As a small business owner, one of the most intimidating aspects of running a business can often be managing the finances. Being subject-matter experts in their chosen profession not many entrepreneurs have experience with the day-to-day aspects of running a business, let alone overseeing the finances.
That’s where expert help is crucially important. A good banker can prove to be an invaluable ally to a small business, not only by helping its owner borrow capital, but also working with him or her to plan for the future and assure potential customers of the business’s stability and credibility.
We’ve asked a group of MidWestOne small business bankers to share the most important money management lessons they’ve learned in their years helping small businesses.
Tip #1: Communicate consistently with your banker.
“Even if there is not an immediate need, it is a good idea to try and make sure you reach out to your banker on a regular basis so when a need arises it can be addressed in a timely manner. Consistent communication can mean weekly, monthly, quarterly or even semi-annually depending on the type and needs of your small business. This also goes both ways. A good banker will initiate communication with the small business on a regular basis.”
Aaron Swartzendruber, Vice President, Commercial/Ag Banking, MidWestOne Bank
Tip #2: Hire a good controller/bookkeeper.
“When it’s time to hire a controller or bookkeeper, don’t skimp. Invest in the employee and ensure they have the skills necessary to be a trusted advisor you can count on. They should be able to:
- Identify financial difficulties at an early stage.
- Analyze what business segments are most profitable and why additional resources should be allocated to those areas.
- Act as your human resources person.
- Put financial statements and projections etc. together for your financial partners.
- Help analyze the feasibility of potential acquisitions.
- Run the business in your absence.”
Jesse Gleason, Vice President, Regional Credit Officer, MidWestOne Bank
Tip #3: Find a mentor.
“If you as a business owner have a question or a challenge, it has most likely been experienced by someone who has gone before you. A mentoring relationship can help you work through these challenges and create a valuable network for you for years to come.”
Brian Hauser, Vice President, Commercial/Ag Lender, MidWestOne Bank
Tip #4: Keep the lines of communication open.
“Good bankers want to be your financial partner and an asset to your business. Communication helps bankers become more engaged with your business and may even help you through difficult times.”
Brad Amthauer, Commercial/Ag Banking Officer, MidWestOne Bank
Tip: #5: Create your business plan.
“Creating a business plan is one of the most important steps you will take, because the plan serves as your guide for tracking your company’s progress. More importantly, a business plan is usually essential if you want to get financing. Your business plan should project 3-5 years ahead and outline the route your company intends to take to reach its yearly milestones, including revenue projections. In addition, a well thought out plan increases efficiency, reduces business-related risks and helps in decision making.”
Rennee Smith-LaBarge, Vice President, Business Services, MidWestOne Bank
Tip #6: Keep detailed financial records.
“Keeping detailed financial records not only helps you know where your business is at financially at all times, but it also provides the information that your lender requires. Having it available at any given time in an understandable format lets your lender know that you are on top of knowing where your business is at currently and where it is headed.”
Cory Ahrendsen, Second Vice President, Commercial/Ag Banking Officer, MidWestOne Bank