The label business has a long-standing history of solid growth, and is generally looked favorably upon by the investment community. Commercial bankers like the stability of the industry, and are usually happy to lend money to entrepreneurs in our industry.
But as is the case in all businesses, you may experience tough times, and rocky cash flow can put you at odds with your banker. I speak to bankers on a regular basis, and many wish their clients had a better understanding of the financial side of the business.
Conversely, you probably wish your banker understood the nature of your business, and had a better grasp of the challenges you deal with on a daily basis.
To help you both improve the relationship, here are a few tips:
1. Strive for a win-win mindset. Too often, we pit ourselves in an I-win, You-lose scenario. It’s easy to think that your banker is just in it for the money, and couldn’t care less about you.
The simple truth, however, is that your banker does care about you (at least, most do). It’s just that they’re tied to the simple laws of economics that you are. They do want to win. And so do you. So think about solutions where both of you can come out on top.
2. Expose your finances to your banker. Again, let me refer to the win-win situation. Many owners hide their financials from their bankers, afraid that if they show too much, the bank will downgrade their loan if they smell trouble.
In truth, it’s far more profitable for a banker to help you regain your footing and get profitable. These are financial experts, folks, and they can probably help you in ways you never realized. So trust your banker, and show them your financials. The results may be surprising.
3. Be proactive. If you sense trouble on the horizon, take action and get in touch with your banker. Don’t wait until you’re missing payments or your deposits have dwindled. That might be too late – the situation might be out of the banker’s hands from a legal perspective.
4. Educate your banker. Let’s be honest: Bankers are great on financials, but may not understand the complexities of your business. So take it upon yourself to meet with him or her often – generally quarterly or semi-annually, and really explain some of your qualitative challenges. If they get a sense of what you’re facing, they may also be able to match a quantitative solution to your qualitative challenges. Collaboration can yield some surprising results.
Note the one common theme in all of my tips: Communication. Open the lines of communication with your banker, and good things will result.