Investing in Your Banking Relationship

November 12, 2019 | Gary Furr Expert Tips

One of the major mistakes I see business owners make is neglecting their relationship with their banker. Your banker can play an important role in your business success, and time spent developing and maintaining that relationship is an excellent investment.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Your banker is a critical part of your business and that’s why you want to work on developing a relationship with your banker before there is a need. Your banker is interested in having a long-term relationship with you as a business owner, not much different than you are looking for with your customers.

Banking is about more than just rates. Yes, you may save a quarter or half basis point at a big bank, but the bankers there come and go. You want a banker who is there for the long-term and understands your community and your business.

Business owners sometimes have an adversarial mindset toward their relationship with their banker. That’s a mistake. Bankers are interested in your success. They want you to be successful because successful businesses reduce the risk to the bank. All bankers want the same thing, regardless of their size. They want to know that you have a solid business strategy, good management, and a clear direction as to where the business is going.

For more reasons to prioritize your relationship with your banker and ideas to do just that, read Chapter 11 of my book.

With over 40 years of C-level business experience and an MBA in organizational development, I am uniquely qualified to help you achieve success in your business. Give me a call to set up a free consultation: 503-312-3145.

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The Effects of a Tax Avoidance Strategy

November 19, 2019 | Gary Furr Expert Tips

Many business owners hate to pay the tax man, and so they employ a strategy of tax avoidance. Learn about the effects of such a strategy, and whether it makes sense for your business.

When you are thinking about avoiding taxes, you are not thinking about creating wealth. It’s a mindset that can be damaging to your business. As a business owner, you should be more focused on maximizing after-tax revenue to build wealth rather than focusing on tax avoidance.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Focusing on tax avoidance is a path that will come back to bite you the business owner when you either need to borrow money or sell your business. Tax avoidance is a short-term strategy with a long-term negative effect on your business and your wealth.

Tax avoidance nearly always results in difficulty borrowing money from the bank or other lending source. The problem is that bankers do not lend from the P&L or income statement; they lend from the balance sheet. When you minimize taxes, you are also minimizing your borrowing power.

It’s a strategy that also complicates selling your business. Tax avoidance means your business will not be worth as much when you go to sell because you haven’t maximized after-tax revenue.

To read more about the negative effects of tax avoidance and the benefits of wealth creation, see Chapter 12 of my book.

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Effective and Cost-Efficient Business Growth

November 26, 2019 | Gary Furr Expert Tips

When business owners think of business growth, they often think first of new customers. New customers are great, and we all want them, but there are often more effective—and less expensive ways—to grow your business. Learn the five ways to grow your business to help achieve business success.

Here are five ways to grow your business: keep the customers you have, sell more to the customers you have, sell more often to the customers you have, get new customers, and get rid of the problem, or low-value, customers.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

The best way to grow your business is to keep the customers you have. The cost of new customer acquisition cost can be high; strengthening your relationships with your current customers is much less costly. When you have a strong relationship with your current customers, you can sell to them more often, including additional products and services without a lot of added cost.

Do not neglect the customers you have. They’re yours already! It’s usually a simple equation: If you want to sell more, communicate more with the customers you have. If you want to sell less, communicate less.

To read more about the five ways to grow your business, see Chapter 13 of my book.

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Skills for Business Growth

December 3, 2019 | Gary Furr Expert Tips

As a business owner, you are likely creative, hard-working, and quick on your feet. These skills and talents are great for launching a business, but more is needed for sustained success. Your business is yours to grow, and you likely need new skills to do that.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

The talents and skills you had when you started your business are not the same talents and skills that will get you from where you are to where you want to be. You have to develop your skills and knowledge in order in order to help your businesses grow. It’s necessary to think more strategically and long term. The key is to see the bigger picture and then proactively develop the skill sets critical to sustained growth.

Accountability is one great tool for making strides in growing your business. Just like we often need an accountability partner for the gym, it can be helpful in our efforts for business growth. Others can often see what we don’t. Their insight can be vital to helping us see new ways toward growth.

For more tips and tools for growth, see Chapter 14 of my book.

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You and Your Banker: An Important Business Relationship

March 3, 2020 | Gary Furr Expert Tips

One critical mistake I see many business owners make is neglecting their relationship with their banker. Your banker can play an important role in your business success, and time spent developing and maintaining that relationship is an excellent investment in your business.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

When I was chief operations officer for a $40 million company, I learned a valuable lesson on how important our banker was to our success. Business does not always go as planned and due to the excellent relationship we had established with our banker, we were able to navigate the downturns in the economy and business. Establishing a trusting relationship with your banker in good times will help you when bad times come, as they inevitably do.

Banking is about more than just rates. You want a banker who is there for the long-term and understands your community and your business.

I spoke with many bankers to prepare to write Make Your Banker Happy, and their feedback revealed ten key areas that are part of establishing a solid, trusting relationship with your banker:

Financials
Credit
Communication
Business practices
Management team
Professionalism
Customer focus
Appreciation of the relationship
Being proactive
Succession plans

Their suggestions and guidance provide a blueprint for establishing the kind of banking relationship that will serve you and your business.

