Cs is Character, which is critical because it can influence the other factors. The bank analyzes how you’re likely to behave if your business situation deteriorates and also examines your ability to run the business. This managerial risk is often overlooked by business owners.
If a deal is weak on a financial or collateral basis, but the character of the business owners is deemed high, then the banker will generally work hard to find a way to make the loan. At Leaders, we go the extra mile if a business owner is of good character.
As a banking relationship continues to develop, character remains integral. It’s extremely important that we do business with good, honest people. Honest people come to you right away with issues they’re dealing with, and allow us time to work out solutions. They view problem solving as a collaborative process.
Even if the economy is down, a banking relationship comprised of honest and free-flowing dialogue delivers ideas and resources that can help your business outshine others.
Recommended Books on Why Your Business Needs to Develop Good Banking Relationship:
- Financing Your Small Business: From SBA Loans and Credit Cards to Common Stock and Partnership Interests (Quick Start Your Business)
- Small Business Financing: How and Where to Get It (Business Owner’s Toolkit series)
- Get Your Business Funded: Creative Methods for Getting the Money You Need
- How to Raise Capital : Techniques and Strategies for Financing and Valuing your Small Business
- How to Get a Business Loan from a Banker’s Perspective
About the Author:
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- Tips for Preparing Bank Loan Documents
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- Types of Business Loans for Small Businesses