For various reasons, a business owner may decide to approach a new financial institution. How do you establish a good relationship with a new financial institution, and maintain it? Lipton LLP has helped many clients do this. Having the right approach makes a big difference.
The thing to remember when you are looking for a new bank is that you are going in as a salesperson. You are going to sell the ability of you and your company to be successful, to somebody who is going to lend you money. That means being knowledgeable about your products and services, and having information to back you up.
Clients often ask Lipton professionals for advice when they are seeking a new financial institution. Our professionals frequently introduce clients to bankers, or accompany clients on their initial and subsequent visits to the financial institutions they have chosen.
Lipton LLP has long-established relationships with many financial institutions, and we know what they look for.
1. Show me the money!
First of all, they want to see your financial statements – including future-oriented financial statements, with projected cash flows, because a potential lender wants you to look to the future. You need to show the prospective banker that you are not just mired in the day-to-day running of the business, but that you also have a plan for where you are going to go.
2. What’s on the horizon?
Stagnation is the death knell of any business. The bank wants to see that you have looked ahead. Is your source of supply going to be maintained? Is your customer base going to change, is your product going to be outdated? You have to be dynamic, ready for change.
3. What’s the game plan?
The best source of comfort to a prospective lender is a business plan, containing financial information as well as a narrative about the enterprise. This should include a presentation on the history of the company and its owners, and a description of the business. The plan should examine the evolution of the market that the business is in, and analyze its suppliers, customers and competitors. Lipton works with clients to prepare such plans as the basis for starting and maintaining good banking relationships.
What keeps the relationships going well?
The best way to manage an existing relationship with a bank is to eliminate surprises, and communicate continually. Keep your financial institution informed when you are making major decisions. Alert your lender to any potential problems well in advance. Deliver interim financial information that will be consistent with year-end results. Oh, and invite your banker for a visit to your business site, so that he or she will see your business as more than numbers on a page.
Mel is the managing partner of the firm as well as the lead engagement partner for a number of clients. He has over 30 years experience specializing in assurance and advisory services, financing, tax, estate and strategic planning for corporations, partnerships, and not-for-profit organizations. He constantly seeks to add value with his hands-on approach in such areas as reporting requirements, internal controls, tax matters, succession planning, organizational and strategic planning issues. Mel has completed the C.I.C.A. In-Depth Tax Course, the Alternative Dispute Resolution Course sponsored by the Faculty of Law – University of Windsor, and the Directors Education Program sponsored by the ICD and the Rotman School of Management, University of Toronto.