Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
1, Communicate honestly with your banker. Don’t hide or skew information because it will all come out in underwriting. They should be honest with you in return.
2, Find a banker you can brainstorm with and bounce ideas around with. Make sure they put relationships first.
3, Let your banker be honest with you about any challenges you may have in getting your deal done. That honesty is part of the relationship you should be establishing with your banker.
4, Think twice about using another bank due to a slightly lower rate. Your relationship with your banker is supposed to help you through difficult times because they know your business. Loyalty is a two-way street.
If the last couple of years has taught us anything, it’s that strong relationships are key to growing a successful business. Unfortunately, many small businesses found out the hard way that they didn’t have as strong of a relationship as they thought with their bank when it came time for help and accessing Payroll Protection Program (PPP) loans from the Small Business Administration. Many have since moved their businesses to local community banks. If you’re in the process of evaluating your business banking relationships, ask yourself if you have these five things in your banking relationship.
Every banking relationship needs to start with honest communication. Own your situation and don’t hide anything or skew numbers because everything comes out anyway in the underwriting process. It’s better to be up front about the state of your business, opportunities, weaknesses and your financial position. Then, your banker can help you navigate next steps on your goals instead of wasting time in the process or scrambling to come up with a solution.
You’ll have a much better experience if you own your situation and put all your cards on the table up front. Vice versa, your banker should be honest with you from the start. If they need something from you, if it’s a long shot on getting a loan closed, what the obstacles could be going into a relationship — they should be setting realistic expectations so there are no surprises.
Early this year one of our customers said one of the things he appreciated the most about our relationship is that he could call his banker up and bounce ideas off him — “Hey, I’m thinking about doing this, how would it impact that?” But he went on to say the best part is he knows he can brainstorm without his banker getting worried and having it negatively impact his banking relationship.
He’s had that happen in the past and appreciates having a partner that understands he’s an entrepreneur, that he’s thinking about an idea and he’s looking for feedback on the pros and cons. That is exactly what a community bank should do. On the flip side, bankers should be able to be transparent on what is happening at their banks without the fear a customer will leave if they share some of the challenges they may face on getting a deal done.
“In banking, it’s about the long-term relationship, not the short-term gain, that helps you build your business.”
Sure, you might be able to get a better rate somewhere else but over time does that shopping around really pay off? Being with a bank for the long-term should set you up for success during the hard times because they know you and can take more of a chance to support you when times are tough. Do the right thing by being loyal and expect that your bank will be loyal too. Loyalty is a two-way street. Sometimes you have to stick it out too when you could go somewhere else because they aren’t able to meet a special rate. In banking, it’s about the long-term relationship, not the short-term gain, that helps you build your business.
As I said, banking relationships should be long-term, so you need to like your banker. There are plenty of great bankers in Minnesota, so if you’re with one that is really good, but you cringe when you have to meet, shop around. Everyone has different styles and personalities and that’s OK. Make sure you find someone who earns your relationship not just with knowledge but also with mutual rapport. Find a good match so you enjoy meeting with your banker and feel comfortable asking questions and talking business strategy. Talking about financials is stressful enough; do it with someone you like.
You should be meeting with your banker more than you think. Have regular check-ins and keep them in the loop on what is happening in your business. It’s better to have them up to speed than to have to spend time catching them up when an opportunity arises and you need to move quickly. And vice versa, they should want to be meeting with you a couple of times a year, not just at an annual review. Take some time and get out of the office to have some great conversations. Bankers generally have a network of people and can often help you solve problems beyond banking; you don’t always have to be talking just about money. Build something special together by meeting frequently and growing your partnership.
Beyond the relationship with your banker, make sure your bank also offers all the services you need and are flexible in tailoring those solutions to support how your business operates. These services should also make it easy to “take your bank anywhere,” accessing products and services that you need for functionality and ease within your business while on the go but still having access to your banker whenever you have a question. That’s a key difference in building a relationship with a community bank. They understand your business, your specific market, and they have the flexibility to work with you. You’re not put in a box; you don’t have to meet exact requirements to get access to funds to grow your business.
We’re lucky to have several great community banks across Minnesota. Find the one that is the right fit for you and the long-term success of your business.
