How Small Business Banking Can Improve Your Bottom Line
Small business banking undoubtedly plays a role in the way you run your business, but if you’re like most successful entrepreneurs, your focus is on new ways to grow and improve your bottom line. And it should be! U.S. small businesses are critical to job and economic growth. According to the U.S. Small Business Administration, two out of three net new jobs in the U.S. are created by small business owners. In 2017, there were 29.6 million small businesses, representing 99.9% of U.S. businesses.
To help you keep those business goals on track, check out our list of 10 tips to steer you toward financial success, including the role of small business banking.
Tip #1: Find a mentor – small business mentors have shown improved success
Even the most seasoned small business owner could benefit from a mentor. A mentor can help you navigate complex challenges unique to your industry, geography or size and provide perspective from someone who’s been there, done that. In fact, in a recent survey by The UPS Store, 70 percent of small business owners that receive mentoring survive for five years or more, double the rate of those who do not receive mentoring.
Mentors offer networking opportunities among other business owners, the community and your potential/existing customers.
Check out these popular small business mentoring sources:
- America’s Small Business Development Centers. With nearly 1,000 centers, America’s Small Business Development Centers (SBDC) SBDC is able to provide no-cost business consulting and low-cost training through their partnerships with leading universities, state economic development agencies and the U.S. Small Business Administration. Their mission is to help entrepreneurs like you realize the dream of business ownership.
- SCORE. In partnership with the U.S. Small Business Administration, SCORE helps foster vibrant small business communities nationwide, through mentoring and education at various stages of a business’ life.
- Business Advising. Matching small business owners with volunteer business advisors, The Small Business Administration provides hands-on assistance, including small business banking expertise, to grow your business and create quality jobs. This non-profit organization empowers small business owners with working capital, free advice and access to networks that will help you grow.
Tip #2: Review your small business’s overhead expenses and improve efficiencies
You know how quickly overhead expenses can become an issue for your small business. Next time you review your monthly expenses, try to identify routine tasks that could be automated for efficiency.
TA few automation examples include:
- Evaluate fees. Review credit card processing, technology solutions and other merchant services. Consider changing to a financial institution that can reduce or eliminate these fees and who specializes in credit card processing for small business.
- Investigate streamlined small business banking services like payroll deduction or bill pay.
- Review your space. A building is costly. Consider reducing your location expenses by sharing space, adopting a remote work culture, negotiating a better lease agreement or refinancing your commercial real estate loan.
- Seek out new estimates for insurance, printing, office supplies, cleaning, security and other overhead expenses.
Be sure to balance your cost cutting efforts so they do not impact employee performance or product quality. Your business accountant or small business banking provider may be able to help you identify ways to control costs specific to your needs. Our business banking team is also a great resource to help you find opportunities to streamline and reduce overhead expenses.
Tip #3: Worried about cash flow? Shore up those accounts receivable.
When was the last time you didn’t worry about cash flow? If you’re one of the few small business owners without this concern, you’re lucky! But, the vast majority of business owners struggle with the day to day cashflow.
Here are a few ideas for shoring up those inevitable accounts receivable:
- Tackle those late-paying customers. Not literally! But, don’t hesitate to place a quick follow-up call to customers who are past due, to quickly resolve those payment issues.
- Review your credit terms. Is your credit term too loose? Net 30 days is the standard amount of time most small business owners will extend credit to customers. Are you clear upfront about what you expect? Do you enforce late fees? Small adjustments can reap more consistent customer payments.
- Consider an installment plan. If you have repeat late-paying customers, consider offering monthly payment plans.
These accounts receivable quick fixes will make for happier customers and improved cash flow – a real win-win solution for everyone.
Tip #4: Make it easy for your customer to pay. Consider merchant services and a possible financing program
Point-of-sale financing was once limited to car dealerships and big-box stores. Today, it is possible for a variety of businesses like furniture stores, dentists, building contractors, and other small businesses to offer financing programs to customers.
Some easy payment options include:
- Credit card processing. A great place for a small business to start is by accepting credit cards. for small business is a simple way to start, along with offering debit card, gift card and other merchant services. Connect with your financial institution about their small business financial services or contact GAFCU to learn about our merchant services.
- Partner with anoutside financing firm. Another option to consider is to form a partnership with an outside financing firm. There is little to no risk for small business owners to work with a third-party financing firm to offer credit to customers. This can be a great fit for high cost products, like home improvements, where buyers can offset a large expense with a monthly payment. Customer financing programs can help you boost your sales, improve customer loyalty and build repeat customers.
Tip #5: Secure short-term funding with a revolving line of credit for your small business
Because of the cyclical nature of business, you may find yourself wanting to borrow money to take care of your company’s short-terms needs. Being able to access funds through a line of credit at any time can help you keep your business running smoothly, day in and day out.
