When you know there’s a meeting coming up with your lender, what’s your typical reaction? Which of the following is most like you?
A. I’m dreading it. I don’t communicate with my lender unless I have to. I don’t think this meeting will go very well.
B. I’m indifferent. It’s just another part of running my business, and I have no idea how it will go.
C. I’m prepared. I communicate regularly with my lenders and inform them about what’s happening in my farm business, and they seem to appreciate that.
1. Just communicate. No matter which answer you chose, there’s an opportunity to take your communication with your lender to the next level. The first step is, simply, to communicate regularly with them. It sounds obvious, but can be tough, depending on your business and situation.
The No. 1 thing that lenders — whether they are bankers or a business that has extended a line of credit — say they want is communication from their clients. When a client suddenly “goes dark” in terms of communication, lenders tend to generally start thinking the worst.
This means the single best thing you can do for your lender is simply keeping a line of communication open in a regular, proactive way. Basically, hearing from you is better than not hearing from you.
If this isn’t something you’re already doing, try going “straight up” with a banker conversation. Start initiating communication with them regularly to create an open line.
2. Prepare rather than inform. The second step, once a line of communication is open and regularly happening, is to shift from “informing” to “preparing” your lender. This opens the channel of communication even further to help improve the lender-client relationship.
Maybe you’ve typically communicated with and updated your lender by telling them what’s already happened in your business, such as, “Last month we bought a piece of equipment.” This is informative, but you’re merely telling your banker about decisions that are already made and done.
Informing your lender is good, but preparing them for what’s coming up next is even better. Shifting to statements like “Here’s what I intend to do next” and “Here’s what we have going on next month” is a much more open channel of communication, compared to “I forgot to tell you, last month we…”
3. Schedule it. Finally, get it on the calendar. We might have the best intentions about communicating with our lender, but what gets scheduled gets done. This could look like scheduling a time to call your banker perhaps once a month or once a quarter.
The frequency will depend on the dynamics of your business and what you’ve got going on at the time.
Prepare ahead to consider both what needs to be communicated and how you will prepare them for what’s coming up next in your business.
By taking these three steps, you can help move your communication and relationship with your lender to the next level. You can also talk with an adviser for the farm for more about lender communication and other ways to keep improving that relationship.
Over the past five years or so, most farmers have come up against added challenges due to the continued down ag economy. Yet, farm leaders have been determined and diligent, working to become more efficient in critical areas of their businesses. That’s the type of mentality that, ultimately, makes you a better manager of your business in the long run.
Lenders know this, too. When bankers see a farmer adapting their operation for success and becoming a better business manager, they’re aware that strong business skills are honed in the hard times.
An area of the farm operation that can be challenging when it comes to decision-making, and where it’s important to have a clear plan in place, is around the farm’s grain marketing.
Farmers who want to focus on getting better at managing their business will also spend time educating themselves on the marketing and merchandising tools that are available.
Our advisers help farm leaders put together grain marketing plans and assist clients throughout the year in making and executing marketing decisions. You can get in touch with our advisers to talk about your situation.