Businesses get turned down for finance, fact. What it doesn’t mean is that your business proposal or the business itself is wrong. Sometimes it just happens.
There is a quote from Sahar Hashemi, co-founder of Coffee Republic;
For me it’s a numbers game – you should almost notch up your rejections. My formula in life is that for the 20 times you ask, you should expect to get no’s the first 19 times and only then should you start expecting to get a yes
This is pretty sound advice. Go back 10 years and coffee shops were nowhere near as prolific on the UK high streets as they are now. So you could almost understand that banks at that time may have been more doubtful. However, it did not reflect what happened to coffee shops in the UK and probably proved that the ‘no’ bankers were incorrect.
The point is that getting turned down for finance was not indicative of a bad business model.
The Dating Analogy
If you think that banks will lend to your business because your proposal, business plan and idea are all fantastic then think again. Our advice is to forget about thinking of things in terms of banker and client and think of it like dating.
Take these points, but do read them partly with tongue in cheek;
- Before asking someone out you find out a little about them, what they like, what they do etc
- You don’t divulge the skeletons in your closet on your first date
- You are still making an effort to impress
- You follow up the date with a phone call, card, flowers etc
- Regardless of the opinion you have of yourself, some men/women will be out of your league, just accept it
This is tongue in cheek but it does bare some relevance, let me convert the above into a banker/ client, lender/ borrower scenario;
- If you are a restaurant and your bank doesn’t lend to restaurants then go somewhere else. If your bank manager has seen losses from restaurant sector then find someone else. Do some groundwork…
- Set out the positives and show how you mitigate weaknesses. Don’t talk about the problems but stay positive about your business
- Impress, enough said
- Don’t wait around for the bank to respond to you. Get contact details for your bank when you meet and use them to follow up a few days afterwards. Don’t be desperate but do be professional and positive. If you have a product to show off then use it, give a sample away etc
- Some banks have minimum limits or criteria. Don’t apply to Coutts until you are well established. If you are in property or construction you may find some banks have minimum criteria, spend your time with those banks that match your criteria
Playing The Dating Game
Sometimes it is easier to think of things in a different way to get them to make sense. This is what we are suggesting and the dating analogy is part of that. If you want more information on how to approach banks and be successful then get in touch on 01293 541333, contact via the website, or add your comments above.
By Dave Farmer