Recently Launch Academy had the pleasure of hosting Caterina Papadakos, Commercial Account Manager for BMO Bank of Montreal. Caterina works with local businesses to help them access valuable resources offered by the bank, and gave us some great lessons in startup financing. Banking can be overwhelming for the best of us, but when it comes to your startup, it’s especially hard to even know where to begin.
Luckily, Caterina revealed a number of gems re: Banking 101. From balance sheets to income statements, she guided us through financial statements step-by-step and allowed us to pick her brain about anything and everything banking-related. Out of this, three major takeaways surfaced that, we think, every startup should know when it comes to both approaching the bank, and keeping your company’s finances in-tact:
1) Cash Flow Is Key— This goes for both your startup and the bank. Start by charting your cash-in/cash-out every month and project your maximum cash requirements at any given time. At the end of the day, cash flow is what can make or break a business.
2) You’re Risky, They’re Not—Let’s face it: startups are risky in almost every sense of the word. So, it’s no surprise that banks can be hesitant to dish out loans to the latest professional-turned-entrepreneur. Financial past performance and projections, management character and experience, and the level of risk for your industry are a few key things that they will take into consideration when deciding whether to lend, so be aware and plan accordingly.
3) No Time Like The Present—Start tracking your company’s finances early and talk to your banker to determine the best approach. Banks typically want to see at least three years financial statements when considering a loan—so, start documenting your company’s finances NOW so that when you want to approach the bank you’re ready to show them your company’s track record.
Startup banking can be confusing, but with the right habits and the right knowledge, you can be sure to stay afloat. Thank you again to Caterina for coming in, and thank you to BMO for the insight!
If you would like the opportunity to learn from some of the best and brightest startup minds that Vancouver has to offer please consider a Launch Academy membership. This is a post by Jackie Murchison. Jackie is Community Coordinator at Launch Academy. Follow her on Twitter @JackieMurchison