Hardware Retailing

APR 2011

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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TIPS FROM RETAILERS A 1. 3. Be honest and transparent. Don't give the bank a reason to doubt your business or your integrity. Be forthcoming. Not only will it help you develop a better relationship, but also the bank is more apt to go through hard times with you if you're up front about problems and how you plan to solve them. fter talking with retailer after retailer about their experiences in securing capital for their operations, several main themes began to surface. Below we've gathered them into an easy-to-reference tip chart. 2. Learn the lenders' language. "I went to school for finance and I still struggle with some of the technical finance lingo," says Comstock. Learn the terms the banker will be using and make sure you know the ins and outs of your financial statements. The banks will be asking about these. In the same aspect, make sure you're fully explaining the retail and home improvement terms your banker may not be acquainted with. 5. 7. 9. Have a casual pre-meeting: Shoot your idea in a casual way without all the red tape of financial statements and credit reports. This will give you a feel for how your banker views your idea, your operation and the lending market. It's not uncommon for Comstock to have an impromptu coffee meeting to feel out his banker's attitude toward his upcoming ventures. Then he uses the feedback to prepare specific information that will address any concerns he picked up during the meeting. 6. your business regularly. Be prepared to answer the FAQs. Make sure you know what you'll say if the banker asks you any of the questions in the "Bank Day" checklist on Page 36. 10. 38 Hardware Retailing Practice. While practicing in front of a mirror is great for many types of speeches, this is one time you want to get out in the field for practice. For example, Comstock visited four different banks before he presented to his primary banker. It never hurts to make more connections and the practice will calm you down and help you dial in what you want to say. 4. Give them the goods. You can't be too detailed and you can't give the bank too much information. The more complete picture you can paint, the more willing the bank will be to invest in you and the more professional and prepared you will look. Raise capital for the right reasons. Understand the variables of your loan and the terms before you sign and know how this will affect your cash flow. As Comstock points out, if you are struggling with cash flow, more financing will help shore your problems up in the short run. If you don't correct the underlying problems in your business, however, that money will be gone and you will be left with the same problems you had but with more debt. Invest in a trusted accountant. Accountants don't always make good business people, but sometimes entrepreneurs struggle with the details of in-depth financing. Help yourself by hiring an account that will learn the ins and outs of 8. Do your own research. Call and talk to some commercial lenders yourself. Identify where you are in your career. Toole suggests mapping out a one-year, three-year, five-year and 10-year career plan. He explains that retailers should not only develop these plans but being realistic about them when sharing the plans with the bank. DISCLAIMER: While all the information in this article can be used as a starting point when preparing to raise more capital, it is imperative each retailer checks with his own accountant, bank and legal counsel for specific details unique to his operation. www.nrha.org April 2011 FINANCIALSTRATEGIES

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