Small Business Financial Article

Picture the scenario of a small business owner named Eugene, who is on the verge of a significant breakthrough that could catapult his business to the next level; but he needs money. Without a capital infusion, Eugene can’t hire the people or buy the equipment he needs. He knows he needs to secure a loan from a bank, but he’s dreading the process. To Eugene, the banker represents an obstacle, not a conduit for solutions. Why? He doesn’t know the banker, and the banker doesn’t know him. While that is not a deal–breaker, it can steepen the uphill climb.

The lesson to be learned here is that the time to start a relationship with a banker is not when you need money; rather, it’s when you don’t need money. Had the small business owner introduced himself to the banker in the early stages of his business, built a relationship, and kept the banker apprised of his progress, the need for money becomes the next logical step that both parties expect. Along the way, the owner and the banker could have worked together on any number of issues that would have cleared the path for a smooth transition to a loan discussion.

Their Value is in the Relationship, Not the Money

The Eugene scenario plays out too many times, mainly because small business owners don’t understand the importance of the banking relationship beyond the critical point when they might need to borrow some money. Not only are they missing out on a wealth of information and resources, but they also lose the opportunity to develop an advocate who can work on their behalf inside the bank and inside the community.

The fact is it is never too early to start a relationship with a banker, even if your business is barely off the ground or still on paper. It may come as a surprise to business owners to know that banks are just as anxious to start a relationship with them. Nothing is more valuable to a bank than a loyal business customer, who may need as many as twelve to fifteen different banking products and services throughout the business life cycle. But, in a highly competitive market, the banks know they must earn your loyalty and will do so by offering valuable guidance and advice along the way.

What You Need to Know about Bankers

To understand the value of a business banker, you need to understand the wealth of knowledge they can bring to the relationship:

They know cash flow. Managing cash flow is what bankers do best. Whether it’s recommending cash flow management solutions or providing advice on cash flow techniques, bankers are equipped with knowledge and tools to help you increase, smooth out or better utilize your cash flow.

They know you and your business. It takes a relationship, but once it’s underway, your banker will know you and your business better than anyone else. Not only do they become vested in your success, but they can also offer you guidance tailored to your specific business and personal needs.

They know people. Your banker is likely to be your best networking opportunity. Bankers know many people in the business community, and they build their prestige and influence by introducing their business owner clients to their network.

They know credit.Building business credit is not easy. It can take time and many hoops to jump through. Your banker can guide you along the way to keep the time and hoops to a minimum.

They know technology. It’s a whole new age for small businesses which, at one time, had to get by with rudimentary tools to help them manage their cash. New technologies have created scaled solutions for small businesses to manage their cash like big companies. Your banker has access to this state–of–the–art technology which can be customized to your needs and budget.

They know what businesses need. Bankers are the barometer for business needs, always looking for trends and solutions that their business clients need, such as fraud prevention solutions, human resource services, local marketing, and e–commerce.

The essence of a solid banker–business owner relationship is trust and integrity, which is built over time. With that, you can enhance your life and your business’s prospects exponentially. When started early, the relationship has time to flourish before the critical needs arise, which can then be addressed as partners rather than as strangers.