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Your Financials and Your Banking Relationship

March 10, 2020 | Gary Furr Expert Tips

Numbers drive everything in your business and if you are not focused on the numbers, then you do not know if your business is winning or losing the game. The bankers I interviewed for my book Make Your Banker Happy all said that their best customers are focused on their financials on a regular basis and provide accurate information when asked.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Bankers like business owners who focus on their financials, understand them, and use them to help guide their business to profitable success. Bankers appreciate business owners who use their P&L and balance sheet to ask better questions in order to make better decisions. They like business owners who produce a cash flow projection and use metrics to guide the business to sustainable success.

I find that many business owners are not paying close attention to their financials; instead they wait until the end of the year to see how they are doing. I have had business owners tell me they know where they are even though they are not paying attention to their financials. When I ask how that is possible, they say, “I have money in my checking account so I know how I am doing.” That is not how you get your banker to love you.

Not surprisingly, the bankers I talked to reported that their most challenging customers do the opposite of what their best customers do—which is pay attention and understand their financials. Considering that the greatest cause of poor performance is not knowing your numbers, it is time to get serious about them!

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Review Your Business Credit History

March 17, 2020 | Gary Furr Expert Tips

Bankers will want to review your personal and business credit history before loaning you any money. It would be good for you to take the time to review your personal and business credit history before approaching the bank to ensure that there are no inaccuracies. If there are inaccuracies, get them corrected before going to see your banker. This paves the way for developing a trusting relationship with your banker and business success.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

As a business owner, you should understand the principles of credit that your banker is using to judge your credit worthiness. The five C’s of credit are character, capacity, capital, collateral, and conditions. Understanding and utilizing the five C’s of credit builds trust with your banker, and every lasting relationship relies on trust.

Let’s look at two of the five C’s.

Capacity: Do you have the capacity to repay the loan? Banks and bankers obviously want the money they loan to be repaid—and they want to see that you have the capacity to do so. If your debt-to-equity ratio is too high, your capacity to repay the debt is too low and it is unlikely you will get a loan.

Capital: What kind of capital are you willing to put toward securing your loan? Any contribution by you the borrower helps to reduce the risk of default. Do you have personal wealth or assets that can be used as a secondary repayment source through the sale of the pledged asset?

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Communicate Both the Good and Bad

March 24, 2020 | Gary Furr Expert Tips

Most relationships hinge on communication, including banking relationships. Proactive communication is high on the list of what the bankers’ best customers do well. Not surprisingly, it is also exactly what their poorly performing customers do not do well. Many bankers report that their poor-performing customers often do not communicate at all unless it is requested by the bank.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Regular communication is critical to your relationship with your banker. Communicate during good times and—more importantly—during bad times. Bankers take bad news well, but they take no news poorly. Respect and good communication skills are important in any relationship, including the one you have with your banker.

As a sign of respect for your banker, I recommend asking your banker what they need from you and then making a point of executing on their wishes. Remember, they are there to help you, not to make things complicated for you—but they have requirements they must adhere to. Listen to their request; arguing about it will undermine your partnership. They will do what they say they will do and so should you. Your banker’s reputation with their bank is important, and it partially depends on your success. Provide your banker with all the information they are interested in in a timely manner.

That proactive communication will increase your banker’s trust in you and your business, and it will get them more invested in your business success.

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Good Business Practices Create Trust

March 31, 2020 | Gary Furr Expert Tips

Your banker wants your business to succeed, and so they want to see your business engage in good business practices. Your banker knows that these practices pave the way for success, and it boosts their confidence that your business is going to reach its targets.

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Bankers understand good business practices and can easily recognize when a business has them in place or does not. As a business owner, it’s essential that you have a clear strategy for your business, a vision of where the business is going, and a plan to bridge the gap between your current state and your desired future. It is also important to have documented processes and procedures of how the business runs day-to-day.

A number of bankers reported seeing many businesses running by the seat of their pants. Those businesses have no business best practices in place to create standard operating procedures on how work gets done, and as a result they have inconsistencies in operations. Bankers know that a well-run company with good processes and procedures will help the business generate a greater profit margin, thereby reducing their risk. They know what to look for when looking at your company.

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Work with Trusted Business Advisors

April 7, 2020 | Gary Furr Expert Tips

Engaging trusted advisors is an important aspect of business success. Your banker wants your business to succeed, and they know that professional advisors help to make that success more likely. You should consider your bankers one of those advisors!

EXPERT TIP | Gary Furr, Organizational Development Consultant:

Nothing of any great significance is ever accomplished alone. We need those around us to help us in the areas we do not have expertise. As a business owner, it is important to engage advisors to help strengthen your business and fill the gaps that may exist within your organization. Engage advisors with real-world business experience to help you achieve success.

A wonderful benefit of a management team that has breadth, depth, strength, and longevity is that it prevents the operation from being fully dependent on the owner. Be proactive and intentional to get the advice and guidance you need. The health of your business depends on it for the short and long term.

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