As a business owner, you are focused on customers, products, marketing and day-to-day operations. You can’t afford to be worried about your financial support. That’s why it’s important to have a trusted partner that thinks ahead, has the necessary capabilities and shares in your business philosophies.
“When you pick a partner that understands what you do, they aren’t asking you a million questions daily,” says Sean Richardson, the NorthCoast President and CEO of FirstMerit Bank. “They’re supporting you, offering new ideas and helping you grow and develop your business.
“When you pick the wrong partner, there’s no trust. They may then begin to question your business decisions. This slows down an organization, which is not what the right partner does. You don’t want a partner that dresses it up in the beginning but then doesn’t deliver once the commitment is made — the last thing either party wants is buyer’s remorse.”
Smart Business spoke with Richardson about how to pick the right banking partner for your organization.
What should a company look for in a banking partner?
Before meeting with a bank, take the time to figure out what you are looking for from your banker. Once you outline your criteria, make sure you stick with them when you make the decision to move banks.
A good rate doesn’t always make a good financial partner. Many people say a strong relationship is most important to them, but at the end of the day they can’t pass up a promotional rate or quick return on the financial side. Then, if that relationship doesn’t turn out the way they thought it would, when they review why the relationship failed, they find they strayed from what they thought was most important.
Stick to it. Tell the banks you are meeting with what’s most important so they know what you are looking for and can tailor their solutions to meet your needs. Here are some starting points:
- Look for multiple people within a bank that you can know, call and trust. It’s not enough to just know your banker. Have more than one contact who understands your company and can be your advocate in case your main contact leaves or gets promoted.
- Seek financial strength. When you need cash, your bank needs to be able to step up.
- Look for breadth of solutions. Banking is more than loans and deposits.
- Make sure your bank has the technology to make it faster and easier to manage your finances.
- Find a bank that focuses on your type of business by industry and size.
- Remember, you often get what you pay for. A negotiation to pay nothing may get you an unsupportive partner that eventually loses money on the relationship.
How should a company handle its ‘interview’ with a potential banking partner?
Provide an agenda for the meeting. Take the time to outline your expectations and objectives.
Usually the bank has its own agenda, two or three things it is trying to accomplish, and it’s wise for a company to go through the same process. Here are some items to consider:
- Understand the credit approval process and who the true decision makers are. Do any of these decision makers truly know you and your business?
- Review the target markets they serve and are comfortable with.
- Understand all of the bank’s capabilities, whether it’s for credit, cash management, international, real estate financing, etc.
- Ask about their financial situation and request proof of success.
- Look at their customer service channel for your business and if it is recognized by other customers as strong. Most banks say they have strong customer service — make them prove it by asking them for references.
- Have them walk you through how and when they will reach out to your business and for what reasons — understand the touch plan.
- Know what possible customer and vendor introductions they can make to you that will help you grow market share and add customers to your company.
Why is a bank’s touch plan important?
Too many times, the banker assumes he or she knows how a company wants to be treated from a communications standpoint. The touch plan resolves this issue by setting expectations for communication between the bank and the company.
What are the keys to getting a banking partnership off to a good start?
- Full disclosure of financial information and future expectations.
- Tight communication with multiple contacts on both sides.
- Anticipation and sharing of any possible hiccups to understand how trouble could occur, but also what proactive solutions may solve the problem.
- Identifying expectations for communication that includes scheduled, regular contact.
- Introduction of your team and their team, face to face if possible.
- Help from an expert when changing banks.
Sean Richardson is the NorthCoast President and CEO of FirstMerit Bank. Reach him at Sean.Richardson@firstmerit.com or (216) 802-6565.