A Partnership You Can Bank On
The old adage is true: it’s not what you know, it’s who you know…but not in the way you might think. Karen Stern, partner in charge of BSW Small Business Services, discusses how a solid relationship with your bank can help your small business flourish, in this month’s “Financial Fitness,” as featured in Small Business Monthly.
Relationships are the foundation of a successful small business, and the most crucial relationship might be the one with your bank. Maintaining a relationship with your bank is a key resource for growing your business. Here are some tips to strengthen your banking partnership and strategically position yourself as a qualified borrower:
Know how to forecast your business’s cash needs. Instead of saying, “I needed this yesterday,” let your bank know well in advance of when you will need the money. Organizations that show their bank good cash-forecasting skills have a better chance of securing the financing they need.
Make sure your financial statements are reliable and timely. Banks want to know that the information they receive from you is accurate and up to date. If your financial statements don’t make sense, consult a CPA to help clarify.
Build a strong management team. For most small businesses, the owner is the main decision maker. Banks want to know you have depth in management in case someone other than you needs to make a decision. Make sure you have a good No. 2 or No. 3 with whom your bank is comfortable.
Be connected to your industry and community. Are you an influencer in your industry? Do you participate in community events, connect through associations or volunteer with not-for-profits? Banks like to know you are involved in the community and have a significant presence in your industry.
Know the strengths of your business strategy. Banks are willing to lend to a borrower who is truly qualified. What strategies did you use to get “lean and mean” to survive the recession? With improved efficiencies and the ability to grow the top line, you can survive the worst and prepare for the best years.