What is a business owner’s responsibility in building a mutually beneficial relationship with its bank?
All banks are not alike, and as soon as a business owner asks, ‘What’s the best price you can offer?’ the client is commoditizing the bank. It’s a silly question to ask if you consider the way businesses feel when a supplier, vendor or customer turns that question on them.
At the end of the day, businesses should carry those values over to their banking relationship, understanding that the cheapest price might not buy the services and strategic partnership they are looking for in a banker. So No. 1, look beyond price and focus on your needs and discussing those openly with a banker.
That brings up an important second point: transparency. A bank wants to understand what challenges a business faces, where it has been and where it wants to go. Clients should be open and willing to have a well-informed dialogue around their objectives. A business must tell the whole story, good and bad, to help the bank understand what role it can play in guiding the company forward.
What is an example of how this interplay between banker and business can play out?
Here’s a scenario that describes how a banker can bring ideas to the table that can change a business’s destiny. We had a customer who was a pure distributor in his industry 10 years ago. While talking about the business, the banker asked, ‘Is this all there is for you? Because I think the real value we can create for you is if you were no longer just a distributor, but, in fact, we vertically integrated you and turned you into a manufacturer where you could control more of your own destiny.’
Four hours later, that’s exactly what the business decided to do. This company is hugely successful today, evolving from a sleepy little distributor into an earnings engine and creating significant wealth for the owner and his family. It was all about idea generation between the bank and his business, and executing on those ideas.
How can a business find a banker who will work as an adviser and strategic partner?
Business owners should ask for a resume when they talk to bankers. Find out about their background and ask questions about how they have helped others.
If you really want someone who will serve as a strategic adviser or counsel, select a banker just as you would an attorney or accountant.
June Courtney is executive vice president of commercial banking for Old Second National Bank, Aurora, Ill. Reach her at (630) 801-2219 or [email protected].