Judy Ballast, a long-time commercial banker with over 20 years of experience, tells wellness businesses how to choose a banker and get the most from the relationship.
If you missed Part 1, it covers the seven biggest banking mistakes small wellness businesses can make, plus three kinds of clients that give bankers nightmares.
What should small businesses look for in a banker?
Ballast says that business owners should look for a banker that “They feel confident in, who can deliver what they say they will.”
1. Does the prospective banker have a solid work history?
Seek out a banker who’s spent most of his or her career with a handful of institutions. Avoid bankers who have hopscotched from bank to bank. That kind of work history suggests that they haven’t stuck around long enough to build knowledge from working with clients through the business life cycle. And, they’ll be less familiar with internal bank processes and resources than someone who knows the organization well. Plus, you want to build a relationship with someone who’ll be around for awhile.
Questions to ask: How long have you been in commercial banking? Which banks have you been with? How long have you been with this bank?
2. Does this banker have deep experience in all aspects of small business banking?
According to Judy, “Some bankers can be ‘one and done’ transaction specialists”. For example, a banker may specialize in nothing but large dollar commercial lending, asset-based lending or SBA financing.
While those specialists can be helpful resources, business owners are better off building a primary banking relationship with a generalist who can “plug in” specialists as needed and orchestrate their efforts. Otherwise, the client has to identify and select the most appropriate and best-qualified specialists and coordinate their efforts with other banking resources — something that most business owners really don’t have the time or expertise to do well.
3. Does your personality mesh well with this banker?
You need to be able to relate well to your banker on a personal level. You don’t have to golf together, but since you’re going to be sharing intimate details about your business, make sure you feel comfortable with the banker you choose.
Avoid bankers who seem rushed, impatient, intimidating or perpetually pessimistic. Look for someone who’ll make sure you understand options and tradeoffs and the pros and cons of different choices.
This one’s especially important. We’ve worked with many successful wellness businesses who were initially dismissed by bankers, attorneys, and other professionals who simply lacked imagination. Anyone can poke holes in your business plan. Look for a banker who can propose solutions for those “holes”.
4. Can you detect a genuine interest in clients and their businesses?
The ideal business banker has a genuine curiosity about their clients’ businesses. In fact, that’s why Judy herself chose banking as a career: “I like to solve problems and fix things, and I really like understanding client businesses.”
If you’re considering a banker who talks more about the bank and its financial products than about your current business challenges and plans for growth, run for the hills. This isn’t the banker you want.
Questions to ask: How often do you proactively call clients during the year, just to check in? How recently did you visit a client business and why? Can you tell me about a client success that you felt especially good about?
5. Is your prospective banker well-connected?
As Judy says, “it’s the banker, not the bank” that business owners deal with day in and day out. A top-notch commercial banker will have a network of business resources that they can help you tap into.
Say you’re looking for a new wellness center location. Your banker can suggest a commercial real estate broker that other clients have used successfully. Perhaps you’re thinking about selling your father/son healthcare practice. A well-connected banker can suggest a business valuation expert and an attorney with experience in exactly that area.
Questions to ask: I may need a new accountant…who would you suggest? If I need a new commercial attorney, who have you seen clients work well with?
6. Do you want a single bank to handle your personal and business accounts?
While a dedicated banker and financial planning services may be appropriate for high net worth business owners, even a new business owner may find it valuable to consolidate personal and business banking relationships.
Having one banker to call who can assist with business and personal needs frees up the business owners time to focus on business. Your banker can be your research and financial solution partner for both business and personal needs. And you may be able to take advantage of online banking tools that give you a consolidated view of your business and personal banking relationships.
Even a sole proprietor like a personal trainer or nutritionist can benefit from combining personal and business banking relationships with a single banker. Since you’re often relying on personal guarantees and personal assets to supplement the financial resources of your single-person business, a banker who understands your complete financial picture is an asset.
