Many business owners, in small and large firms, don’t really focus on their balance sheet.
You may be surprised to hear this, but finance is about much more than money.
Security, serviceability, interest rates, covenants, margins, fees, repayments – yes, these are all important, but there is something even more important in a successful business–financier relationship and that is strong communication.
The following cheat sheet offers some of my tips for ensuring the lines of communication are always open between your business and your bank or financier.
A banker is not just a simple supplier to your business – they are a partner in your business.
In order to advance funds to your business, the bank must first assess a range of risks associated with your business. Based on that assessment, they then take a risk in advancing you dollars.
Yes, they take security for that risk, which usually ranks before your equity in the business, but ultimately their success in lending money is inextricably linked to your success as a business.
So treating them as anything other than a business partner is not doing the opportunity justice.
A bank, financier or equity investor focuses on three S’s when considering their appetite for your business. They are:
Our cheat sheet can help you understand and manage these factors, to help create a strong and positive relationship with your bank or financier.