A banker’s dozen

Small business owners are in a class of their own – they have unique needs, challenges and opportunities. Making the most of every possible resource is critical to both day-to-day and long-term success. Often overlooked is a benefit owners can gain from their banker: guidance and expertise in financial management and growth.

Banking isn’t just about lending money and executing transactions. Bankers serve as strategic advisors to entrepreneurs in their quest for success. The ability to listen objectively and share the collective wisdom of many small-business experiences is the mark of a banker who truly engages with his or her customers as a trusted advisor.

Distilled from many such conversations between small business bankers and owners, here are 12 ideas – a “banker’s dozen” – that are particularly important for a growing enterprise:

1. Have a real business plan. This is good advice for businesses of all sizes. Every day, decisions are made that define a company’s direction. A sound plan is a living document that guides day-to-day decisions and keeps the business on course to reach its goals.
2. Build a cash reserve. Most business owners can’t wait to pay off debt, but it can actually be a good thing to carry some credit and show that it is being managed well. This also can help a company build a cash reserve, which is critical for operations – and emergencies.
3. Pay attention to cash flow. Stay close to money coming in and going out – a business owner should know their receivables and costs. Cash flow gives an entrepreneur flexibility to launch a project, add staff or seize an opportunity. Tools such as online banking with cash flow alerts, credit card and online payments for customers and purchasing cards can help a business get paid quicker and control spending. Companies that experience seasonality in their cash flow need to pay special attention to the fluctuations and plan accordingly.
4. Outsource something. Most people start a business because they love the work, but then spend more and more time managing it. If they’re not careful, running the business takes them away from doing the work that’s their real passion. A small business banker can identify trusted providers or solutions to manage payroll, bookkeeping, HR, purchasing supplies or other tasks that can keep entrepreneurs from “growing the business.”
5. Take your bank everywhere. Whether an entrepreneur is in the office, at home or on the road, most business banking can now be done remotely with online and mobile tools. Bankers love to see people in the bank lobby, but they also understand owners are pulled to be everywhere at once. Adopt these new technologies to save time and eliminate a drive.
6. Manage those cards. Credit and debit cards offer so many options; make those cards work for the business. For example, using a debit card instead of writing checks for purchases could earn reward points for cash back – and in six months or a year, it adds up.
7. Don’t be fooled by “free.” When it comes to bank products or anything else, pay attention to details. In checking accounts, for example, a product tailored to fit the company’s number and type of transactions may be more cost-effective than “free checking” once the extras in the fine print are added up.
8. Get ready for “time off.” No one plans to be sick or injured, but sometimes it happens. Business owners should prepare by having and funding a Health Savings Account (HSA) and securing income protection plans such as disability or major medical coverage. If bad things happen, the planning you’ve done can keep you and your business going.
9. Make a succession plan. Start preparing well in advance – one to three years, more if possible – for retirement or a career move. The business may have substantial value (hard assets like property and equipment or soft assets such as customer lists) that can be sold to provide a start on retirement or that new opportunity. But having a plan must come first.
10. Assemble a “dream team.” Seek out expert advisors and build relationships – with a banker, lawyer, accountant, tax pro, insurance agent, suppliers, customers or all of the above. A mix of pragmatists and visionaries is good. A dream team can troubleshoot issues, provide perspective and generate new ideas for sales and profits.
11. Create a tax plan. Create a plan to set aside money for customer payments – either a monthly or weekly amount – to cover tax obligations. Get expert advice on deductions and credits, including a system to be proactive throughout the year to maximize those tax benefits for the business.
12. Get involved with other entrepreneurs. Time and again, business owners realize great benefits (and enjoyment) from engaging with like-minded entrepreneurs – in a training class, Chamber of Commerce, community organization or business group. Don’t go at it alone.

Sure, the economy is challenging right now and small business owners have special challenges. But this also is a great time to be an entrepreneur, to think differently and create opportunities to grow. Even uncertain economic times, if handled correctly, offer opportunity to plan ahead and execute better than competitors. Just remember what Roger Maris once said, “You win not by chance, but by preparation.”

And if help is needed to prepare, try asking a knowledgeable banker for ideas.