Like most other relationships, the relationship between a business and a banker is an ongoing affair — a process.
“A small business should use a banker like any other part of the team,” says Wendy Bolas, a business banking manager for FirstMerit Bank in Akron. “They should work with their banker the same way they would work with their CPA or attorney.”
Smart Business spoke with Bolas about the process of working with a banker.
What’s the most efficient way to work with a banker?
If customers engage their banker in four areas, they will have a successful relationship.
- Have a plan and discuss it with your banker.
- Anticipate your needs in general.
- Use your banker for financial representation.
- Use your banker as a trusted adviser.
What advice do you have on planning?
Every customer needs to have a plan and to discuss it with his or her banker. I know it sounds simple, but often businesses don’t do that. They are reactive rather than proactive. A plan does not have to be elaborate or amazing but needs some foresight.
A good plan has to be transparent. A business can’t half-tell its story. A banker cannot work with a business if management is not being open. A good plan can not be created in a vacuum. Use your banker as a sounding board. Share ideas and work with your banker.
What sorts of benchmarks are important?
To anticipate its future needs, a business should establish benchmarks. Every business should have a three-month (short-term), a nine-month (mid-term) and a two-year (long-term) outlook. Anything past two years is dicey, unless you are anticipating a major project.
Be honest with yourself and your banker. Know the plan’s pitfalls. Sometimes you need to see the glass as half full, and sometimes you need to know it is half empty.
Lastly, have a rainy-day fund or a plan that will let you raise money against a rainy day. Too many business owners live without a reserve.
What exactly do you mean when you say ‘financial representation’?
A good business is represented by three legs: the owner, the banker and the CPA. The idea is to get all three legs working together.
Financials need to be prepared well. But be sure the statements are representative of the business reality and not tinted by tax concerns or other considerations. Good CPAs are worth their weight in gold.
Most owners are tied up in their business or their craft, but you need to know if you are meeting month-to-month goals. Sometimes business owners are surprised with what they are making month to month. A CPA or banker can help quantify revenue and earnings. It sounds trite, but if you don’t know where you are going, you will not know when you get there.
