Q: We own an insurance agency, and we find we don't need much from our bank now. How do we maintain good relations?
A: The cold reality: The bank doesn't need you at all. You must take the initiative to keep in touch. I endorse the following nine-point program:
1. Keep the lines of communication open with your overworked account officer. Make an appointment to deliver and briefly review your current business and personal financial statements. Give him or her a short history of your company and your current business plan. Be responsible for educating the officer about your industry. Wait a few months, and invite him or her to lunch. It's deductible.
2. Identify shared personal interests or values. Become a good business acquaintance. In conversation, be candid; never make false claims or exaggerate. And don't bad-mouth your competition.
3. Never surprise the banker with bad news. If things are not going well and it could negatively impact your accounts or loans, give the banker plenty of warning.
4. Never break a promise to the banker, not even a trivial one. The primary risk factor in small-business banking is the credibility and character of the customer.
5. Don't be overly aggressive in your accounting choices or in minimizing income taxes. If you follow nonstandard accounting procedures, the bank can't compare your financials to industry averages. Banks don't underwrite loans to companies losing money, even when there's a deliberate tax strategy involved.
6. Network with the bank to meet your account officer's boss and the person who pinch-hits when your officer is on vacation. Go to bank-sponsored seminars and receptions. Learn the names of local bank directors. If you meet them socially, let them know you are a satisfied customer.
7. Only refer quality business owners to the banker. You are known by the company you keep.
8. Never take the bank for granted by overdrawing accounts or making late loan payments. Don't ask for unnecessary policy exceptions.
9. Stay focused on your business, but also seek the benefits of industry leadership roles.
George M. Dawson is a business consultant and author of Borrowing to Build Your Business: Getting Your Banker to Say "Yes" (Upstart Publishing). Send him your financing questions at firstname.lastname@example.org.