The Bank Won’t Back Your Business Because You Don’t Have a Communications Plan

A Communications Plan? “What is that?” I hear you asking. What am I getting at? Every business has stakeholders. Having a communications plan is all about how you maintain a “conversation” with the various stakeholders in your business. “Stakeholders” is simply a term that refers to anyone and everyone that has some role to play within or in conjunction with your organization – from the directors and shareholders to your customers, your suppliers, your financiers and even the community in which you operate your business.The number one issue with having and executing a communications plan is trust. It is impossible to run a successful business without maintaining the trust of its stakeholders. Regular, honest and meaningful communication is critical to a business’ ability to relay important messages to their stakeholders and to receiving vital feedback that will keep the business on track toward successfully executing its business plan. Effective communication is the key to developing and maintaining that most elusive of business talismans – “relationships”.Successful businesses (and business people) run on the rails of relationships and successful relationships run on the rails of effective communications. Good communication of critical issues can deepen relationships with key stakeholders – customers, prospects, suppliers, etc. Poor communication is a sure-fire way to destroy relationships or make it impossible to develop close relationships in the first place. While it is well documented that true communication is always a two-way street, having an effective communications plan for your business is decidedly about only one direction – your business communicating to your stakeholders effectively. You can only plan your communications – the stakeholders you are communicating to are ultimately responsible for their response to your communications. A great communications plan can, however, direct your stakeholders towards responding in the most positive manner possible.But why would the bank be interested in your communications plan and in whether or not you have one?What is it that makes a business with a clear communications plan more bankable than one that has an ad hoc approach to stakeholder communications? Well, first of all, if you’re looking to borrow some of the bank’s money, you are asking them to become one of the stakeholders in your business. If you have no structured and clear plan as to how you are going to communicate to your stakeholders, the bank has a good reason not to back you. Prove to the bank that you have the plans in place to effectively communicate with all of your stakeholders and you will go a long way toward convincing them that you are not going to become a “problem account” at the first sign of any unforeseen deviations from your well-thought out business plans.Listed below are the keys to an effective communications plan. See if you are already doing any of these things and consider starting to do some of the ones you’re not already doing.

Quickly communicate any good news to your stakeholders. Cost savings that you can pass on to your best customers. Exceeding your sales and profit targets. Awards that your business has just won. Anything that would make any of your stakeholders happy that they are doing business with your company.
Quickly (and completely) communicate any bad news to your stakeholders. I can hear the “What – are you nuts?” responses now. But remember, the whole point here, the “number one issue” is trust. Almost any bad news can be dealt with – especially when it is addressed quickly; destroyed trust tends to stay destroyed – forever.
Don’t forget to communicate with all of your stakeholders. That means your best clients, your favorite suppliers and the business banker that has endeared himself to you like a member of your very own family. But it also means your least favorite clients, the people that take some effort to keep in communication with because you just don’t have that natural rapport with them. The best part of this is that an effective communications plan might include communicating to your worst clients, suppliers or employees that they no longer need to carry the burden of being your clients, suppliers or employees. If some stakeholder in your business is making it impossible to deal with them (or simply making it more difficult to deal with your preferred stakeholders) – effective communication might include giving them the “thanks but no thanks” talk or explaining to them the conditions they will need to adhere to in order to continue being a stakeholder in your business.
Know how much communication each of your stakeholders actually wants. Some stakeholders might be fine with an annual letter updating them on anything new that would have an impact on them. Other stakeholders may want to be in constant contact. Some stakeholders, like your bank, might actually have you agree to loan covenants that require you to communicate specific financial information to them monthly or quarterly.
Be aware of your business’ obligations to communicate certain information to certain stakeholders. The best example of this situation is the Tax Office – get your communications plan wrong with them and you will not have to worry about your business’ communication plan for very much longer.
Effective communications means finding ways to create win-win situations with as many stakeholders as possible. With more communication and the enhanced relationships that will result from better communication, you should be able to uncover many ways to make all of the stakeholders involved better off. Think better trade terms, improvements in efficiency, sharing of market intelligence, more engaged employees, better reputation in the community – the possibilities are endless!
Make sure you don’t take any of your stakeholders for granted. It is important to communicate with everyone that has a stake in the operation of your business. There is a lot of talk out there about concentrating your attention on the magical “top 20%”, but you have to balance that with the fact that some of the stakeholders that aren’t making your top 20% today might be, potentially, in your top 20% in the years to come.

This entry was posted in Uncategorized. Bookmark the permalink.