A revolving credit line enables you to source funding before your business actually needs it and can benefit your small business by:
- Building your business credit
- Offering flexible payment terms to help you manage cash flow
- Providing access to cash-on-demand
A revolving line of credit, like Greater Alliance’s business line of credit program is a great solution to help your small business when short-term working capital is quickly needed. Check out our rates and terms here.
Tip #6: Keep an eye on industry trends
As a small business owner, you need to continually be attuned to industry trends to recognize unmet needs, market patterns and potential business opportunities. Technology, for example, is an area that impacts a wide variety of industries. Over the last several years, the rise of mobile technology has made a significant impact on how businesses connect with their customers.
According to Telapprise, by 2020, mobile devices will be so pervasive that the number of devices in the U.S. market will outnumber the population of the United States by 4 to 1.
Today, most of the U.S. population uses at least one mobile device on a daily basis. Staying on top of trends like this can help you adjust your business strategies accordingly, and invest in areas that these trends could positively impact your business growth over time.
Another great way to stay on top of trends is to continually listen to your customers. They can help you identify gaps in the market, and help you creatively find solutions to meet those demands. Airbnb became the successful brand it is today by following trends of disruption in the hospitality business that have been around since the 1950s and by understanding shifts in consumer behavior. Check in with that mentor we suggested earlier or talk to your small business banking team about industry trends and opportunities.
Tip #7: Market, market, market – keep your audience informed
Keeping your target audience informed about your business and the value you can bring to potential clients is what marketing is all about. You may have the best product or service in your industry, but without marketing, will they know this?
Marketing can also:
- influence your brand reputation and top-of-mind awareness
- help you compete with larger corporations for a piece of the market share
- grow your referral and word-of-mouth business
- grow your sales
Don’t let the short-term expense of marketing keep you from the longer-term return on that investment. By developing a strong and comprehensive marketing strategy, you’re investing in your business’s potential and future growth.
Tip #8: Target your audience (and stick with them)
Sometimes, diversifying isn’t always the best strategy. For some businesses, trying to please everyone is not possible. Having an area of expertise will set you apart from your competition and will attract a more targeted audience for better results.
When your business specializes in a product/service, you’re able to provide your target market with a superior value proposition over companies that generalize in a related field. Follow trends and focus on continual learning for a specific niche compared to a broad offering to position your small business as an authority and increasing your credibility to potential customers.
Finding (and growing) your niche market through strategic planning sessions or working with a mentor is a great way for you to help keep your goals and objectives on track. Our small business banking team is also a great resource for you as well.
Tip #9: Empower your employees and embrace customer service
Small business owners who embrace customer service as a company-wide philosophy tend to have greater sales success. Forbes highlighted Disney and Zappos as two great examples. For all employees to truly understand what it means to be customer-focused, they must understand how important customer service is to the company, how service fits into the culture and how each and every employee plays a role in organizational success.
Satisfied employees are productive employees who stick around and keep your cost of hiring low. Empower your employees to be decision-makers while developing functional skills, improving company processes and streamlining strategic goals. Invest in training programs to enhance your employee’s skills, improve morale and increase productivity.
Tip #10: Never stop learning
Most small business owners must wear multiple hats to keep business moving forward. As such, you must constantly stay on top of trends, regulations, competition and economic factors to thrive.
According to a recent article by Mission to Learn, small business owners who embrace lifelong learning are able to adapt to change easily and therefore can be more successful. Lifelong learning increases your knowledge and your ability to use that knowledge in diverse and meaningful ways. Here are a few quick ways to keep that brain active:
- Join a LinkedIn industry network
- Become a member of your local chamber of commerce
- Engage with an area service club, like Kiwanis or Rotary
- With today’s instant access to information, you can easily tap into what’s most relevant to your industry.
- Do an online search of your industry’s top information resources
With today’s instant access to information, you can easily tap into what’s most relevant to your industry.
How to select the right business banking needs for your Small Business
The right small business bank will behave as if they are small enough to care and provide personalized services, yet large enough to offer the best products and services with the lowest fees. The Greater Alliance Federal Credit Union small business banking team understands what it takes to operate a successful small business. We’re here to help you in make better, long-term decisions on your business banking solutions.
Greater Alliance Federal Credit Union has many small business financial services available to assist you in finding the right business banking needs for you, like credit card processing for small business or business loans and lines of credit
We encourage you to contact Greater Alliance or another trusted financial institution to discuss your business model and needs and to build a small business banking relationship that will grow as your business grows. Contact us at 888-554-2328 x290 or visit a Greater Alliance branch location today.