Plan ahead Featured

7:00pm EDT November 25, 2008

By all intents and purposes, 2009 may bethe most challenging year for businessowners since the Great Depression.

The changes that are underway in the financial service industry are historic and businesses have to learn how to grow as they facethese challenges. The more reliant you are ona bank for capital, the more you need to be incontact with your banker.

A banker should ask you how he or shecould assist you and your business in 2009.This will initiate thoughtful conversationabout the goals and needs of the business inthe upcoming year, says David Janus, president and CEO of FirstMerit Bank’s Clevelandregion.

“Programs should be designed to increaseefficiency, lower overall banking costs andgrow capital,” says Janus.

Smart Business spoke with Janus aboutways business owners should approach 2009and how to utilize their banker in theirapproaches.

What should a banker be able to do for yourbusiness?

Each company’s needs are different and abanker’s services range greatly. Let yourbanker be an asset to your team.

Here are a few suggestions:

 

  • Brainstorm your 2009 business plan. Your banker can help you start a business plan and cover any unforeseen areas.

     

     

  • Play the devil’s advocate. Let your banker use other businesses’ mistakes to help you. Allowing your banker to identify gaps or holes will make your business plan stronger.

     

     

  • Find a means to your plan. If you have designed your business plan and identified your goals, allow the banker to introduce what banking programs or products will help you reach your goals.

     

     

  • Bring value to the business. Your banker should have a general understanding of your industry and be able to help you keep an eye on changes in your market.

     

What should a business owner look for in abanker?

Typically, business owners do businesswith individuals they know, like and trust.You can’t know your banker unless you visit with him or her often. Business plans willneed to be adjusted throughout the year so abanker should be there to provide revisedsolutions and to introduce any new productsthat can enhance a business.

Business owners should identify what qualities or services are important to their needsand business. Qualities such as convenientbranch locations, bankers who can offersound advice, banks with the newest products or banks with a plan to help their business grow and make profit may be necessary.

How do you recommend business ownersapproach their 2009 business plan?

Business owners need to always be thinking of ways to retain their current profit andgrow it in the future. The SWOT approachencourages business owners to evaluatetheir strengths, weaknesses, opportunitiesand threats. Today, some business ownerspredict that their customers will requestfewer orders in 2009. With this reduction inrevenue, retention may be the biggest goal.

In 2009, business owners anticipate theircustomers may pay them slower. Because ofthe credit meltdown, lines of credit may belimited. It is helpful to determine how restrictions on consumers’ credit may affect yourbusiness and plan accordingly.

Are there any approaches to running a business you recommend business owners takein 2009?

Cut costs overall. This is the year to take thetime to evaluate every line item. If you arespending money, it should add value to yourcompany. If you spend a dollar, one shouldquestion if it was necessary to spend the dollar and, if deemed necessary, is there any waythat cost can be reduced to 99 cents?

Business owners should take advantage ofthe products and services the bank offers tomeet the needs of increased efficiency. Someservices may cost you money initially, butthey can save you in the long run. Productssuch as remote deposit capture allow you todeposit customer checks from your office.This means you are not wasting the time tovisit the bank, the money it costs to get you tothe bank and the loss of productivity.

In light of the financial insecurity in 2008, arethere steps business owners can take toincrease financial security in 2009?

There are four steps to take:

 

  • Have immediate access to your capital. It is important that business owners be vigilant of the soundness and security of their financial institution. You need to know that you can visit your bank at any point and access all of your capital. Ask your bank if it intends to provide you with the same access to credit and capital as it has in the past.

     

     

  • Diversify. Even if you are happy with your bank, it is a good idea to know other banks that may be able to handle the needs of your business should you ever need another option. Have a backup plan.

     

     

  • Research. Know the background and future outlook for your bank, vendors and customers. They all play a role in the future success of your business so you need to know how they can weather the storm.

     

     

  • Know more people at your bank than your banker. You should know your relationship manager, his or her boss and his or her boss’s boss. Thus, if your banker leaves, there is more than one person who has knowledge of your company and its needs.

 

DAVID JANUS is the president and CEO of FirstMerit Bank’s Cleveland region. Reach him at david.janus@firstmerit.com or (216) 694-5658.