Online Small Business Banking

In the digital age every bank has an online presence, from my little credit union to the big national players. However, not all banks are geared toward serving small business via the internet and, while they all offer you a lot of promises and maybe a flashy new toaster oven, not all of them offer you the services that you need at a competitive price. Here’s what to look for and how to spot those that offer online small business banking from the poseurs.

Customer Service and Big vs. Small Banks

One thing that you may read is how important it is to “cultivate relationships” with your banker and how important your banker is in expediting and even deciding whether or not you get a loan. While this may still be true in the smaller banks, in larger regional or national banks you will never, ever meets the person who approves your loan. A buddy of mine who was a big shot at a major bank before ditching it all to go into the Peace Corps said that the big banks create a strong separation from the banker that you meet, who is basically a sales person, and the person who decides, who is basically an accountant. So skip bribing your banker with chocolate truffles or bottles of bourbon. In fact, if you already bought the “gifts,” just send them here and I’ll gladly dispose of them for you for free!

Similarly, once the recommendation for business people was to keep all their banking with one bank, in order to build up a relationship of trust with that bank. Now, however, the idea of relationship is breaking down and, thanks to the internet and the relative ease of online banking, small businesses can cherry pick the best services off a smorgasbord of banks just like the Bigs do. In fact, the biggest reason that I can see of deliberately keeping all services with a single bank is not having to remember more than one sign-on, password, and pin!

What Your Bank Should Be Able to Do for You

Business Checking Account

One of the essential elements of running your own business is treating it as a separate entity distinct from your own personal affairs or the affairs of your other businesses or investments. Failing to treat your business as a separate entity opens up numerous potential legal and tax consequences that could end up being very costly or even financially disastrous to you. Opening up a business banking account is one essential act that helps establish your business as a separate entity. For most business the key to the checking account is functionality, forget interest rates and a few dollars difference in cost. The key questions are:

  • Can you use the web site to pay pre-pay bills, transfer money, accept online payments and whatever other essential services that your business might need?
  • Are you able to easily download information from the online site to QuickBooks Online or whatever other accounting software that you might be using?
  • Do they have the highest level of online security that is convenient for you?
  • Are they relatively light on “hidden fees” that $5 and $10 you to death just to be able to perform regular, essential operations of your business?

Security

Small businesses run by new entrepreneurs often have lower standards of security and this is especially true when it comes to banking and banking online. The smalls just don’t have the expertise nor the payrolls stuffed with I.T. professionals to keep up with the Trojans and frauds that cyber-criminals use to prey upon the unfortunate, and the unwary. You want the highest level of security possible but without making it so inconvenient on yourself that you aren’t fully able to take advantage of the online services. For example, while I was a Peace Corps Volunteer in Guatemala I often had to do my banking from internet cafes, and not always with my laptop that was impractical to lug around. When Chase, my original bank, changed the security so that I had to go through a complicated and time-consuming process every time I tried to access my account from a different computer I had to change banks (rather, I added a new bank) because that just wasn’t doable for me.

Loans and Lines of Credit

Loans are a prime area of shopping around and using the power of the internet to shave a fraction of a point off the interest rate. However, if you can’t pay the loan through an electronic transaction between the bank of your checking account and the bank that services the loan and make that payment for free then who cares about a little reduction of the interest rate. I like to look around for the best deal and then ask my primary bank if they can match it, just to keep my life as simple as possible.

Credit Cards

One of the easiest ways to make payments these days is by credit card and you will want at least one that is exclusively used for business purposes. There is no “best” credit card for small business and usually your bank will be able to provide you one. Keep in mind that you want one that is easy to set up and maintain electronically, that is widely accepted (especially if you travel for business), and has a high enough limit for what you need. Remember that building up credit for your business is just like building up credit personally, the better your history the higher your limit will be.

In Conclusion

Starting up a small business can be intimidating and the days when you could have a banker hold your hand and guide you through the process are long gone. The flip side of that is the incredible amount of information available to you at your fingertips. Another advantage is that you are no longer geographically limited, a world of banks is waiting to serve you! Just remember to keep in mind the services that you need, those that you don’t need, and those that you need but could be found at another bank for a better price. Happy banking!

Small Business Marketing – The Power of a Market Review

Conducting a market review is one of the most important steps in the small business marketing process as it provides together with a business review the information you need to create a dynamic marketing plan. All big businesses conduct these reviews as they know it can save time and money for their business.

A market review does not have to be complicated and a lot will depend on what information you can source. The important factor regarding a market review is to understand the key elements of your market and how these elements can affect your business now and in the future.

The key elements you need to look at when conducting a market review for your small business include:

Size of Market
Your market is simply the overall industry in which you compete. For example if you sell juice then you compete in the Beverage Market. If you sell holidays as a travel agent then you compete in the Tourism Market. Analyzing the size of your market can tell you whether it is growing or declining, help you to identify growth opportunities and for a new small business can determine if the market is large enough to compete in and operate a profitable business. There are many sources you can use to gather information on the size of your market and these include trade magazines, industry associations, search engines and local government websites and resources.

