By Gene Crane, EVP, Business Banking Manager, River Bank & Trust
If you are a business owner, 2017 is well under way and a perfect time to ask yourself what are all the things I need to keep an eye on. As a business banker, my experience allows me to share these as the main things you need to keep a sharp focus and attention on:
1. Adequacy of insurance coverage.
Here are some questions: Ask yourself: Do you have a good agent and heed their advice and seek their counsel? Is there a buy/sell arrangement with partners? Do I need a key man (person) life insurance policy? Are my deductibles right? Is there adequate coverage for a business interruption?
This may seem like a no-brainer, but do you as the business owner actually sit down and devise a budget for the year? Just as important, does your budget align with your goals and ambitions this year? Remember to build a budget around the things you hope to accomplish.
3. Capital expenditures and debt plans.
The debt could arise from those capital expenditures, which could range from hiring more people; buying new equipment; moving to a larger facility or office or expanding your current site as part of the goal of growing the business. Do you have a plan and schedule for handling that debt? We can certainly help you with that.
4. Use profits wisely.
Reinvest in the business and be thoughtful about distributions. It’s difficult to grow your company if you are pulling money out after paying your salary and all expenses. Some business owners strip their company of profits so they are unable to build capital and grow the company. Capital is key as well as preparing for downturns in the economy or unexpected breakdowns.
5. Spend time with your banker.
One of the first rules is don’t surprise your banker. Let them know about major developments – both good and bad. Give your banker a head’s up because that makes it so much easier to take care of you and your business. Bankers are not the enemy – they are your teammates.
6. Get your money’s worth from your CPA.
Your certified public accountant is an excellent financial resource. They have great advice for tax strategies and overall financial strategies. You can run ideas by them about capital expenditures. Take advantage of a CPA’s skill set.
7. Get paid for what you do.
You will greatly hinder your business if you do not charge enough for your service or products. Don’t be afraid to gradually raise your rates. After you charge enough you also need to make sure that your customers are paying. Don’t be afraid to collect for your services. You have to get paid for the service that you provide – your company needs the capital. Make sure you are competitive. Keep up with your latest industry developments and trends.
8. Keep an eye on the socreboard.
The scoreboard is your company’s financials. You should know at all times how the business is performing weekly, monthly and annually. You should able to recite if sales are up or down or how profits are looking or if your expenses are in line. You need to maintain up-to-the-minute books and if you don’t your banker won’t know how your business is performing. The better your books are the better we can help you.
NOTE: After graduating from the University of Alabama in 1987, Gene Crane returned to Montgomery to begin his 26 year banking career. In 2011, he joined River Bank & Trust as an Executive Vice President and Business Banking Manager. Gene leads the bank’s development of commercial and business banking clients. He is involved in many community organizations including the River Region United Way, the Alabama National Fair, the Alabama Shakespeare Festival, the YMCA of Montgomery, and the Kiwanis Club of Montgomery.