Choose the Right Bank for your Small Business

If you’re an entrepreneur and getting ready to start a new small business one of your first task is going to be to find a bank that helps you to achieve your business goals. Indeed, a mistake that many new business owners make is to use a bank out of simple convenience or loyalty when in fact they should be taking time to ask tough questions and make sure that their bank has their best interests in mind (at least to a point).

That being said, below are a number of steps, tips and advice that you can use to help you select a bank that’s suited to your specific needs as well as helping you to improve your overall relationship with your bank. Enjoy.

  • One of the first things you should do is get to know your banks branch manager on a personal as well as a business level. By building a connection with the decision-makers at your bank with face-to-face conversations, you’ll increase the chance that they will accept your proposal or lend you the money that you need when the time comes. You should also review your personal accounts with them and show them that you are committed to bringing them new business if they are committed to helping your business grow.

There are a number of services that you should definitely inquire about and also some that you should qualify for including employee credit cards, mortgage loans and other products that can sometimes be bundled for better rates.

Loyalty to your bank should pay off in lower interest rates and less overhead and should enable you to utilize one bank instead of several.

  • At least once a year you should ask your bank for feedback on the performance of your company. The fact is, there are many small business owners who don’t take advantage of the expert advice and experience that a bank manager has, advice and experience that could very well help them grow more quickly. It’s recommended that, at least once a year, you schedule a formal briefing with the branch manager and other key banking staff as well as the key members of your own staff.

What this can do is provide you with valuable feedback about your company’s financial performance over the previous year as well as pinpoint the areas of opportunity and growth that you may have but not be aware of. Even better, the advice that you get will help you and your team to sharpen your pitch when meeting with potential investors.

  • Make sure that, at least occasionally, the relationship manager at your bank is bringing you new business contacts and ideas. If you are working with an effective business banker you’ll find that they understand quite well what it means to cultivate collaboration between their clients. For example, if you’ve recently given them a great presentation you should expect them to mention it to some of their other customers and, when they come across a customer who may be able to help you, they should do the same.

Frankly, your bank manager’s job is to contact you about new products and services that they offer but, if that’s all they do, you may wish to find another banker to work with.

  • Talk frankly with your bank about how they are doing and what plans for growth that they may have. If you look at your bank as a partner in your business then you will quickly realize that asking hard questions about their track record and their predicted growth, as well as any plans that they have for the future, are only normal. Ask about their limits for federal deposit insurance, their security measures to protect you from fraud or mismanagement and anything else that might affect you positively or negatively in the future.

While you may not be looking right now for a bank loan it’s always a good idea to build connections and demonstrate loyalty with any bank that you are going to work with in the future. The fact is, most businesses will face theft or fraud at one point and, if you have a relationship with your bank that you can count on, you’ll have a much easier time straightening things out when the inevitable happens.

A smart bank manager will recognize the value of a long-term relationship with a successful business and, if you nurture a strong relationship, you’ll find that this can pay off greatly in many ways.

If you have any questions about banking, personal finance or any other type of finance question, please let us know and we’ll be sure to answer those questions and give you options as well.

Speak Your Mind