Just when we think we are making progress, along comes another hurdle. Long-time readers may remember the agony and ecstasy of finding a banking partner last summer. This subject was well covered in the last issue by Randy Hubbard, Finding Operating Capital. His comments about finding the right "match" is crucial. Our banking "partner" decided quite unilaterally that our business did not match their requirements to be one of their customers. Therefore they decided to cancel our credit line. This in spite of the fact that we were never in default, never maxed out the line and never abused our agreement. Oh yes, they let us do business with them for all of 7 months.

Our sin was not making enough profit for these 7 months. Thanks guys!

In the middle of trying to bring 2 new products to market, streamline our manufacturing, control costs, find new reps, ship product daily, we now have to find a new banking partner. Our good friends at Megabank have put us in the position of having to repay the note to them while trying to fund material and wages to build an ever-increasing order level. We are running at 3.5 times last year -- with our new stuff yet to hit the street.

We have spent 3 years building good relationships with our suppliers and have made it a practice to pay promptly. Now that ability is in jeopardy. We need to conserve cash while we hunt for a banker that will be the right match for our company.

This time we need to be smarter and follow some of Randy Hubbard's advice. If we have the time and some alternatives, we will try to "qualify" the bank. Do they specialize in small business? Have they helped similar companies? If so who? Do they understand what we do and how we do it? Will they flee if we don't do 10% net this year? Will they take the time to help us?

This is going to be short this month. I have to get a report done for a potential banking partner who has a department that specializes in small business loans. Maybe if things work out, they'll give us 8 months.