I’ve been thinking about the similarities of banks and government, especially on how they work with small businesses. I have spent 30 years working with them and see quite a few similarities.
One of lenders prime functions is to provide the funds to keep businesses going and to succeed. They set loan covenants that are designed to protect the bank’s loan as well as to provide financial guidance for the borrower that keep the borrower in good financial condition too.
Government also offers funding via SBA and other programs.
Government passes laws that offer businesses tax incentives and other subsidies to help businesses succeed.
Each takes a “piece” of the business via interest or taxes.
Each would claim that small businesses, are the mainstay of our economy.
The irony of it all is that most businesses I have seen would tell us that banks and government should “stay out of running their business”! They really don’t like the strings attached to their loans or government programs, they want to be independent as much as possible.
I don’t have many ideas on what small businesses should do other than spend some time learning about and understanding each of these entities. In my financing coaching business I spend a lot of time teaching my clients about lenders, how they think and how they function, which often comes as a revelation to many clients. Most of them don’t know much about lenders and don’t really care as long as they have money and no hassle. They may not have anyone on staff that understands banks either. Many however find themselves in a bind with a lender and are forced to learn when they are at their weakest;
when they get kicked out of a bank, or a bank refuses financing and that is when I get referred to them. Usually I can figure out a solution, but it often a major stress event for the business.
I usually wish I had been referred in earlier so I could have helped them avoid the problem when there would be a better, lower cost solution to the problem. Like going to a doctor for a checkup, sometimes early diagnosis is the key to survival.
I am available for free consultation any time for any business that wants a quick look at their financing situation… it may be the best time a business can spend.