How to build a relationship with your banker

How to build a relationship with your banker

Hermione Malone- Go.Be. Executive director
Hermione Malone,
Executive Director, Go.Be.
Ann Duplessis- Go.Be. Interview
Ann Duplessis,
Senior VP Retail Banking,
Liberty Bank

There might be no bit of advice given to business owners more often and understood less than the importance of establishing a relationship with your banker. Given this advice, one entrepreneur asked in response, What does that mean? Am I stopping by the branch with donuts every week to say hi?

“In a post-COVID world, it is a bit more difficult to go into the branch and bring donuts because they’re not going to let you in,” laughed Ann Duplessis, Senior Vice President at Liberty Bank and Trust Company. But there really isn’t much mystery to building a banking relationship. In fact, there are really two key steps.

Step 1

“Choose a bank that you know can handle your financial needs at the place you are now and maybe beyond. Truly establish something meaningful, not just a savings account. [An] operating account, regular checking account is meaningful to us,” said Duplessis.

That’s the first step.

Step 2

Anyone who opens a checking account or business banking account has someone assigned to the account, whether you know it or not. If you don’t know who your banking officer is, just call and ask. Then actually pick up the phone and call them to introduce yourself. That’s the second step.

“It’s like networking 101: Hi this is Ann Duplessis. You don’t know me but is now a good time to talk? I’ve been banking with you for X years and I’d like to set up some time to talk with you about a potential loan request.”

It’s a critical two-way street Duplessis said.

Myth Busting

Myth: “We [banks] get a whole lot of value when you deposit money.”

Fact: “Banks do want to lend money. Lending is how we pay bills.”

“People that are not in the financial services world think this is going to be so hard. Banks do want to lend money. Lending is how we pay our bills. The myth is that we get a whole lot of value when you deposit money. But, we have to pay you for those dollars. The reason why your deposits are important is because I can leverage those deposits and lend out. When I’m able to lend money out, you pay me. That’s revenue and we can pay the bills.”

Why Are Banking Relationships Important?

Why are small business owners so frequently encouraged to build relationships with their banker? Because, says Duplessis, it is critical to business growth – and the only way your bank can effectively partner with you.

“We don’t know your business, we know numbers,” she said. But, oftentimes numbers don’t tell the whole truth as it relates to an ability to manage a company or manage through some potential volatility that could happen through your business life cycle.

“The first way we kind of minimize that real or perceived risk is we learn more about your company and the industry and how your company works. Instead of us learning us through Googling and data, we really want to hear with you. When I can sit with someone and they can tell me with passion about that company and that resonates with me, then that gives me some comfort. It starts to minimize my concern that this person doesn’t know what they’re doing and that’s risky,” Duplessis said.

Biggest Mistakes To Avoid

Mistake #1- Not Knowing Your Numbers

There are mistakes Duplessis has seen business owners make in building successful relationships with their bankers. No surprise, they all boil down to the numbers. Both the owners knowledge of their business financials and that those financials are up to date.

“I can’t tell you how many times we’ve had great conversations with a business owner, thought really highly of the idea, and then I ask for the numbers or pro forma for last 2 or 3 years. Well, when I start asking questions, I hear, “I don’t know. I’m not sure, I have to ask my accountant”. At that point, your financial statements should absolutely be your bible,” Duplessis said. “If you don’t know what your financial statement says, you’ve killed yourself.”

“If you don’t know what your financial statement says, you’ve killed yourself.”

Know your numbers, even if you have to practice with your accountant. Know the trends in your business. You need to be able to tell your banker what happened. “Even if it’s a tight deal, that tells me you know what’s happening,” Duplessis said. And equally important to not sinking your banking relationship? Timely tax filings. “We have to have the tax returns because we have to be able to validate the information. Bankers don’t look kindly on businesses that don’t have their business together. We understand extensions, but if you’re extending a return for 3 years, something’s wrong,” Duplessis said.

Mistake #2- Not Keeping In Touch

And even when a business owner isn’t looking for a loan, keeping in touch can pay off. If you’re launching a new product or are in the newspaper or anything that’s been published, send it to your banker as an FYI.

“Sometimes that’s a wake-up call for me and will prompt me to give them a call,” Duplessis said. “That is a great way to keep your lender engaged. We’ll remember this because not many business owners do this. And the ones that do stick out.”

Understanding The Limitations Of Your Banking Relationship

Duplessis reminds small business owners to clearly understand their capacity as it relates to growth and what it means when they’re borrowing money for that growth. “A lot of that is going to come from having a source of consultation like Good Work Network. That is important because you’re in business to have it be sustainable. And that sometimes means getting advice from a third party because they’re not close to it,” she said. In the old days, bankers had the time to sit down and talk to customers and to counsel them. “We just don’t have the time to do that anymore. In many cases, not all, what you find is because of technology and the way banking has changed, you have more sales people who are more business development people. Much of the stuff we used to do personally is done by a computer or underwriting team. That’s why if there is a resource that can provide technical assistance that can help you evaluate your strategy to help you answer some of those questions that the bankers have, take advantage of it.”

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