Trust your instincts when selecting a banker

Last updated on May 13th, 2019 at 02:23 pm

Trust your instincts when selecting your banker

By Richard Hellan, for SBT

It’s great when you hear small-business owners talk about their banking partners in a genuine and positive manner. The emphasis is on the word "partner," and they mean it.

Of course, when a small business owner’s relationship with a banking partner has gone sour, the tune the owner is singing isn’t so uplifting and inspiring.

How then, do small business owners go about finding banking partners who are right for them? What can they do from the "get-go" to find a banking partner who understands their companies? After all, every small business owner wants a banking partner who will be with him or her for the long haul, through the lean years, as well as through the years when sales and profits are high and "Celebration" is officially adopted as the company song.

It has been my experience that savvy executives in small businesses locate good banking partners and keep their relationships strong by following three simple guidelines:

1. Search for a banking relationship proactively and in an ongoing manner. Don’t wait until you find yourself caught between a rock and a hard place and then look for a bank to get you out of the jam. Banks want to serve successful people and to be their partners in winning.

However, the ride to success in business is filled with valleys as well as peaks, and sometimes it is normal for banking relations to become strained. Keeping your banking partner abreast of changes in your company is essential.

Keeping an eye to the future and discussing future needs in an ongoing way with your bank and with other prospective banking partners simply makes good sense.

Is your current partner prepared to meet your future needs as you see them unfolding? Fostering an interest in your company from alternative partners in an ongoing way keeps your relationship with your existing partner healthy and strong.

Assuming your current banking partner will always be there for your company allows for a weakening of the relationship. An implied promise that a bank will be there for you whenever you need it is a promise that should never be made. In the end, any banking relationship is conditional.

2. Search for a banking relationship with a detailed strategic business plan in your briefcase. The best banks want to do business with principals who have taken the time to create a roadmap to follow in managing and developing their companies.

Developing a formal strategic business plan document makes good sense for a lot of reasons, and it can be one of the best decisions a small business owner makes prior to searching for a solid banking relationship.

In Wisconsin, there are a wide variety of resources to help small businesses develop a plan, so there is simply no good reason for a business owner to be without a strategic business plan. It is a tool that can be used to develop a solid banking relationship from the start and as a tool that can keep a banking relationship on track during challenging times.

The best loan officers want you to keep them abreast of changes in your business plan as time passes and events unfold. In fact, be suspect of any loan officer who doesn’t want to take time regularly to study and reflect upon your plan with you. Such a loan officer has little to offer to help a small business owner make the best decisions in the field of finance.

3. Shop for the right bank to meet your needs and the needs of your company. While it is often said that small banks serve smaller companies better, the banking industry is changing and there are many large banks with a keen interest in developing relationships with smaller companies with specific profiles in selected fields.

However, just as a banker is required to conduct due diligence activity before it shares risk, a small business owner should conduct due diligence with each bank being considered.

And, most definitely, there should be more than one bank being considered whenever a new relationship is considered.

Marketing materials about a bank’s mission can be impressive, but also misleading. A small business owner should know the profile of the bank’s "ideal" new small business prospect.

The business owner should know the current financial position of the bank and the bank’s most current development strategies. References should be checked by asking current customers of the bank about the quality of their banking relationships and the loan officers.

The small business owner should also pay attention to his or her "gut" when meeting with whomever is to be the loan officer. If their gut tells them something is wrong, they should pay heed to what their gut is saying. Did the loan officer fail to connect with you on a personal basis? Did the officer seem intelligent and ask intelligent questions? Did the officer demonstrate interests in knowing "personal" dreams and ambitions, as well as "corporate" visions and business plan detail?

Having the right banking partners should enable small-business owners to tackle the challenges of managing and developing their business head-on.

Richard Hellan is president of Hellan Associates, an executive and business coaching firm headquartered in Milwaukee. He can be reached at 414-967-9012.

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