Market Segment Analysis

Segmentation is a process that looks at the total market and then divides the products or services into broad groups that have similar characteristics. In the examples above, whilst the total market is beverages, the segment that is the most important to a juice manufacturer is the Juice Segment. Looking at the total beverage market today throughout the world the leading soft drink manufacturers have entered many of the market segments such as bottled water to expand their business. Market segment analysis also helps you to determine where your small business marketing efforts should be concentrated.

Distribution Channel Analysis
A distribution channel is the way in which your product or service is made available to your customers so they can purchase it. Examples are supermarkets, personal selling (face to face selling), distributors and the internet. Analyzing the sales of each distribution channel in your market enables you to identify which channels are the most important for you to compete in to grow your business.

Market Trends
A trend is any significant change to your market that your business may need to respond to. Examples of market trends include changes to the economy, changing customer demographics, social and global factors (to name a few). If you conduct business in the USA at the moment or are intending to compete in the USA then the concerns about a possible recession and how it could affect your small business needs to be identified so action plans can be put in place to minimize the impact.

Market Seasonality
If a product or service is seasonal it means that the majority of the sales occur at one or a few times a year. Tax accountants obviously have increased sales when the end of the financial year occurs and tax returns and other government reporting are required. Understanding market seasonality factors can lead to your small business maximizing sales through this period and also may highlight opportunities to spread your sales throughout the year.

Competitor Analysis
Your key competitors need to be analyzed in order for you to identify their key strengths and weaknesses and how they compare to your own small business. Reviewing this area means that you can be smarter with your marketing efforts and be proactive against their weaknesses and of course defend against their strengths. One tip that all big businesses do is to have a competitor file with examples of their marketing activities, products or services.

Big businesses know the value of reviewing the market in which they compete and you can to. Remember you can start slowly and just review one section at a time and then put in place activities or make business decisions based on the review to grow your small business.

© Marketing for Business Success Pty Ltd 2008

Tips to Successfully Sell a Small Business

When you started your business you planned to grow it as a lifetime enterprise. Now, for whatever reason you have decided to sell your business and cash in on all your hard work. Maybe you want to stock up all over again in another field of business or maybe you just want to put up your feet and relax. Since selling a business is normally a once in a lifetime venture, it is unlikely that you would have any prior experience unless you have started or sold several small businesses in the past. Here is some good advice to get you started with selling your small business:

Defining your business sell expectations
In order to conclude a successful sale of your small business you need to plan the sale meticulously and the first step is to define your expectations:

  • Do you want to sell your business for cash or will you accept payment in another form such as stock or debt instruments?
  • What is your price expectation
  • What expectations do you have of the buyer in terms of business continuity and tradition?
  • Do you want to sell out to the public in an IPO or to your employees in a ESOPs scheme?

Timing and financing
It can sometimes take a long time to negotiate and conclude a sale of a business especially if there is complicated tax issues involved. The majority of small business sales involve some form of seller financing such as deferred payments so that you may not see a large lump sum of cash payment up front. Give some thought to the risk and how you would like to structure the small business seller financing.

Valuing the sell of your small business
You would need a detailed and sensible valuation of your business in order to justify the price that you will be asking for it. Decide on the method that you’ll use since methods may vary with the kind of business involved. The judgment on whether you will use asset value, replacement cost, or capitalization of earning or some combination thereof depends largely on your judgment and what a potential buyer will accept.

Re-doing your small business financial statements
As long as you are running your business, how you present your financial situation is largely dictated by tax considerations so as to minimize your tax bill. You will probably need to recast your accounts to show the true earning potential to backup any business valuation that you undertake. Though you should probably be cautious as to whom you show these records and consult an attorney in the process.

Sell small a business with privacy
It’s a good idea to sell your business with concerns for privacy. You should conduct all your sale negotiations in secret and restrict people in the know to as few information as possible. If word gets out that you are selling, you will find key employees leaving the company or being recruited by competitors, you’ll also find suppliers pulling lines of credit. This will simply impair your ability to get a decent price for your small business. The sale of a business usually screams financial troubles, you don’t want the wrong perception to get out in the public about your small business.

Use a competent small business broker
If possible use a competent business broker. Get referrals, shop around, and research. S/he will help you set a realistic price, identify and approach potential buyers in the strictest of confidence. Remember that s/he has a vested interest in getting the highest possible price since their rate for services rely on commissions of the sale.

Selling a business can take time, but due diligence will prove to breed success. One can expect a sale of their business if they’ve took the needed measures to ensure that their small business is aligned in a direction of growth and they are able to prove such statistics.

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