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What Your Banker Isn't Telling You

Understanding how bankers work with small-business owners will help you make the most of your relationship.
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Let's face it -- the really smart financial guys with Wharton MBAs are crunching numbers for a bank somewhere on Wall Street. Your banker's job, on the other hand, is twofold: to sound an alert if there's any potential turbulence happening in your business and to sell you more stuff. Don't get me wrong -- he's a  good guy,  affable and very social and he's probably been in banking for the past twenty years. But he's really not a financial whiz. When it comes down to it, he's not actually a banker. He's a sales guy who happens to work in the banking industry. This is typical of just about all the bankers who work with small businesses. 

Because you have a line of credit and maybe an equipment loan with the bank, he dutifully calls you once a quarter to check in and see how things are going. He asks for your financials (although he doesn't really read them, this is done by the uncaring robots in the credit department). He chit chats. He comes out to see you once, maybe twice a year and always with someone new from the bank. They're interested in you. They're interested in your family. They want to demonstrate how much they care about your business and your life. And they want to sell you wealth, cash management and personal financial planning services too.

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It's not all golf and lunches for your banker, though. He's under a lot of pressure. He'll spend 80 percent of his time on 20 percent of his clients. Like any salesman, he's got quotas to fill, new loans to push, new services to sell. He's fed financial analysis and market summaries from the credit team on Wall Street. He hands these out to his clients and prays no one asks him any detailed questions about the numbers because deep down, he really doesn't understand them that well. Look, he didn't go to Harvard, okay? 

As a small-business owner, you have to deal with this guy -- particularly if you need financing to buy a building, purchase equipment or acquire new inventory. There are just two things to remember about him:

1. He's not the boss. He's a messenger. He makes no decisions. His card may say Vice President, but that title is as common in banking as bikes are in Mumbai. When your banker is negotiating whether or not you have to provide certified financial statements, it's not really your banker. He doesn't actually care. It's his bosses who care. He didn't get into banking so that he could harass small business owners. He's not proud of his industry's past behavior. He's all about relationships. So have one with him. Don't worry -- you can break that shell that was built around him as a result of countless days of corporate training and get to the human being inside. And once you do, take advantage of the real benefit that he can bring to your business.

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2. His primary benefit to you is not banking. It's consulting. And it's connecting. Share your financials with him. Be open. Disclose everything. Lay it all on the table. He's your banker, not the IRS. If his bank has loaned you money, he's got skin in the game and has every reason to see you succeed. He's  not a financial expert, but he works at a place that happens to employ armies of them. So use them. Ask for them to review your financials. Have them give you feedback. Learn from their education and from the experience they've had with other customers. You don't read financials very often. Bankers do it all the time. Let them in. Let them suggest ways to better manage things.

Of course, these guys have never run a business themselves, never signed a paycheck, never collected a receivable from a customer. But they have hundreds of customers who do. So let them tell you how you compare. And then let them connect you to others who can help you. Bankers are a conduit in the community. They know everyone and love to make connections. Your banker should be happy to introduce you to potential customers and suppliers that he knows. He's thrilled to refer business to his network of CPAs, attorneys and insurance guys because he knows they'll all return the favor some day. Take advantage of these connections.

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