In January, Al Davis and Bill Lawrence of Revitalization Partners were featured in the Sound Financial Bites podcast hosted by Paul Adams, CEO of Sound Financial Group. The episode, entitled “Speaking Bankanese,” teaches listeners the importance of understanding how banks communicate in order to save companies money and optimize businesses.
Revitalization Partners has worked with companies that are thriving and focused on maximizing profits and future potential sales as well as companies in distress who have toxic banking relationships and need help creating value in their business. In both circumstances, Al and Bill stress that it is of utmost importance for business owners to comprehend the way banks speak and why. If a business owner can master this, they can cultivate strong banking relationships and create stable, successful companies. Below are some of the main takeaway points from the podcast.
- Beware Predatory Lending. Al and Bill first discuss the danger of predatory lending, a practice used by lenders to tempt business owners with a loan that carries hidden costs, including high fees and a high interest rate. Receiving a large amount of “easy money” may sound enticing, but in reality, the amount of money business owners end up paying in predatory lending situations is much greater than the amount they originally received. Whether they talk it over with their attorney or accountant, business owners should ask plenty of questions before signing because these types of loans are nearly impossible to get out of.
- Create a Compelling Narrative. Bill and Al also discuss the strategy of taking your business to market. To do this, it’s crucial for business owners to be able to present their company to bankers in a way that they can understand, in a language that urges bankers to support the company’s goals. Business owners tend to forget they need more than numbers; they need a compelling story that conveys the kind of financing and assistance the business needs. Whether the end goal is expansion or long-term lending, each goal should have a narrative behind it.
- Build Lasting Relationships. Bill and Al highly suggest that business owners keep their options open by talking to multiple banks about their company and its goals. Business owners often forget that bankers are also salespeople and are always looking for a good deal. As business owners develop relationships with more than one bank, they’ve essentially created a competition among potential banks, which ensures a better deal for the business owner. It’s also helpful to know that if one banking relationship doesn’t seem to be working out down the road, business owners can lean on previous relationships to find a better fit.
- Maintain a Good Work-Life Balance. Lastly, Al and Bill recommend that business owners run their company as if they were shareholder, rather than an owner, so as to not allow the company to completely take over their lives. It’s important for owners to not be completely connected and ruled by their company. A business owner who is willing to let their company go when the time is right is going to live a much happier life than one who is not. Bill and Al remind business owners to create an identity separate from their business so they can continue to make smart company decisions in collaborating with banks.
To learn more about “Bankanese,” listen to the full podcast episode here.
Revitalization Partners is a Northwest business advisory and restructuring management firm with a demonstrated track record of achieving the best possible outcomes for our clients. They specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations.
At Juniper Capital we are committed to sharing business advice that helps you achieve success. We offer hard money loans in Idaho, Oregon and Washington and private money lending across the Pacific Northwest.