Building Bridges With Your Banking Relationship

This is the 5th of a 5-part Financial Literacy series where we’ll discuss trending topics within the entrepreneurial space.

For many small businesses within the Caribbean region, building and nurturing long-lasting relationships is a key ingredient for longevity and profitability. The latter is emphasized in my Cash Flow blog: “Cash flow, which is managing the money that goes into and out of a business, is analogous with survival. No matter how good your intentions are as a business, a neglected cash flow can lead to expensive frustrations and potential failure.” Forging these valuable connections is more than simple networking; it opens doors for business acumen and opportunities that could otherwise be overlooked.

Your banking relationship is no different. Historically, banks have operated within a system of hierarchical constraints, tight regulations and technological limitations. But advancements in both computing and telecommunications, and the need for more authentic personalization have paved the way for increased flexibility and streamlined problem solving. As I wrote in my Commingling blog: “Educate yourself. Use your bank as a resource. Assessing your business becomes easier when there is a mutual understanding of what’s expected and where pitfalls can happen.” In this modern age of banking, your business stands to benefit from such open lines of communication.

There are many more services that a small business gains access to as a bank’s client. Among them - a dedicated banker, chequing account and credit card facilities, night safe options and internet banking, to name a few tools and resources. In other words, your banking experience is holistic. It should be tailored to guide consistent and definitive development and growth for your business.

So, how do you achieve such an experience? As with any aspect of running a small business, knowing who you are is an apt first step: “If I asked you to describe your business, the product/service, and its value proposition in one hundred words or less, would you be able to do it? Having a clear vision and understanding of your business’ capabilities creates an initial path for you to follow.”

Embracing proactivity is the second. Understand that your bank, and more specifically your banker, is your business confidante. This crucial partnership is in no way a top-down correspondence. Seeking advice on where to direct business funds or discussing financing options or general brainstorming within a particular industry are all shared endeavors. Creditworthiness, for example, is one major concern for any small business: “Creditworthiness is ultimately a measure of value. Having good business credit positions your company as a reputable client.” For these reasons, your banker becomes a reliable and accountable point of reference.

Your business’ best interests will be the mainstay of a great banker. It’s not just about the sale. They will cultivate honest, valuable, and above all, unambiguous exchanges that take into account your operational priorities and long-term vision. It’s also more than likely that your banker has worked with many different organizations across a variety of industries and disciplines. This wealth of knowledge means they can give insight and make predictions of what to expect within your complex macroeconomic environment.

For you and your small business, making the most of this relationship requires an equal exchange of information, ideas and trust. It’s natural to want to own your venture. As I previously said, entrepreneurs will tell you, “...owning your own business is, in essence, a compilation of many different motivations and emotions. It’s an idea persevered and brought to life, a passion to drive innovation and chance, a want of flexibility and unconventionality, both professionally and personally.”

However, you can’t accomplish everything on your own. Remember, your business’ bankability is transformative: “Understanding that there are both quantitative and qualitative determinants of your bankability is paramount. Think of it as the who, what, when, where, and why of your business.” Lean on your bank’s network and avail yourself of the in-house subject matter experts. You may be loathe to share all the fundamentals of your business with a financial institution. But it can mean the difference between pre-empting a crisis or allocating limited resources to an issue that could’ve been avoided.

The bridges you build for your business are what will define you. Whether it be internal or external stakeholders, many of those relationships can spell your success or failure if managed ineffectively. If you treat your banking relationship with the requisite respect, you will find yourself in an advantageous position to take your business forward.