How to prep for a growth meeting with your business banker
Courtesy / Machias Savings
Shawn Leger is a vice president of business banking at Machias Savings Bank.
In the early stages of your business, you’re likely focused on getting things up and running, offering a quality service or product and building your customer base. Over time, thinking about what your business will look like in the future becomes necessary, and your business banker can play a critical role in planning for what comes next.
For many businesses, the need to grow is obvious, but you might need assistance from an experienced lender in determining what comes next and what options are available to you when it’s time to hire additional people, increase volume, or expand into a larger space to accommodate your growth.
Your banker can work with you to determine what that next step looks like and the financial needs that would accompany it.
As you prepare for that meeting, there are a few important steps you should take.
Consider your risk tolerance
Every business owner is taking a risk in starting and growing their business, but it’s important to ask yourself what level of risk you’re comfortable with - and it’s important for your banker to understand as well. Think about where you want to take your company and what the future looks like. What do you envision over the next year, two years, or five years?
In determining your growth strategy, you should assess not only your business risk but also the personal risk you’re willing to take on behalf of your business. Consider which personal items could be used as collateral, such as your home, truck, or equipment. If your banker isn’t able to meet the loan amount you’re requesting, what are you comfortable bringing to the table to bridge the gap to help get closer to lending the amount you need to grow?
Prepare important financial statements
Come prepared with enough background to have a productive meeting with your banker. Make sure you have a personal financial statement that lists your assets and liabilities. You’ll also want to bring a profit and loss and balance sheet for your business. This is particularly important to paint a comprehensive picture of your business and to facilitate a productive conversation with your banker as they go through it.
Bring the right team members to the meeting
What is your level of engagement with your own financials? You might choose to bring your bookkeeper or another team member to the conversation if they’re more involved in the financial side of things than you are.
Think about what other resources are available to you
When it’s time to source additional funding, don’t forget to consider options outside of a loan from your bank. Not only will this provide additional funding for your business, it will allow your bank to see that you’re invested in seeking out solutions to help your business grow.
Depending on your industry, there are programs and agencies that can help business owners bridge financial gaps. Consider looking into organizations like CEI or the Southern Maine Finance Authority. Your banker should be able to make introductions to organizations that might be a good fit for your business.
There are certain instances in which private equity might make sense. In these cases, you may give up a certain percentage of ownership to help your business grow.
A bridge loan offers a short-term option for funding before a more permanent financing option is secured. This can give a business time to sort out any necessary steps to become more “bankable” during the financing process.
Remember that your banker is your partner as you grow and their ultimate goal is determining how to fund your business responsibly and remain on the same page as you throughout the process. The conversation doesn’t stop after you receive funding, but keeps going as your banking partner supports you through the next phases of your business.
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