business banking

Roland Emmans is head of technology sector for HSBC. In this piece, Emmans looks at ways in which technology entrepreneurs can get the most out of their bank. 

Your banker can be one of your most powerful business allies, helping you with so much more than debt.

They can provide perspectives on other businesses, share their experience on how similar firms have developed, introduce you to useful contacts and, of course, provide a range of banking services.

Here are six ways that ambitious tech businesses can get the most out of their bank to support their growth aspirations.

1. Be open and honest

Many businesses will adopt a particular mindset when dealing with their bank centred on facts and figures.

Of course your banker will want to know about the numbers, but running a tech firm is a passion and I find that the most fruitful banking relationships happen when you share your hopes and dreams for the future of your business. Your banker should be passionate about supporting you so sharing your strategy and vision will really help them to understand your drivers.

Don’t feel nervous about discussing your real hopes for the business, however ambitious they might be. Also, if you’re concerned about sharing sensitive information, most banks will be happy to sign a Non-Disclosure Agreement. There may be parallels with other business your banker has supported and they may be able to share insights but if they don’t know what you want to achieve, they’ll never be able to tell you this.

2.  The good, the bad and the ugly

As well as your aspirations for the business, it’s also important that your banker knows about any bumps there may be in the road ahead. Be prepared to give them the good, the bad and the ugly.

If trading isn’t looking good or you need to restructure the business, telling your bank early will only make it easier in the long run.

Bankers are a sensitive bunch and don’t like surprises, so if there are problems which mean you might breach any financial measures or metrics, give the bank fair warning.

It makes it a far easier problem to manage. For example, if your banker knows that your July and August figures aren’t looking good, but that September and October are much better, you can have an informed conversation about how to effectively manage a difficult period.

3. Make sure they understand your business

This is a two-way relationship so while you’re being open and honest about your aspirations, you need to be confident that your banker truly understands the day-to-day running of your business as well as your plans for growth. After all, they are the ones who will be representing your interests within the bank when it comes to important decisions such as applying for funding.

It might be a gut feeling but most savvy business leaders will instinctively know if someone doesn’t ‘get’ their business. The best bankers will go the extra mile to get under the skin of your business but don’t be complacent – challenge your banker to make sure they really do understand. Ask them to explain your strategy back to you. This can be a real eye opener: it ensures they really understand the strategy but also that it’s a coherent message when someone else explains it to you.

A good understanding also means your banker can provide you with constructive challenges (which you can, of course, take or leave!). For example you may have a particular route which you think your business should go down. If your banker has seen similar companies coming unstuck in that area, you can benefit from their experience.

4. Work their connections

When your banker truly understands your business you can have a genuine debate which can open-up different options and avenues that you might not have thought about.

Bankers with considerable experience of working with similar companies in your sector are likely to have helped businesses in the past overcome the hurdles that your business is facing now.

Don’t be afraid to lean on your banker’s experience and connections. Use them to put you in touch with other businesses or partners that can help you succeed.

5. International support

Expanding into new markets is a good example of where the support from a strong business ally such as your banker can help. Most tech businesses have the potential to be international by developing transferable technology which has applications in many markets.

When starting out internationally, the trick is to make sure that, as well as helping you in the short-term, your bank can support you in the medium and long-term as your business grows and expands.

Life is far easier if you have the same banking partner globally that can provide local accounts and insight and connections into new markets.

It means you’ll already have done much of what’s outlined above, developing the relationship and understanding, and so won’t have to build this up again with a new bank from scratch.

6. Exit this way

Finally, it might seem a long-way off to some, but it’s worth discussing the long-term future of the business with your banker.

If you know your plan is ultimately to sell the business, let your banker know early. They are there to help you realise your management aspirations and provide the building blocks along the way.

We are seeing a lot of private equity activity in the market place but exiting or floating a business is not a quick thing to do.

The more time you and your banker have to prepare, the better. With the exception of serial entrepreneurs, most tech business leaders won’t have done anything like this before – but a decent banker will and can help you prepare.