Nobody knows your business like you do.
Your management team is on top of key performance metrics (KPIs) daily, such as mpg, dwell time, gross profit, idle time, revenue per tractor/trailer ratios – monitoring your company’s every move. You and your team know your business – and how to guide it to success.
But what about when you need to communicate your businesses’ value outside of your team? Securing a loan or line of credit, preparing your business for sale – these are times when an outsider’s perspective can be make-or-break.
That outside perspective will be very different from your own. A banker or buyer is trying to gauge the upside and potential risks of providing you a loan or making you an offer. Finance professionals speak a different language than transportation people.
A banker or a buyer wants to know that you have a solid understanding of your daily KPIs, but that’s table stakes. Then come countless questions to ensure that their investment is solid.
Be prepared for those encounters in advance. Keep your financials clean, organize your documents and be prepared to give easy access – that’s a clear sign that you are prepared for their questions, have anticipated their concerns, and can highlight the positives in your operation.
In my 33 years in banking, I’ve seen how the businesses that approach the bank from a position of strength versus weakness are, more often than not, able to secure the financing they need. Always have a living, breathing budget or projections to go along with current up-to-date financials. They will help you prepare a much stronger story. Having these things ahead of time will make your business appear more “bankable” prior to your request being underwritten. Provide the bank with everything they ask for. After all, they are taking a financial risk in partnering with you. Don’t always assume you are doing the bank a favor. – Paul Rhea, Strategic Growth Director, Anders CPA
One of the ways to think like a banker or think like a buyer is by engaging an experienced CFO, especially one that understands your industry. When negotiating banking terms, a quarter or a half percent can translate into a substantial difference in interest expense and ultimately put more money in your pocket. Likewise, negotiating more borrowing capability can free up cash, so you can focus on your operation versus managing your daily cash.
Most business owners don’t have extensive experience negotiating loan terms or preparing for a sale. That’s why we created this booklet, Think Like a Banker, Think Like a Buyer, to outline the main areas to focus on when you get ready to communicate your businesses’ value to the outside world.