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Lessons Learned from My Workout Banker

Lessons Learned from My Workout Banker

Lessons Learned from My Workout Banker

By Jim Gilbride

Our business had been flying high, until our largest supplier decided to self-distribute their products and took 85% of our business with them. I advised my banker and we worked quickly to reduce and renew our line of credit. Shortly after that, my banker was excused, resigned, or fired from the bank. Upon introduction to our new banker, we outlined our situation and plans for rebuilding, at that time we also advised the bank, we would need their help as we foresaw a cash shortfall until we could regain our volume and profitability. Our new banker advised, they would discuss with their boss and respond quickly. It was at this point I became a “special asset” …it is always nice to be thought of as special!!!

Turns out my definition of special and the banks did not align. Bottom line they wanted us to exit the bank promptly. Our workout banker, Mr. H, turned out to be a stronger ally then we expected. We presented our plan to Mr. H. and proceeded to get to the work of regrowing our businesses. The first year went pretty well, we doubled our volume, and lost less money than expected, but we were burning cash and couldn’t tell if the light at the end of the tunnel was daylight or a freight train.

Year two of the rebuild saw growth slowing and cash continuing to run out. We reduced expenses, consolidated certain products into fewer warehouses, and increased prices to maintain some sense of equilibrium and reduce our cash burn. Results of year 2 showed a 30% grow rate, but still short of the finish line, and cash was nearly gone. We took our weekly cash flow forecast down to a daily exercise and set out for year three.

Year three started with slower growth than expected and continued tightening of cash. We had been talking with another similar distributor about combining efforts in one market and finally had what we thought was a workable plan, except we were short $600k in forecasted cash to see us through to profitability. We approach MR. H, at the bank and made our case to him requesting an increase of our line of credit from $3M to 3.75 to cover the needed working capital. To our surprise we received the increased requested to proceed with our plan. We refinanced all of our debt 12 months later and left Mr. H and his bank. 

18 months later I had the pleasure of sharing coffee with Mr. H to reconnect and learned he had left his bank. In our discussion he mentioned to me “you don’t know how rare it was to get the bank to loan you more money”. Being the curious type, I asked him why he/they did in fact loan us the extra funds. Here comes the lesson…. he said, “Jim, first off, the bank doesn’t want your business, they want you to pay them back as originally planned. Secondly, you and your team were the most knowledgeable about your business and likely the best people to turn things around. You had a plan, you knew your numbers, communicated regularly, and most importantly never surprised me. You didn’t always hit your numbers, but you had good sound understanding of why and how to fix it.” 

From that moment forward, I have a new respect and understanding of how to build a strong relationship with a banker. Bank funding is the least expensive form of commercial funding available. Your banker is your mouth piece and advocate at the bank. Bring them into your business, show them the plan, demonstrate to them you know your numbers, communicate regularly and most importantly, do not ever surprise them. 

Fast forward to today, I have the great honor of working with many business owners, providing them with fractional CFO services to help them build their business. We emphasize the need to know your numbers, and communicate them regularly with your banker. Both of those activities will provide a foundation for greater success. 

Jim Gilbride is an Area President with FocusCFO based in Cleveland. 

Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Michigan, Kentucky, Indiana, Pennsylvania, Tennessee, and North Carolina. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses. 

For more information, visit us at focuscfo.com or follow us on LinkedIn. 

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All Hands 2020 Award Winners

All Hands 2020 Award Winners

2020 Award Winners

Congratulations to these Associates for their recent award at the FocusCFO All Hands meeting.

