I recently asked a friend whether his local printing business was experiencing any restriction of credit. His response:
“If I need money I just call up my banker. We meet and I get what I need.”
Admittedly, Gary has owned this business for over 35 years. I know, I have been a customer that long! And my guess is that Gary is frugal, conservative and has acquired significant net worth over time. He may even be one of those business owners described in the book, The Millionaire Next Door. You know…you’d never guess it by looking at him. (No offense, Gary!)
That said, it got me to thinking. If you are in business but you only talk to your lender when you need money, you may be surprised at your next conversation. Here is why:
- Business lending and lending to business owners will be harder in the recovery than it was in the recession.
- For many businesses, your financial performance in the recession does not reflect your potential in the recovery.
- Lenders need more than “I have known Gary for years and he and his business have always done well” to make the case for your next loan.
- If your financial institution is in a challenged state the ability to lend to your business may be impacted more by their financial condition than by yours.
So call today and invite your lender to your business before the end of January. In fact, invite your lender and his/her boss. Prepare for this meeting by making a list of:
- everything that went well in 2008 and 2009…and why
- what did not work and the steps you took to fix it
- your customers or customer base, the strength of each and what you are doing to continue to earn their business
- your key employees (management and operations), their strengths and what you are doing to keep them
- the elements of your strategic plan to recover if needed and capitalize on the opportunities in the recovery
Then review all of your lists. Be prepared to share your pains and your plans. Make sure your lender really understands your business. As you talk about what you are intending, listen to your lender. Lenders see inside many businesses and may have an idea that you had not thought of. They cannot advise you but they can give you avenues to consider.
You will impress your lender by your proactive invitation. If you don’t need to borrow money yet, it will be even more impressive. Of course, by the time you are done, they’ll be hoping you need to borrow soon!