Can You Live Without a Bank?
While the hatred of financial institutions is rather en-vogue, the simple truth is that banks, banking, and bankers play a very important role for all businesses whether one wants to admit it or not. Think about it: You are buying supplies and selling products. How are you paying for it? You may be operating your business in some form of commercial real estate, which is made possible by a mortgage through some form of lending institution. Usually a bank. Your business is (ideally) about generating profit. Your customers’ ability to pay you is often dependent upon their ability to generate cash or obtain lines of credit from a bank. Where are you putting that profit? Almost all businesses need a checking account for operations and payroll. How are you meeting payroll? Can you even think of a business that does not accept credit cards? And where do those credit card charges go? In short, most business roads lead back to your bank account.
Back in February of 2015, I wrote an article entitled Do You Have a Line of Credit (LOC) Yet??!?, in an attempt to convince business leaders they should have a LOC at their disposal, even if they don’t think they need one. It’s a commonly-held axiom that those who need money, can’t find it, and those who don’t, can.
Love them or hate them, banks are key to your business
Do You Know Your Banker?
If you really think about it, banks represent potentially the single greatest third-party institution that influences your business. Your loans, rates, payroll and customers are all somehow tied to a bank and therefore, your individual business.
So the million dollar question is: What are you doing to leverage the power of banks for your business? Sadly most businesses do not really know about the very institution that they entrust their money to! Can you answer the following questions about your bank?
- Are you SURE you have great merchant account rates? The advertised rates are usually the “qualified rates” (or best rates) and are rarely available to merchants.
- Are most of your transactions swiped or card-not-present transactions? Do you know what your rates are for each type of transaction?
- Are you taking advantage of banking incentive programs? Do you even know what are available to you and/or your business?
If you cannot answer any of the questions about your bank, it might be time to go in and get to know them.
The problem is, most entrepreneurs and business owners struggle to meet payroll without even knowing their banker, let alone know of any special programs that could help them or their business.
Do you know your bank?
Now this issue is understandable. There are only so many hours in a day to run your business, let alone chat with a bank. But if you’re not trying to leverage your banking relationships, you’re potentially selling your business short.
Take the time to really know your banker. Go to your to your banking branch and tell them that you want to meet their “business banker.” Tell them about your business and see what incentive programs and options may be available for you or your business. This is business for you and for your bank. Work towards establishing a relationship with them. If possible, see how you can bring the bank more business and they will work towards helping you in ways you can’t even imagine.
At the end of the day, work towards having a first-name-basis relationship with your banker. The relationship will pay off handsomely over time, and more importantly, improve your understanding (and access) to capital when you need it.
Law 4 Small Business. A little law now can save a lot later.