You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.
Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be your trusted adviser.
“I would tell you it’s the same role they should be playing in any economy, but it’s probably more critical in a challenged economy like the one we have right now,” says Elaine McMahon, senior vice president, department manager for small business banking in Southeast Michigan, Comerica Bank. “We have a much broader perspective on the marketplace than usually they do, particularly if we’re talking smaller companies, small businesses. We can provide them consultation relative to what’s going in the marketplace, we can provide them advice as it relates to their specific companies, and ultimately, we can help by providing solutions, the financial products and services that banks offer that can assist them.”
Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.
To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.Introduce yourself and your business
The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business. Even if you’ve been partners for decades, invite your banker to your office or place of operation for a meeting.
While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.
Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?
If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.
“I think communication is key, sharing information and communicating,” McMahon says about developing the relationship. “It’s human nature that people don’t like sharing bad news, but we encourage our clients to come to us regularly, whether the news is good or bad because it’s our goal to try to work together with them to help them be successful.”Use your bank for regular counsel
Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.
Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.
“The bank will sit down and analyze that information and engage the customer in conversation relative to trying to get a better understanding of where the company has been and where they are going,” McMahon says. “A good bank uses this communication to build a relationship with a company and to provide them counsel as to where they see the strengths and where they see the challenges of opportunity for the company to become more efficient or become stronger. And, oftentimes, providing them a financial product is part of that equation.”
Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.
There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?Take advantage of products and services
At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.
A relationship review with your bank can help you tackle ways to save money and save time.
One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account.
While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.
But once again, banks try to go beyond just selling a product and act as an adviser.
“We’ve tried over the years to identify key areas where small business owners could need assistance and where we could provide value,” McMahon said. “We’ve developed this cache of seminars, most of which are free or for a really minimal amount to cover a breakfast or lunch.”
Some banks offer seminars, while others provide informational Web sites as additional resources to finding efficiency. If you have a responsible banker, he or she will be proactive and committed to seeing you achieve success.
“The banker has to ask questions, too,” McMahon says. “We can’t just expect our customers to be coming to us first. We’re the ones that understand the products and services, so we’re the ones that need to go out there and know how we can uncover the needs so we can try to meet them.”