As a small-business owner, you are the chief financial officer, the human relations professional, the marketing manager and the IT guy of your own company.
Managing your business’ finances and business accounts can feel, at best, like a nuisance. But effectively managing your company’s finances is one of the most important indicators of success.
Whether you’re a new small-business owner who just finished filing business documents or an experienced entrepreneur looking for a new bank, an effective relationship with your bank is essential to ensuring the financial health of your business.
Working with small businesses presents unique opportunities for banks. Every small business is different and your banker is likely to ask you a few specific questions in order to understand your industry, financial history and business goals. Preparing thoughtful answers to these questions will help your banker serve you and your business needs. Here are a few questions to consider:
WHAT DOES YOUR BUSINESS DO?
A simple question that needs more than a simple answer. Be prepared to explain not only your product or service but also your industry, customer base and competitors. When your banker understands the objective of the business, he or she will be able to provide you with the right tools for success.
HOW LONG HAVE YOU BEEN IN THE BUSINESS?
A business in its first year of life may have a different trajectory than one that’s been around for several years, and the best financial solutions can vary based on how a business plans to grow. Providing a snapshot of your business’s past will help your banker visualize its future and the best path for success.
HOW DO YOU GET PAID AND HOW DO YOU PAY OTHERS?
The cash flow of your business is one of the key indicators of its health. Understanding how money flows in and out of your account allows your bank to determine ways to improve your cash flow — ensuring you have the money you need when you need it.
WHAT WOULD HELP YOU RUN YOUR BUSINESS EFFICIENTLY?
Many banks have a suite of services and products, like online banking, remote check deposits and merchant services that help business owners simplify their finances. For example, Bank of America offers credit cards specifically catered for small business owners and health savings accounts just for small-business employees. Before you meet with your bank, look online to see if any of their offerings jump out at you. Getting informed ahead of time will help you know what to ask for.
WHAT ARE YOUR CURRENT
REVENUES AND BUSINESS GOALS?
Are you planning to expand your business, buy equipment or increase inventory? A deep understanding of your sales, projections, and goals will help your banker provide lending advice and options for future opportunities.
Tim McDonald is senior vice president of small-business banking at Bank of America. He can be reached at email@example.com.