Unless you were born rich, your company (whether you grow flowers, plants or bulbs) needs financing. Banks are the major financiers of companies and in the horticultural sector Dutch-based Rabobank is the world’s largest financier. How does Rabobank accomplish this? Rabobanks’ International Business Manager of Food and Agriculture Jakob Brand and Sector Specialist Dave Marcus tell us.
“We try to distinguish ourselves with sector knowledge which is gathered from a worldwide network. Giving our customers access to this knowledge and network is certainly a unique selling proposition (usp). Because of our cooperative structure, we cannot always offer the lowest interest rates. But we can be a partner helping entrepreneurs to do their business the best way possible and enable their future: for instance, by advising them on topics like world trade, currencies, global sector flows and trends but also on currencies and international payment services.
“Finance companies are all about securities. You need to pay back what you borrow. But Rabobank is increasingly looking at the entrepreneur himself, his character and his business model. We know the horticultural business so we have opinions about one’s business plans, financial reserves or sustainability policy.
When financing companies, Rabobank gives high priority to sustainable businesses which is hard to quantify. But a company should at least meet local laws on this issue. And it helps if they participate in a sustainability standards and certification program such as Fair Trade. As a bank we have a vision of Growing a Better World Together. This challenges us and our customers to deal with Mother Earth in a more careful and sustainable way.
“Suppose a Colombian grower wishes to refinance his nursery and comes to us. The first thing we do is find out if there is a match: talk to each other; visit the farm. Talk about the business, the entrepreneur’s plans and his views on the future, his products and his views on sustainability.
Financing is not just handing over a bag of money. It is about a long-term relationship between customer and bank. Therefore, we need shared viewpoints on the grower’s product plans, sustainability and social issues.
Later we look at the figures concerning assets and debts. You need to know the customer’s needs and his securities in order to offer him optimum financing. Customer one may need a mortgage, whilst customer two is in need of a lease construction. Our aim is to always facilitate clients and help them do business to the best of their ability, even if this means not financing a company.”
Three questions and three principles about banking
“Basically,” says Rabobanks’ Jakob Brand, “banking is about three simple questions and three simple principles.”
Question 1: Who are you? Who are you as an entrepreneur? What are your dreams? What keeps you awake at night?
Question 2: What do you need the money for?
Question 3: Next to diligence and good behaviour, what can you offer me if you cannot pay me back?
Principle 1: Cash is king. In business it’s all about the money.
Principle 2: Use common sense. Avoid making mistakes because you think doing business is easy in your part of the world or in your line of business.
Principle 3: Read between the lines. Between the lines of business plans and policy papers there is more to be read than you might think. Every businessman needs solid visions and plans, a policy to stick to.”
Author Piet Kralt