Your banker is your friend.
But a lot of entrepreneurs don’t think that. They think the bank is their enemy, and they need to bribe their enemy or do something to gain their favor so they’ll work for them.
Recently, I was teaching an audience of small and mid-sized business owners on this topic and I told them – not so much. Why? Because COVID has changed the way small and mid-sized companies look at banking relationships.
Case in point, the first round of PPP. We all saw the news last year that banks put preferential treatment on PPP loan applications from large companies (be-cause they’re likely getting paid a percentage of the loan value). So if they have to put in an hour of processing time for a $10M loan, it’s going to be way more profitable than putting in the same hour of processing time or more for a smaller business asking for $50K or $100K.
A lot of small and mid-sized companies looked at that and went, wait! Wells Fargo, Chase, Bank of America, PNC – what the hell? Are you ignoring me? I’m your customer, and you’re not showing me any love! You’re prioritizing the big guys and leaving the small guys out to dry.
I get it. And I offer you the same challenge that I offered to the folks at the event: reevaluate your relationship with your bank and make it work for you.
If it’s not working for you, especially if you have a big bank, you need to change because it’s all about the relationship.
Changing the Way You Think About Your Banking Relationship
You have loans, savings, checking, and hopefully a line of credit — but it’s when we get in a pinch and really need somebody to be on our side that we need our bank.
My friend, global negation specialist Christine McKay, taught me that in negotiating there’s really no win-win because you can’t negotiate a relationship. In a relationship, you don’t both win, you come out with a stronger relationship. That’s what you should be working on with your banker.
To do that, I think small and mid-sized companies need to play with the institutions that are going to support them the best. I challenge people to look at their local banks and smaller regional banks for that support. Those banks have a vested interest in helping you as a business owner and in strengthening your community that a big national bank never will, because they live and work where you live and work. That vested interest will hopefully motivate them to support you and your dream because they can fund your dream. They have the re-sources every business needs access to.
Utilizing Funding From Banks
I’ve shared about how banking is a relationship, so you don’t want to damage or strain the relationship by doing things that would hurt the other party. Be disciplined about utilizing funding from banks – don’t pay late, spend frivolously, skip payments, or disparage the bank. Basically: don’t piss the bank’s money away!
I like to call this money OPM — other people’s money. It’s yours to use for a period of time, but it’s important to be a good custodians and fiduciaries of that money so you can use it productively to grow your business, expand your re-sources, or fund a launch. When you use the bank’s money to grow your business, sales, and profits, you have the ability to pay that money back to the bank. That’s being responsible.
Show Your Banker Some Love
My final suggestion to you: show your banker some love! Go in and actually talk to them. Initiate the connection yourself by proactively reaching out. If your bank isn’t working for you, find a small lender in your area and cultivate a relationship with them that will benefit not only you and them but also your community.
If you’re struggling with your banking relationship or have one that’s not working for you, I promise there is someone else out there that wants to do business with you. And if you need help utilizing your funds responsibly and developing a supportive banking relationship, reach out to us at TurboExecs!