Plan ahead Featured

7:00pm EDT November 25, 2008

By all intents and purposes, 2009 may be the most challenging year for business owners 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 face these challenges. The more reliant you are on a bank for capital, the more you need to be in contact with your banker.

A banker should ask you how he or she could assist you and your business in 2009. This will initiate thoughtful conversation about the goals and needs of the business in the upcoming year, says Sue Zazon, president and CEO of FirstMerit Bank’s Columbus region.

Smart Business spoke with Zazon about ways business owners should approach 2009 and how to utilize their banker in their approaches.

What should a banker be able to do for your business?

Each company’s needs are different and a banker’s services range greatly. Let your banker 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 a banker?

Typically, business owners do business with individuals they know, like and trust. You can’t know your banker unless you visit with him or her often. Business plans will need to be adjusted throughout the year so a banker should be there to provide revised solutions and to introduce any new products that can enhance a business.

Business owners should identify what qualities or services are important to their needs and business. Certain qualities, such as bankers who can offer sound advice, banks with the newest products or banks with plans to help your business grow, may be necessary.

How do you recommend business owners approach their 2009 business plan?

Business owners need to always be thinking of ways to retain their current profit and grow it in the future. The SWOT approach encourages business owners to evaluate their strengths, weaknesses, opportunities and threats. Today, some business owners predict that their customers will request fewer orders in 2009. With this reduction in revenue, retention may be the biggest goal.

In 2009, business owners anticipate their customers may pay them slower. Because of the credit meltdown, lines of credit may be limited. It is helpful to determine how restrictions on consumers’ credit may affect your business and plan accordingly.

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

Cut costs overall. This is the year to take the time to evaluate every line item. If you are spending money, it should add value to your company. If you spend a dollar, one should question if it was necessary to spend the dollar and, if deemed necessary, is there any way that cost can be reduced to 99 cents?

Business owners should take advantage of the products and services the bank offers to meet the needs of increased efficiency. Some services may cost you money initially, but they can save you in the long run. Products such as remote deposit capture allow you to deposit customer checks from your office. This means you are not wasting the time to visit the bank, the money it costs to get you to the bank and the loss of productivity.

In light of the financial insecurity in 2008, are there steps business owners can take to increase 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.

SUE ZAZON is the president and CEO of FirstMerit Bank’s Columbus region. Reach her at sue.zazon@firstmerit.com or (614) 545-2791.