Do You Need a Mentor?

In recent years the major banks have suffered increasing pressures on costs at a time when the demands from customers have become more and more sophisticated.

One response to these pressures has been the growth of outsourcing and the reduction in the levels of branch staff. Despite the criticisms that outsourcing, telephone banking and Internet banking has de-personalised banking relationships it has enabled the industry to manage increasing volumes of transactions more cost-effectively.

However, in my view, there has been a cost for the Small Business Customer and it is one that could have a serious impact on the future of many businesses.

The cost has been the demise of the ‘Bank Manager’.

In years past the ‘Small Business Man” often built a close working relationship with their Bank Manager and in many instances became an extremely important part of the team. They were not simply the provider of finance but became a sounding board for ideas and often the business mentor.

The benefit to the customer, particularly, the owner-managed business is that they received independent views on their ideas and gained a friend with whom they could test their thoughts before they finalised important decisions.

The benefit to the banks was that they really got to know their customers – it did not mean that all lending decisions were subsequently error free but it did mean that some times customers got the support they needed even if the ‘computer’ said no.

Relationship Managers are now increasingly salesmen selling products to customers who may or may not need them. Far too often they are under pressure to increase income in the short term rather than nurse businesses through the good and bad times to become customers that survive and ultimately create long-term value.

Bank managers care about their customers but no longer have the time to spare – quantity of activity rather than quality is now the watchword. Both the Customer and the Bank, in my view, suffer the consequences. This is not only a threat to the long term survival of many small businesses it’s a major risk to future economic growth.

Businessmen often need an independent view and the Banks need to understand their customers more if they are to get more decisions right and ultimately help business grow.

It is unlikely that we will see the return of the ‘old-fashioned’ Bank Manager they are simply under too much pressure to achieve short-term success. However, the small business will continue, in many cases, to need a mentor – an experienced independent sounding board that will also help with the relationship with the Bank.

It is worth considering whether you would benefit – my experience with a number of small businesses is that there is value in finding the right person.