Bonding with your banker

March 21, 2012



There is no doubt that operating a dental laboratory in today’s environment has gotten more complex. New technology, competition and ever more demanding customers seem to place ever increasing demands on the lab owner/manager’s time and skill. One side effect of this has been the need to pay more attention to the business side of your lab. Making the best crown or producing the best denture is no longer a sure-fire formula for success.

The financial structure of your business is key to making sure you have the resources to invest in new technology and handle the everyday ups and downs of cash flow. A sound financial structure allows you to pay bills on time, take advantage of discounts, meet payroll demands and support the growth of the business. If you are investing in a new milling system, for example, a loan from your bank may be a better way to go than financing from the equipment supplier. Owning your lab facility has proven to be a financial benefit for many labs compared with renting or leasing space.

Bank on it

Your banker can help with all these things, but they don’t hand out cash to just anyone at the drive-through. They need to know you and feel good about your prospects. Here are some things you can do to establish a good relationship and tap into the resources your bank can offer.

1. Facetime: Like most things in life the most important thing is to “show up.” Meet face-to-face with your banker on a regular basis. Start doing this right away BEFORE you need something from the bank! I recommend meeting at least annually, but twice a year is better. The idea is to be sure he or she knows you as an individual and becomes familiar with your business.

2. Arrange a tour: Invite him or her to visit the lab so he or she can see what you do and better understand the business.

3. Ask questions: Discuss the services the bank currently provides and ask if there are others that may be of interest or benefit to you. They can be helpful with cash management services such as a bank box so clients send payments directly to the bank and you get access to the funds sooner.

4. Open the books: Provide the bank with copies of your financial statements (P&L and Balance sheet) at least annually, and be prepared to discuss what is going well and any problems you may be experiencing.

5. Shared planning: If you have a written business plan, share that with the bank as well. If you don’t have one, consider preparing one.

6. Bundled advantages: It may make sense to discuss bundling your checking, credit card processing, etc. together to make you a more attractive customer.

7. Standing credit: Request establishment of a line of credit for your business. This is an agreed-upon amount that you can draw upon should you need it. You will pay interest on any amount you draw against it, but if you don’t use it you don’t pay. It’s a good safety reserve to have should you need cash quickly for some reason.

Conventional wisdom right now says that “Banks” are not lending because of the recession. Not true! They do have money to lend and will lend to small businesses when it makes sense. Bond with your banker and see how it can help your business.