For luxury start-ups, obtaining concrete funding and credit is often paramount, but a hard nut to crack. Here, wealth management and private banking company Boston Private shares its secrets for closing the deal.
Banking, especially in the corporate sense, is often seen as a transaction involving lending, deposits and basic cash management. When you deal in the luxury market, however, your banking partner should be one that can keep pace not just with your evolving needs, but with those of your clientele as well.
For early stage companies, putting the right banking strategies in place at the onset can help transform a need-to-have relationship into a trusted partnership.
For those companies in the start-up phase, one of the first priorities is often obtaining credit, a loan or supplemental capital. Yet, securing that funding is not always easy; in fact, following a year of record lending by the Small Business Administration, entrepreneurs still struggle to get the financing they need even when all indicators point to the opportunity for growth.
“ Nearly 1 in 5 small firms cannot meet increased sales demand due to inability to garner financing ”
And, the 2014 Year-end Economic Report of the National Small Business Association notes that nearly one in five small firms cannot meet increased sales demand due to inability to garner financing.
Regardless of industry or target clientele, establishing a clear set of messages around your value proposition, revenue projections and payoff model is imperative before contacting potential banking partners for credit or financing. Approaching the process with a compelling business case will help drive more productive conversations and serious consideration.
This is where the importance of choosing the right banking partner becomes apparent. Specifically, private banks tend to have a better understanding of the demographic luxury start-ups are targeting – after all, they’re working with the same high-net-worth individuals.
With other factors being equal, this can help establish common ground with your banking partner, as they are more likely to understand the importance of investing in products or services targeting the affluent audience.
In this early stage though, it is important to look well beyond the financing transaction to what your business needs will be one, two or even five-plus years down the road. Again, this is another area where private banks set themselves apart.
Unlike traditional “retail” banks, private banks are relationship driven and employ experts in areas such as cash management, trust and wealth management, enabling the relationship to grow with your business needs.
For example, private banks often work with venture capitalists, private equity firms, multi-family offices and others, that may provide an opportunity for introductions to professionals that might provide counsel, funding and potential business opportunities. A retail bank doesn’t offer the same treatment.
“ Wealth today doesn’t have a certain age, address or profession ”
In yet other cases, a private bank can help with things such as a personalized cash management strategy, foreign currency needs and even advice on product inventory in regard to overhead management. In essence, this type of banking partnership enables customized services paired with counsel from professionals with deep experience as your business needs grow and evolve.
A private banking relationship can assist a business well beyond the financial transaction, becoming a true business partner who has a vested interest in both your personal and the business’ success.
Wealth today doesn’t have a certain age, address or profession. It’s being created by an extraordinary variety of business owners, entrepreneurs and leaders, and nowhere is that more true than in the luxury market.
In establishing your banking strategy, look beyond a bank that is happy to extend a line of credit to one that is committed to building a partnership based on expertise and personalization that will not only help grow your business, but also build your wealth.
For more information please visit: www.luxurysociety.com