Let’s start with the perspective that the bank needs you as much as you need the bank.
“Banks live by lending money and they are constantly in competition with other banks to win new customers.”
A good place to start with respect to establishing a solid and long-lasting relationship is to understand how your bank manager thinks, feels and acts. See the Full Article The chart below shows examples of the questions a banker asks themselves regarding potential customers i.e. you the entrepreneur. These include such questions as: Does this investment make sense? How much capital do they really need? Can we trust the entrepreneur?
Click on the Chart to Enlarge
Appreciating the needs or your “partner” will help you to better position yourself and the “ask” of the bank. Here are a few things that you can do to strengthen that position.
Always think and talk about investment and not expenditure. A focus on investing will show that your are already expecting to make a return and build the business Also be prepared to discuss future investments so they will not come as a surprise to the bank and as a good way to demonstrate the entrepreneurial vision of the company.
Do a risk analysis of yourself which both identifies the risks that exist in the company, how likely they are to occur and countermeasures in the event that they occur. By describing ways to handle the risk areas, you will demonstrate that you have a realistic understanding of the company.
Produce a single binder – a bank binder – with all of the information collected and organized that would be of interest to a bank. This can both provide the bank with a better basis for decision making, greater security and a better impression of the company. See the full article for a suggest list of binder content.
The bank needs after care. Just like other important relationships, if your business is to evolve there may soon come a day when we will need an even larger commitment from the bank. Consequently, one must constantly work to increase the bank’s trust in the business and add funds to the “emotional bank account.”
Remember bankers benefit from making loans and debt can be a good thing for a company, when you show that it is created by good investments which will eventually yield a positive return.
This blog condenses some the information and business advice found in an article on “Control your Bank! – How to get the credit you want”. It is taken with permission from a Series of Articles published by GrowthWheel with the goal of providing inspiration and ideas that start-up and growth companies can use. The MEV Innovation Centre uses GrowthWheel as a visual tool to help companies develop, design and improve their businesses taking a 360 degree perspective. It works as an alternative to the conventional business plan by helping start-ups and growth companies make decisions and take action.
The MEV Innovation Centre is a certified GrowthWheel business advisor. If you would like a full copy of the article and related worksheets, please send us an email at MEVInnovation@milton.ca. For more information on GrowthWheel or to schedule time with one of our business advisors, again send us an email