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Build a strong banking relationship.

A healthy banking relationship is an essential building block for a successful business and that's why entrepreneurs have to know how to nurture strong ties with financial institutions.

Whether a company is seeking first-time financing or is an established client, the key to creating a strong, trusting banking relationship is communication.

"The goal is to create an atmosphere of open communication between an entrepreneur and the bank," said Andre Bourdeau, executive vice president, Financial Services and Consulting Group at the Business Development Bank of Canada (BDC).

"All entrepreneurs have ambitions. They want to seize business opportunities and grow their companies. So it's important to establish a good reputation with the bank as a entrepreneur and a good manager."

A bank is in the business of lending money, but it's also focused on managing the risk it's assuming in financing a small and medium-sized business. That means the banker will analyze the merits of a company's product or service, its financial strength and the experience and expertise of management.

The key tool in providing this information is a detailed business plan that lays out financial, market and operational information. Once the bank has provided financing to a company, it will want periodic updates on the firm's financial status, projects and goals.

Establishing a personal rapport and a good reputation with bankers can be an important--if hard to measure--factor when it comes time to ask for increased financing, improved terms or a reduction in service charges.

Bourdeau recommends a company try to establish relationships with at least two people in a branch given the high rate of turnover in many banking positions. And he cautions companies not to be too quick to change banks to save a few basis points of interest.

For more information on BDC and their services, call 1-877-232-2269.
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Title Annotation:Expert Advice
Publication:Wind Speaker
Date:Dec 1, 2005
Words:300
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