Small business: This veteran can still make a rookie mistake – Des Moines Register

You would think that after almost 40 years of being a banker, and more than 35 of those years with direct customer contact that I would have learned.  But I made a classic rookie mistake. 

In my defense, I was just doing my job.  A job that has becoming increasingly more complex and more regulated every year.  Because of this, we are asking more of our customers every year, too. 

But I digress.

In dealing with a long time customer who was asking for a routine increase for their loan, I asked them for current financial statements. 

For those of you with limited accounting experience or training, the financial statement basics are tax returns, a balance sheet and a profit and loss statement.  Via email, I asked my client to send me an income statement.  The next day I received a detailed listing of the primary sources of their income for the year.  And that was all.  Nothing about the expenses, no profitability, just the income.  Just like I asked for.

Not fully getting it, I asked some of my co-workers this question; if you owned a business, and I asked you for an income statement, what would you give me?  Remember these co-workers are really good at what they do, although some have had more accounting in college than others.  The responses were generally split, with some saying they would have supplied me with the same information I received from my customer.  Others said they would supply what I thought I asked for.

Still not fully getting it, I Googled “income statement.”  Here was the definition: “An income statement is a financial statement that shows you how profitable your business was over a given reporting period. It shows your revenue, minus your expenses and losses.”  The response vindicated me.

Then I realized it was a shallow victory at best.

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As small business owners and managers, and as salespeople for our companies, we need to think like our customers, not like we work where we work.  The more industry jargon we use, the more technical terms that come out of our mouths to make us sound smart, the less we are connecting with our customer base.  Jargon is acceptable when we are talking with others in our industry, because it facilitates a deeper understanding and a potentially better conversation. 

Talking with our customers is different.  They are expecting us to be the experts in our fields.  They are expecting us to understand what is best for them and communicate it in a way that makes sense to them, not to us. 

Please don’t misunderstand me. I am not saying to “dumb it down” for our customers, and that they cannot understand the complexities of our businesses because they most certainly can.  They are smart, which is why they deal with our companies.  However, they are better off concentrating on what is important to them, and relying on trusted advisors, like you. 

It is our job to understand how much our customer wants to know about our business, our products and services.  We do that by listening and asking meaningful questions.  Then answering their questions at a level where they are comfortable.

Later that day, after I finally understood what I learned years ago, I emailed the customer again and apologized.  Then I explained exactly what I needed to move the loan request forward, using language that was on their level, not mine. 

No more rookie mistakes.

Tom Friedman

Small Business Today is a bi-weekly feature written by Tom Friedman, market president of First National Bank, Ankeny.

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