Managing Your Cash Flow

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What to say to your bank manager

4 Mins

Whether you need to get a loan or top-up for your overdraft, you will need to have some kind of a relationship with your banker. 

To have a meaningful relationship with your banker you need to have some kind of a business plan to demonstrate that you have methodically thought through and planned your coming year and that you are business-like in your approach to running your business. 

For your own benefit, writing a business plan is fantastic because it is making your mistakes on paper; you wouldn’t build a house without drawing up the plans first so why should a business be any different? 

Your plan gives you the opportunity to revise and change some of your assumptions. It may show you that it really is too late or it may show you how a few tweaks here or there (price up, costs down, etc) can make all the difference.

You can use the business plan to measure your performance along the way – keep a track of what you need to deliver on.

Don’t give your bank manager any surprises; make it easy for him/her. And how do you do that? Set off early in your campaign to keep them informed and up-to-date. Bank managers, like most of us, hate surprises and their performance bonus will evaporate if their lending has been bad so they don’t want you to fail! 

Keep your manager in the loop especially now; they don’t like radio silence because they can’t pick up your mood telepathically. They cannot guess what you are doing or pick it up by osmosis. Talk to them. 

Be consistent, reliable and honest when presenting plans and ideas. Their systems will be telling them a pretty clear story about your finances so there is no point trying to beat them at their own game; they will only work with you if you work with them first.

Give them the reports that any half-decent business will have. Show them your projected profit and loss accounts and cash-flow forecasts. Typically I would prepare these forecasts for the next 6 months and 12 months in detail with outline figures for the next 24 or 36 months. Show most of your assumptions and best and worst-case scenarios. You must “do the numbers” and show how you arrived at the final figures. And of course, keep it simple and easy to understand.

So, what are you doing to sort things out? You must show the bank how you are going the extra mile and why they should continue to stake their reputation on your determination and passion. 

Don’t forget to include an executive summary as well as your “elevator pitch“. Be as simple and clear as possible so that they can see and understand exactly what you are trying to do. Apply the 14-year-old test: “Would a 14-year-old understand what you are trying to do and why and how?” 

Remember to treat the bank manager as if he/she is on your side. If you treat them like the enemy, then that’s how they will behave, and that will not help you at all!

Robert Craven shows MDs and owners how to grow their sales and profits and focuses on how to do this in recessionary times. His latest book is Beating the Credit Crunch – survive and thrive in the current recession. For further information, contact Robert Craven on 01225 851044 or at rc@directorscentre.com

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