7. Choose a bank that will be convenient for your needs.
Find out if the banker will come to your office. Consider whether bank locations are convenient for your needs. For example, if you’ll be making night deposits, make sure that the nearest drop is on a convenient route. More and more banks have extended their hours to include evenings, Saturdays, and Sundays. If this flexibility is important to you, look for that feature.
Convenience can be especially important if your wellness business maintains extended hours which make it difficult for you to get to distant locations during the typical business day.
8. Does the bank have the resources my business needs?
Most businesses will need to borrow money at some point. Find out whether this bank has a strong track record of lending to your kind of business. Lending services, pricing and underwriting guidelines can vary dramatically from bank to bank.
Most banks offer lending for operating lines of credit, equipment loans or leasing, business expansion or real estate. However, expertise and flexibility will vary greatly from bank to bank. Asset-based lending and factoring frequently require a financing source other than a bank so your banker needs to know the best resources for your industry.
You’ll also need to consider whether they offer tools and products that can make your business life easier and increase your staff productivity.
For example, a lockbox (where payments are sent and posted) and sweep accounts (which automatically transfer available cash to an interest-earning account) can streamline your in-house operations and reduce the likelihood of fraud
Tools like online banking offer streamlined bill payment and instant visibility to account activity and balances. You may also want consolidated reporting of multiple accounts — either personal and business, or multiple business accounts. This feature is especially valuable if you oversee multiple businesses or organizations.
Also: does the bank offer security features that enable you to safely delegate certain banking responsibilities to others in your organization?
9. If your business is new, are the minimum banking fees and charges reasonable?
Check the cost and minimum balance requirements for a “starter” business account. These accounts are often free at entrepreneur-friendly banks and minimum balance requirements can be as low as zero.
Investigate the per-item costs for business checking as well. For example, will your business pay a fee for each item deposited?
If you’re planning to use your bank’s merchant services for credit card processing, check the fees to make sure they’re competitive.
10. Does this bank have a full range of products that your business can “grow into”?
As a business owner, your goal is to choose a bank that can provide additional products, services and resources are your business grows. Otherwise, you’ll have the unpleasant task of switching banks or maintaining multiple relationships — not what you and your staff should spent time on.
Examples: credit-card processing and merchant services, payroll services, and “bank at work” benefits for your employees.
We also asked Judy to tell us what clients can do to benefit most from their banking relationships. Her advice:
11. Know your cash flow and what’s going on financially in your business.
Judy says a savvy business owner should never say “I run ‘X’ dollars through your bank every year so you should know by looking at my account how I’m doing.” You’re the owner. It’s your responsibility to know your cash flow situation and key financial trends in your business. If you need help in financial management, a resourceful banker can suggest a business advisor who can help you straighten things out.
She also offers these additional tips:
12. Use bank resources fully.
Some clients are still reluctant to use services like online banking. However, if you always call to check your balance or the status of a deposit, you’re often going to spend time on hold or have to leave a message and wait for a callback.
It’s usually much quicker and easier to check online yourself. And services like online banking are usually included at no additional charge, so take full advantage of them.
Business credit and debit cards assist owners and employees in managing business expenses. Some banks offer business debit cards with daily pre-set spending limits so that your employees can have a predetermined amount available for business purchases they make routinely.
13. Keep your banker in the loop.
Treat your banker as part of your extended team — someone that you trust and have confidence in. Include them in your medium-term business planning and thinking. They can help you anticipate issues and point you to potential resources.
The business climate and the economy can change fairly quickly so while some short-term planning (the next 6 to 18 months) is important, medium-term planning (18 months to 3 or 4 years) is vital to business success. Successful business owners anticipate changes in trends and consumer or business spending and will adapt their business model accordingly.
14. Use your banker’s Rolodex.
A good business banker is extremely well-connected to other business resources, like CPAs, attorneys, real estate agents and brokers, valuation experts, business coaches, and more.
Keep them informed about your business goals and challenges and ask them for suggestions about professional business resources that may be able to help you.
