Any good relationship starts with finding the right partner. This is especially true when business executives seek a beneficial relationship with a bank. The bank is providing facilities and finance, so they are effectively in partnership with your business. To help establish and grow that relationship, executives need to know what and what not to say banker in order to maximize the business relationship.
Building a solid banking relationship takes time and hard work on the part of the banker and client. However, maximizing that relationship is mutually beneficial. Demonstrate to your banker that you support the bank and expect to receive the same support in return. Remember: a mutually beneficial banking relationship hinges on honesty, integrity, and open, candid discussions.
Treat your banker like any other valuable client or strategic vendor. The best banking relationships are based on pro-active communication. By establishing a pattern of regular communication and not just when you need something, you build a relationship. It tells the banker that you’re more than just a fair-weather client. You’ll save time preparing for your annual loan review because you won’t have to re-educate your banker on your business. Plus, if your banker moves on or moves up, your close relationship will help you learn this sooner and connect you to your new account manager.
Relationships, whether personal or business, are always challenging. But there are certain things an entrepreneur can do to help create a climate that is conducive to fostering a productive, long-lasting relationship with a banker.
Communication – or lack of – is probably the greatest area of weakness between entrepreneurs and bankers. When the news is bad, owners tend to shut down lines of communication, thinking the banker will be upset. While the banker may understandably be concerned, his reaction will be far less negative than if he is not told what is going on. Nothing upsets a banker more than surprises.
Until the banker and entrepreneur speak on the same wavelength, and understand each other’s vantage point, a good relationship can’t exist.
If banker relationships can be so beneficial, why do so many business owners suffer through poor ones, or cultivate none at all? Often, the problem is that entrepreneurs don’t understand the restraints and needs of bankers. Bankers, by law and temperament, are not investors. Risk and reward typically have a direct relationship — the higher the risk, the higher the reward. Investors decide to put money into an enterprise without guarantees they will get their money back, let alone a return, because the rewards can be large if the business succeeds. However, lenders such as banks don’t have the same lucrative potential. Even if the money lent is the catalyst for putting a firm on the fast track to success, the most the banker can expect to get back is the capital (plus interest) in timely payments. That is one reason why bankers and entrepreneurs so often clash. The entrepreneur asks the banker to take investor risk, while the banker’s position is that he can only take credit risk because of the limited potential payoff.
To maintain a good relationship with a banker, you must demonstrate professionalism and competence.