Banks, Businesses, and the Business of Banking

Segueway to Success

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SeguewayBy: Brent Hamachek and Tom Kuchan

Our “Segueway to Success” show, talking about our blog, airs each Wednesday at 15:00 CST.  Find today’s show and the archives on our web site:  www.seguewaysolutions.com/Articles-and-Events.html

Over the past 12 years our company has worked with clients in over 30 different industries to help them successfully transition from one stage of operation to another.  While each industry has its own unique attributes, business is business and most of the situations we encounter share common threads regardless of industry or size.  Perhaps the most common is the constant friction and communication gap found between the business owner and their commercial banker.

We I started in the commercial banking industry over 20 years ago.  While much has changed in that time, nothing has really changed at all when it comes to business and banks talking past each other and with both being frustrated by the other’s inability to “get it” when it comes to understanding and resolving a particular business matter.

There is a very simple, fundamental, reason why bankers and business people seemingly look at the same set of circumstances and draw very different conclusions.  The reason is found in their differing perspectives and what is most important to them.  It’s about results vs. process.

Business people, especially in the privately-held world, are primarily concerned about results.  There is a thin line between success and failure and the business owner needs to make certain that they get results in order to survive.  They’d like to follow specific processes, they’d like to do things by the book but when it comes time to make decisions they will almost always opt for getting the best result regardless of how it jibes with the policy and procedure manual.

Conversely, bankers want to get results, too.  They know they have to make loans and gather deposits to fund them in order for the bank to succeed long-term.  On the other hand, in the short term the security of every banker’s job lies in how well they adhere to the “Loan Policy”, the “Asset Liability Policy” or the “Compliance Manual”.  In an industry so heavily regulated, coloring outside the lines carries a stiff sentence.  Following the process is paramount with good results a hoped-for byproduct.

So, if the business person wants to be successful in dealing with their banker they need to recognize and accept this reality.  It hasn’t changed since we started our careers and it won’t change before we finish. So here are five tips and five questions for business people to keep in mind and utilize when dealing with bankers:

Remember:

Entrepreneurs operate under risk-reward theory.  Banks operate under risk-loss theory.

Entrepreneurs look forward as extensively as they can before making a critical decision.

Bankers look backward as extensively as they can before making a critical decision.

A key to having a successful banking relationship is to avoid having your name show up on reports (past due, overdraft, public-record, missing documentation, etc).

Bankers provide loans…NOT capital!  Don’t use the words interchangeably.  If your company flourishes, you get rich.  They get Prime plus one percent.

The most powerful person in a commercial bank tends to be the chief credit officer and they tend not to meet customers.  If you’re a borrower, gaining access to them can be a coup and a key at the same time.

Ask:

What is your authority and how is authority staged beyond your level?

Who are your bosses and how do I meet them?

Have you ever worked outside of banking and if so what did you do?

What materials do I need to get you initially and periodically to keep my name off the bank’s radar screen?

Once I become a customer, who will I be dealing with on a daily basis?  How many people?  Where are they located?  What are their jobs?

There is, of course, a great deal more that goes into building an optimal business-bank relationship.  These suggestions are offered as a starting point. Understanding your banker can be the difference in success or failure when financing your business.

Join us as we talk to one of our favorite bankers, Don Leighton, Senior Vice President Commercial Banking Division Head at Barrington Bank & Trust Company, N.A. about business, banking, and the business of banking.

 

Segueway Solutions – http://www.seguewaysolutions.com/

+1 (847) 778-9474

Brent E. Hamachek spent the first 15 years of his professional life in banking, working in 6 different sectors including audit, credit and 9 years as a commercial banker.

After commercial banking, Brent formed Segueway Solutions in 2000 in order to assist privately held companies in transition. To date, he has worked in 40 different industries and has served in the capacity of CEO, CFO & EVP Sales for clients. Brent is a sought after consultant, speaker and trainer offering national and foreign expertise to clients.

brent@SeguewaySolutions.com

Tom Kuchan is a proven leader in global business expansion and effectiveness, risk management, finance and operations with experience in both Fortune 50 and entrepreneurial environments. He has a proven record of defining strategic objectives, translating them into operational tasks, and leading their implementation in diverse geographies and cultures across the globe.

Tom has lived overseas for over twenty years, including Switzerland, Germany and the United Arab Emirates, and has worked extensively across Europe, Latin America, Africa, the Middle East, and Asia.

tom@SeguewaySolutions.com

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