One of the biggest things bankers have difficulties with when evaluating new clients is their ability to clearly and accurately communicate where their business is going and what their plan is to get it there. Understanding where you are and where you are headed and how a banking relationship is going to fit into that plan helps bankers decide the best ways they can partner with you.
When creating a plan that you are going to communicate to a potential lender, there are three things that you need to focus on:
- Part 1: Communicating Where Your Business is Going
- Part 2: Communicating Your Business’s Vision Through Strategic Planning
- Part 3: Communicating Why You Need Funding
Communicating Where Your Business Is Going
The first step of an effective strategic plan is to be able to communicate the direction your business is headed. As a business leader, in order to do this, you must first understand this for yourself. Ask yourself these questions and be honest with the answers:
- Where is my business now?
- Where do I want my business to be in the next year? Three years? Five years?
- What do I think I need to do in order to get there?
Where is My Business Now?
Understanding where your business is now is the first step.
Does the business exist to provide a certain lifestyle for you and your family, or have you built a professional organization around yourself or an ideal?
Can the business operate without you or are you still a key link?
What is your place in the market?
How does the market view you?
Look at the qualitative aspects of the business that truly define what the business is. What are the core values? Who are your best clients, customers, and vendors and why? This goes beyond just thinking about how much revenue you are bringing in or how many employees you have.
Where Do I Want My Business to be in the Next Year? Three Years? Five Years?
When you have established where you are, now think about where you want to be.
Do you want to grow the business to new markets?
Do you want to be able to step away from the business at times and pursue other interests?
Do you potentially want to sell the business or pass it on to someone?
What share of the market do you want to control?
How do you want the market to see you?
You also need to include the same qualitative aspects that you analyzed when looking at the current state of your business. What core values do I want the business and staff to exhibit? What types of clients, customers, and vendors do I want to have? What type of environment do I want to create for those that will interact with the business?
What Do I Need in Order to Get There?
Now you need to get a rough idea of the path you need to take. If you want to sell your business in the next five years, where can you go to learn the best way to do this that will meet your expectations?
If you want to expand to new markets and increase your share of current markets, what do you feel you are going to need? More equipment? A larger facility? More staff? A different type of marketing?
If you want the market to see your business in a different way, what do you think you need to do to make this happen?
Core values and culture play a part in an effective plan as well.
Do you feel the core values that the business currently exhibits are going to get you where you want to go? If not, how do you think you need to change that? If so, how can you exhibit more of those to help you achieve your goals?
You should not worry about having all of the answers or a crystal clear picture of where you are, where you want to be, and how to get there. By having a good idea of these things, you have a foundation to begin communicating that to your employees and any third parties that you may need to get you there.
Communication
Now that you have a basic understanding, how do you begin communicating this and who do you communicate it to?
First, you have to communicate it to the individuals who work in the business. You now have a vision that needs to be shared. Share it with your leadership team and key employees. Get them to buy into it, then get them to share it with those underneath them to get their buy in as well. Lead by example and typify the values and behaviors that you feel are going to help your business achieve your vision.
Second, you have to communicate it to the market. This goes beyond just putting out marketing campaigns. You have to conduct your business in a way that advances your vision. If you are trying to establish a certain set of core values, but those values are not exhibited during the normal course of business, the market will not see your business in the way you want it to be seen.
Third, you have to be able to communicate it to third parties that will help you achieve your vision. This includes consultants that have expertise that compliments yours and your team’s, companies that you will outsource certain functions to in order to expand capabilities, and most importantly lenders who are going to help you secure the working capital you need to get there.
Have Questions? We Have Answers
Understanding where your business is going, having a good strategic plan, and being able to effectively communicate your needs, vision, and plan to your banker are a good foundation for building a good banking relationship that will help your business grow. By lending your business money or giving you short-term access to working capital, your banker is in effect investing in your business. Treating your banking relationships with this perspective is the first step towards being able to access the capital you need to maintain and grow your business in the future.
Are you having trouble communicating where your business is going? Let us help! Contact us now.