Client for Life Award

Gold Level

David Bourke

Leadership and Support Team
Director, CFO Services

Tom Flynn

Central and Eastern Ohio
Area President

Client for Life Award

Silver Level

Don Cain

Central and Eastern Ohio
CFO

Pat Lang

Central and Eastern Ohio
CFO

Tom Flynn

Central and Eastern Ohio
Area President

Jim Zins

Central and Eastern Ohio
CFO

Jeff Lacy

Central and Eastern Ohio
CFO

Lynnette Zody

Central and Eastern Ohio
CFO

Client for Life Award

Bronze Level

Dan Bloom

Central and Eastern Ohio
CFO

Forest Bookman

Northern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

Mike Derringer

Central and Eastern Ohio
Area President

Kathleen Ferry

Northern Ohio
CFO

Tom Flynn

Central and Eastern Ohio
Area President

David Green

Central and Eastern Ohio
CFO

Jeff Lacy

Central and Eastern Ohio
Area President

Pat Lang

Central and Eastern Ohio
CFO

Jim McKinney

Central and Eastern Ohio
CFO

Lyle Rhodebeck

Central and Eastern Ohio
CFO

Jim Rowlands

Northern Ohio
CFO

Jeff Semple

Northern Ohio
Area President

Bob Stecki

Central and Eastern Ohio
CFO

Jim Zins

Central and Eastern Ohio
CFO

CFO Hall of Fame

Gold Level

CURRENT MEMBERS

Lynnette Zody

Central and Eastern Ohio
CFO

Bruce Collen

Central and Eastern Ohio
CFO

NEW MEMBERS

Pat Lang

Central and Eastern Ohio
CFO

David Bourke

Leadership and Support Team
Director, CFO Services

CFO Hall of Fame

Silver Level

CURRENT MEMBERS

Jim Zins

Central and Eastern Ohio
CFO

Dan Bloom

Central and Eastern Ohio
CFO

NEW MEMBERS

Jim McKinney

Central and Eastern Ohio
CFO

Don Cain

Central and Eastern Ohio
CFO

CFO Hall of Fame

Bronze Level

CURRENT MEMBERS

Wendy Brugmann

Northern Ohio
CFO

Joe Dougherty

Central and Eastern Ohio
CFO

Skip Vermilya

Northern Ohio
CFO

Sherif Matar

Central and Eastern Ohio
CFO

Jim Rowlands

Northern Ohio
CFO

Kathleen Ferry

Northern Ohio
CFO

NEW MEMBERS

David Gouttiere

Northern Ohio
CFO

Will Cooper

Central and Eastern Ohio
CFO

Dean Cole

Central and Eastern Ohio
CFO

Todd Peter

Northern Ohio
CFO

David Green

Central and Eastern Ohio
CFO

Bob Stecki

Central and Eastern Ohio
CFO

Area President Awards

Rookie of the Year

David Tramontana

Southwest Ohio
Area President

Area President Awards

Rising Star

Darren Cherry

Central and Eastern Ohio
Area President

Bob Miller

Central and Eastern Ohio
Area President

Area President Hall of Fame

Gold Level

CURRENT MEMBERS

Tom Flynn

Central and Eastern Ohio
Area President

Mike Derringer

Central and Eastern Ohio
Area President

Jeff Lacy

Central and Eastern Ohio
CFO

NEW MEMBERS

Jeff Semple

Northern Ohio
Area President

Area President Hall of Fame

Silver Level

CURRENT MEMBERS

Jim Gilbride

Northern Ohio
Area President

NEW MEMBERS

Forest Bookman

Northern Ohio
Area President


Fred Dannhauser

Northern Ohio
CFO


Peter Geise

Northern Ohio
CFO

Area President Hall of Fame

Bronze Level

CURRENT MEMBERS

NEW MEMBERS

Bob Miller

Central and Eastern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

Jim Collins

Southwest Ohio
Area President

Greg Gens

Northern Ohio
Area President

2020 Continuous Learning Award Exit Planning Institute – CEPA

VETERANS

Kathleen Ferry

Northern Ohio
Area President

Tom Flynn

Central and Eastern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

NEW MEMBERS

David Bourke

Leadership and Support Team
Director, CFO Services

Jim Gilbride

Northern Ohio
Area President

Jeff Semple

Northern Ohio
Area President

Brad Martyn

Leadership and Support Team
Visionary and Founder

Mark Clower

Southwest Ohio
Area President

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