Business owners to look at their banker as a business partner on the same plane as an accountant and attorney, say experts
By Deborah Jeanne Sergeant
An important part of establishing and growing a business includes selecting a business bank.
According to SCORE, a nonprofit business mentoring organization in Washington, D.C. (originally Service Corps of Retired Executives), “82% of small businesses fail due to cash flow problems.” Establishing a good business relationship with a bank can make a big difference.
“Understanding the business is our job,” said Jamison R. Flora, senior vice president and business banking sales manager at Community Bank. “We understand capital needs so we can help.”
But how do you select a bank? It’s important to feel comfortable with your banker, for one thing.
“If you don’t have a banker that you can pick up the phone and call who knows your name and your business, you should work to change that,” Flora said. “Banks all have similar products. It’s a little bit commoditized.”
Yet he also said that the differences among banks can help small business owners decide. For example, as the business grows, can the bank accommodate the business? A bank that’s too small may not be able to. But a bank that’s too large may overlook the needs of a small business.
Flora encourages business owners to look at their banker as a business partner on the same plane as an accountant and attorney. A business banker should know about the business, its history and your business plans and goals.
“In the end, you should have someone there who’s not just reactionary to your needs but a partner,” Flora said. “If you’re looking at buying a building, they can help you walk through if it’s feasible.”
Talking with a few different bank representatives can help business owners get an idea of the level of attention they would receive from each. Flora added that the bankers should talk about the business and its plans, not just the bank’s rates and products.
“That’s a ‘tell’ for me,” he said. “We really need to understand why they got started and why they do what they do. If you’re trying to make a personal connection and that’s hard to do, it’s a red flag. There should be folks who get to know you. If you’re directed to websites or siphoned off to 800 numbers, it signals it’s a time for a change.”
A small business bank should be able to offer financial guidance so you understand better what banking products will be most helpful for your business. For example, business accounts, including savings, checking and credit card or debit card services. Look at the fees and account charges to ensure they’ll work for your business budget. Does the bank provide convenient hours, ATMs and branches? These factors will help you find a bank that meets your business needs effectively.
“Your banking partnership should be built around the tools, products and resources that you need,” said Jonathan Spilka, business banking territory manager, NBT Bank. “For example, do you need cash management services? If so, does the bank you’re looking to partner with have a full suite of these services? Or perhaps you need a certain type of working capital line of credit or business mortgage. How about digital banking? Does the institution you are considering have the services you need to quickly and efficiently conduct business digitally? Some banks offer all these products, but some only offer select options.
“This is such an important relationship and you want to be sure you find the right fit for you and your business.”
