When Will They Ever Be Happy?

This is a question that a new Client, referring to his bank, asked me recently. My first thought was: Beautiful Dreamer… Then, I thought the better of it and shared the following ideas with him, simply because I felt he deserved a more solid answer.

You see, this new Client had not consistently provided his banker with on time reports over the prior two years. He felt he was “too busy…” Doing what, I thought?

He had no CPA Prepared Financial Statements, and he never provided them with a budget since he felt “that was their job.” As a result, he really didn’t focus on regular Cash Flow Analysis or measuring Inventories. It was simply a state of chaos!

If this describes you (or someone you know…) consider the following:

All Bankers must “serve two masters.” They have a difficult job. They are trying to provide you with what you need as a borrower, and they need to protect the assets of the bank (by not making a bad loan). It really is a tough role. Not impossible, just challenging. I know because I was a loan officer for two major banks. It was a role that I reconsidered after being held at gunpoint in a bank robbery…

In any event, it’s not our job to make your banker’s life and loan approvals more difficult! On the contrary, think about ways that we can make their lives easier:

• Talk to them about what your objectives are for your business & life. They will likely be very interested to hear this information.
• Provide them with a clear Annual Budget at the start of each year. This helps you both think about areas where you may need to tighten some details.
• Do regular Cash Flow Analysis of your results vs. the budget in my prior point. Even if it isn’t “All Roses,” it certainly is better to know sooner. If a problem exists, you can start to fix it before it gets beyond repair!
• Have regular CPA Prepared Financial Statements. These are crucial to bankers.
• Complete at least Quarterly Herd & Feed Inventories to maintain your Loan to Value % at a reasonable level.
• Hold Management Team Meetings with your Key Advisors.
• Finally, meet with your Banker 1-2X per year. They will love touring your operation to see your progress and will also appreciate a meeting with you at their office occasionally.

So, to answer the question above, if you are doing these tasks, regardless of what type of business you are in, your Banker will be happy, and you’ll be the ultimate beneficiary of these sound efforts via an easier loan approval process! I’d be remiss if I failed to state that every business needs these items. If I can assist you with them, please let me know.

I will leave you with one final thought: Have you covered all of these items in your operation? What is your Plan going forward?

Let’s take your business to the Next Level!