Bankers - 5 People You Need on Your Startup Team
The banker’s role is a vital one on every growing business’s advisory team. According to the Small Business Administration (SBA), somewhere between one-half and two-thirds of small businesses use financing. Those that don’t are among the many businesses that “are not growth businesses; they reach an optimal size and stay that way. And some businesses are structured so they self-finance,” according to a U.S. Small Business Association article.
To put that in perspective, if you want to grow and don’t have the personal capital to self-finance, you’re in good company. Small businesses borrow about $1 trillion annually, and as you can see from the chart, for emerging businesses, nearly 50 percent is in the form of personal or business bank loans and lines of credit.
Choosing a bank may seem to be a purely economic decision, based on fees and interest rates. But the service component should play at least an equal role in your choice. In theory, it seems it would be easier to establish a consultative relationship with lenders at one of your local business banks. Typically, a personal attention to business owners’ needs is the competitive advantage they claim. However, many entrepreneurs say they’ve established great relationships with professionals at local offices of big money-center banks—so you shouldn’t necessarily discriminate based on size.
Often your attorney or accountant can refer you to a banker they know who has done good work for other clients. Hallmarks of excellent service include the ability to advise you on how to manage cash flow for your specific business needs; how much credit you can afford to take on—and the most economical way to access it; and helping you create a long-term financing strategy that supports your plans for growth.