Turn Your Banker into a Real Asset

Posted: November 16, 1998 by Bill Cunningham in Money, Planning, Startup

Classic Cincinnati Post column from 1998

Entrepreneurs spend more time developing a solid relationship with their Federal Express courier than with their banker.

Many fear getting to know their banker. Why?

The business owners know that banks have thousands of rules and guidelines that must be strictly followed and they probably feel they are not in compliance with 90 percent of them. They operate on a modified ”don’t ask, don’t tell” philosophy: ”If the bank hasn’t told me, I must be OK!”

This approach is as valid as ”I still have checks left, so there must be money in the account.”

Entrepreneurial life doesn’t have to be that way.

You can change the ruthless headmaster/incorrigible student relationship into an asset to grow your business. First of all, choose you banker as well as your bank. Ask about the many services each bank can offer a small business. In addition to offering checking and secured loans, they have revolving credit lines, credit card processing, integrated services, online banking and the list goes on.

Then choose your banker.

Do you like them? Are they genuinely interested in your business?

If you have developed the next great killer application for the Internet, does your banker know the difference between hardware and software?

Ask if they specialize in particular areas, such as energy, software, retail, metals and mining. Each of these areas has special needs. Without naming names, they should be able to give you their views on your industry, markets, customers and suppliers.

You don’t want your banker to spend time learning your industry. Leverage their experience – find out what to avoid and tips to succeed that they have gathered from their own involvement.

Astute bankers have a great network to help your business.

A recent Fortune article reveals the most successful high technology venture capital firm, Kleiner Perkins Caufield & Byers, has created many relationships among its various holdings. Your banker can do the same thing. By making successful connections between clients, both should prosper, and that should make the banker happy.

When you hire employees, you typically look for knowledge, desire, enthusiasm and the ability to go the extra mile. You should think of your banker as a key employee – an ex officio member of your management team. By doing so, you must provide your banker with the same opportunities to succeed as your team. Provide frequent updates, include them in corporate events, and ask their opinion and recommendations.

Now that you’ve selected your new partner, what are the basic rules of the game?

Doug Cleaves, vice president of metropolitan commercial banking at PNC Bank, gave me a few tips on how to keep your banker happy. First, recognize that your banker is your internal advocate. Once you are wedded at the altar of indebtedness, your banker will do all that they can to help you succeed, both internally and externally.

To help them succeed, you need to communicate – a lot. For starters, monthly financial statements are appreciated. You’re going to print them anyway; why not send them a copy?

Make sure they get your newsletter if you have one. Occasionally invite them to board meetings. Take them to your trade shows. Introduce them to your best customers and to your competitors.

Since the bank has put their faith in you and your business plan, you should return the favor by moving as much business their way as you can.

If you have a reasonably nice 401(k) plan or a modest portfolio of stock, consider putting it with your new banking partner.

Banks look at the profitability of the total relationship, so the more you give the better deal you will get.

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