Find a Banker you can Befriend
It’s possible that you may have a negative perception of “the bank.”
Most people rarely rely on their bank for anything more than a savings account, credit card, and checking account to send their direct deposits as well as possibly a mortgage.
But if you’re an entrepreneur (or aspire to be one), it’s imperative that you understand the significance of a good relationship with your bank.
Perhaps more important than your relationship with the bank is your relationship with the banker on the inside.
Banking on Success
Money grants you both options and possibilities. If you are lacking in money, you are lacking in capabilities.
In order to get started, you need a source of funding.
Some entrepreneurs choose to be entirely self-funded or funded by their family members.
But many others will need assistance from their local bank branch to meet their business’ capital needs.
Meeting my Banker for the First Time
My partner John and I were two such entrepreneurs that needed help from the bank.
When we decided to start our new business, John set a meeting with a banker he trusted named Andy Clark.
At our first meeting with Andy, we filled him in on our financial needs and business plans. John and I planned to pull out a second mortgage on each of our homes and borrow the additional funds from Andy’s bank.
The additional funds would be secured by our manufacturing plant as well as other equipment. We also asked for receivable financing to cover the lag from the collection of sales and due dates from suppliers.
During our conversation with Andy, he asked us questions to determine how much of a risk as borrowers we were. But beyond that, he was trying to gain a better understanding of our character, knowledge, and track record.
In the end, Andy told us that he would be able to secure financing for the equipment, as well as a credit line for running our business.
He also let us know that we would need to take a second mortgage out on our homes, as we planned.
Though it was a difficult period in history (late ’70s and early 80’s) for lending funds, Andy helped us to get our plans in motion and continued building a strong relationship with us based on trust and accountability. At that time, interest rates were well above 12%!
Weathering a Transition
Unfortunately, as all good things must come to pass, Andy left the lending industry several years later to become a CFO for a large company.
Andy had been a guiding light that helped us through our very rapid, turbulent early years as a business.
But now, it was important that we find somebody else to fill his role. We sought out another bank to handle our continued growth needs.
The people at the bank were okay but did not create the same type of powerful relationship that we had created with our friend Andy.
One morning, we arrived at the bank somewhat early for a scheduled meeting and we were escorted to a conference room with four men. As we sat down, we were informed by our banker that “Jim and his team” would be taking care of us from this point onward.
Our banker left the room and let us get acquainted with Jim and his men. Jim then explained that the bank was “calling our note,” giving us just a few days to pay it off, and even asked for our company credit cards!
Something was not right. Our company was essentially being fired as a customer from the bank. Essentially we would be forced to close our doors and lay off the hundred plus employees we so valued!
Getting the Team Back Together
John and I immediately called our CPA Dennis, who had been with us from day one. Dennis was also a referral from Andy Clark and knew him well.
Dennis was astonished to hear the news. Though our company was highly leveraged, we had been showing consistent, positive trends on our balance sheet and income statements.
“Most bankers in the area would jump at the chance to work with your company!” he said. I half-heartedly replied, “Where is Andy when we need him?”
Little did we know that Dennis had actually remained in touch with Andy.
He sprang up in his seat and said, “Actually, Andy is back in the banking business! He is working with a new bank now, and as a VP in commercial banking. Let me get him on the phone while we’re here.”
John and I were stunned!
Dennis got Andy on the phone, and we explained the situation. Andy agreed to meet us the next morning, reviewed our financial statements, and helped us navigate the process with his new bank.
Andy’s new bank agreed to pay off our old bank, handling all of the details. We now had increased credit lines, and were invited to join him in his office the following morning to sign the papers!
Relationships Can Save You
In a period of just over 24 hours, we went from being successful and focused on our business, to nearly complete failures who were focused on survival, and back to the top of the world!
We were back in business!
This was all thanks to our long-earned relationship with Andy. If not for that, John and I would have been in serious trouble.
All relationships are important, but that goes triple for the relationship that you build with your banker.
What to Look for in a Banker
While Andy was a referred contact from my business partner John, he embodied all of the qualities that we wanted in a banker.
It’s not just that he was able to lend us the funds that we needed, but he was an advocate for our business. He was a friend to us when John and I needed him, and came to understand our character as we came to understand his.
Look for a banker who is experienced, trustworthy, and takes an interest in what you are doing as well as who you are. . Your banker also needs to communicate effectively, and help steer you when corrections are needed.
Those qualities were what made Andy more than just a banker to John and I; they’re the qualities that made him a true friend of our business. Our business expanded, plus grew and grew, and was eventually sold to a Fortune 500 firm after many years of successful operations.