With the recent wave of business closings and filings for PPP the question arises, How Close are you with your banker? Mark Cuban, owner of the Dallas Mavericks and star of cables “Shark Tank”, made an amazing observation. “Most large entities have access to funds that the small business owner doesn’t. Cuban then rattled off at least 7 different techniques large businesses could access to raise capital.
For the small businessperson, our first line of capital is our local bank or credit union. These frontline institutions have been used for generations of small business owners on the way up. Unfortunately, only a handful of entrepreneurs utilize banks and lending institutions to their full capacity. Within the black community the numbers are even smaller.
Years of rejection and our lack of moving up the economic ladder of success have made an indelible mark in the psyche of black small business owners. Ironically, not seeking the advice and familiarity of a lending institution only exacerbates an already disproportional number of black failure rates and lack to access to capital for black business owners.
The Black Business Chamber is dedicated to helping entrepreneurs of color break through this financial divide. We must change our habits, beliefs, and actions if we ever want to see a change in our culture and community. These first steps will be tough, but they are critical.
Our bankers have a vested interest in our success. Without the success of small business banks cannot succeed. They count on small business owners to take out loans, purchase equipment, buy buildings and then pay back those loans. It is in their best interest to make sure you continue to be a viable entity. The sooner we get that deep into our spirits, the easier it is to open to them so they might be able to help us succeed.
The second thing we must understand is there are tons of programs, interests, and ways of becoming financially literate. One size does not fit all. Neither does one bank product fit every situation. We must educate ourselves in banking, finance, and financial vehicles so that we become educated consumers.
As we mentioned before, Mark Cuban rattled off at least 7 different kinds of financial strategies large businesses could use in order to raise capital for their ventures. I’m almost sure he didn’t have note cards in front of him. He knew these principles from heart. He thought like a businessperson. We must do the same. We must become students of finance and business.
Here are some questions you should ask yourself to determine your level of closeness with your financial institution. To give you an analogy, in marriage there are phases. The courtship, marriage, honeymoon and starting a family.
Before you get married you engage in the courtship. During this courtship couples spend an inordinate amount of time together. They spend hours on the phone. There isn’t anything about your betrothed that is insignificant. You hang on every word your potential future mate makes.
Based upon all the information you receive during this courtship you make your decision. No one in their right minds would consider marrying someone without deeply knowing if this were the right person for us. Banking and Finance in your business must be the same thing.
Based on your answers you’ll be able to determine if you are close or are you strangers. Don’t let this discourage you from starting over and getting to know your banker. You may be married to your business but the relationship with your banker isn’t an all or nothing proposition. You can start off right where you are. But you must start.
Give yourself a point for ever answer. At the end total up your answers to give you a final score.
When was the last time you spoke? (In weeks) 1 2 3 4 5
Do you have your Financial Institution on Speed Dial? Yes 1 No 2
Does Your Lender Have Your Personal Phone Number? Yes 1 No 2
Do You have a Business Line of Credit? Yes 1 No 2
Do You have a Business Credit Card? Yes 1 No 2
Have You ever Borrowed Money from Your Bank? Yes 1 No 2
What is your Credit Score? Excellent 1 Good 2 Fair 3 Poor 4 DK 5
8-10- Watch your step
11-15- Borderline Accident waiting to happen
16-20- Time to reassess your priorities
As entrepreneurs we all must do more to become professionals, competent at what we do and continually striving to be better. Financial literacy and becoming professional businesspeople must be at the top of our minds. Creating a close relationship with our bankers will pay dividends in time of need. This recent COVID-19 pandemic is proof of that.