Build the Relationship That Could Save Your Business
Color Me Mine was a successful and growing franchise of paint-your-own-pottery stores. And when the economy turned south, demand grew even more. People who could no longer afford expensive presents gave hand-painted mugs instead. And "staycationing" families who couldn't travel headed to their local malls looking for fun things to do. "Color Me Mine does better during a recession," says CEO Mike Mooslin.
At the same time, attractive and affordable retail spaces were opening up in mall locations across the country as other companies cut back or closed down. All systems should have been go, except for one problem. With banks clamping down on small business loans, new franchisees couldn't get financing. "We've been unable to sell franchises at the same frequency and volume the past few years," Mooslin says.
Color Me Mine needed a different strategy, and Mooslin had an idea: Instead of simply selling franchises, the company would open its own stores, run them for a time, and then sell them as already-profitable businesses that could more easily obtain financing. He knew that strategy would work, but now instead of franchisees needing loans, Color Me Mine would need one--a large one--to open these new locations.
Fortunately, Mooslin had spent years preparing for just such a moment by carefully building a very close relationship with Wells Fargo, the company's bank. "A bank is probably the most important relationship one has as a business owner," he says. He was able to get the loan and the chain has continued to grow, reaching more than 140 stores in 11 countries.
A Carefully Cultivated Relationship
How did he do it? First, by getting every product he could from Wells Fargo instead of shopping around. That meant personal banking and investment accounts as well as accounts for the business, insurance, and any other financial product Mooslin needed. "Everything they offered, I took," he says. "That made me a good customer. Not necessarily a large customer, but a good customer."
Then, early in the relationship, Mooslin invited bank representatives to come check out the company in detail. "They came to my office and met with me for several hours," he says. "I took them through the entire operation, almost like a mini-audit. When they left, they really felt they understood our business."
And the transparency didn't end there. Mooslin followed up by sending the bank information about the company's financial performance every month, so his contacts there can see how things are going, a practice he continues to this day. "If we have a bad month I want them to know it just as well as my board members do," he says. In fact, he reports communicating with the bank even more often than with the company's board.
Providing monthly financials to the bank is "probably the best thing I could have done," he adds. "They know when they're being sold a bill of goods and when they're getting true and accurate information. And their response is, 'We wish all our customers did this.'"