How a long-term relationship with a banker facilitates business longevity

Among the keys to business longevity is getting good, sound advice. While there are many sources of advice, having a trusted banker for guidance is a benefit to any company.

“A good relationship with a banker offers business owners a connection to someone who understands their business, the financing options available and the market, and can ultimately serve as a guide not only when times are good, but also through challenging times,” says Matthew Berthold, executive vice president and chief operating officer at Westfield Bank.

Bankers, he says, learn from the experiences of their clients. That gives them knowledge of broader trends and approaches to opportunities in the market that they can then share, helping business owners grow.

Smart Business spoke with Berthold about the keys to business longevity and the benefits of a long-term relationship with a banker.

What, generally, are the keys to a business’s longevity?

It’s important for growing companies to understand the indicators that influence their success. These indicators, which are unique to each industry and each business, give companies a sense of the level of risk they face and their performance against industry or internal benchmarks.

Companies also need to understand their competition and what is needed to be competitive among them. For instance, if technology is having an impact on a company’s sector, that technology should be researched, and if applicable, incorporated and built upon, in order to keep up or stay ahead of the competition.

But a key ingredient to success is people. It’s critical that companies have the right people in the right positions. Always work on building your talent pipeline.

In that same vein, succession planning is central to a company’s continued success. Whether a plan is created internally or with the help of outside advisers, companies need to have people ready to advance within the company and help it grow. It also means having a plan to replace someone who leaves so there are no setbacks in the company’s strategic plans.

Who do the more successful businesses turn to for advice?

In addition to consultants who may be brought on because of the expertise they bring to a specific project, companies often put tough decisions before an advisory board. These boards are comprised of business leaders, often from companies outside of their industry, who have a pulse on the market, offer a different perspective and who understand the business’s needs. An advisory board can help companies understand the broader market and serve as a source of advice on the best path through tough challenges and growth.

How do established companies use bank financing successfully?

Determining the best way to fund your business is paramount. Bank financing is an effective way for companies to grow their business. Successful companies have an understanding of their financial needs and the options available to them. It’s unfortunate to see companies locked into repayment terms that impede their ability to grow. It’s an error that can be avoided if owners are willing to talk through their needs with a banker to find the best solutions for the long-term.

Business owners understand their business, its mission and products very well, but not all of them understand the best way to finance their company’s initiatives or special projects. This is where a partnership with a bank becomes critically important. Businesses with a strong banking relationship can lean on their banker to determine how best to structure loans, or if a loan is even the best way to finance a project.

What is the benefit of a long-term relationship between a business and a bank?

It can be frustrating for business owners to tell their company’s story over and over if they switch banks or get assigned a new banker at a bank plagued by high turnover. By having a consistent banker working alongside the business owner through the company’s life cycle, the business owner only needs to update the banker as things change. It’s one less thing for business owners to think about as they work to grow their company for the long-term.

Insights Banking & Finance is brought to you by Westfield Bank

How to limit the risk of identity theft for yourself and your business

The risk of personal identity theft is a fact of life for everyone, and business owners are no exception. However, criminals have a lot more potential targets for fraud when someone owns a business.

“Business identity theft is like regular identity theft — they get as much cash upfront as they can under the business’s name and then disappear. It’s hard to catch these criminals, that’s the unfortunate part,” says Jamie Kibler, chief compliance officer at Richwood Bank.

Smart Business spoke with Kibler about how business owners might be targeted with identity theft and what they can do about it.

In what ways could a business owner be at risk with regard to identity theft?

While individual identity theft is the most common, a business can be targeted, too. Criminals might steal details about the business and/or business owner to open a loan or account in that business’s name with no intention of paying on the debt. They could use stolen information to set up a fake company to obtain credit in the existing company’s name. Then the criminals can buy retail or sell stolen property, leaving the legitimate business owner liable for their activities and perhaps stuck with business expenses or tax obligations. This in turn could make it difficult to make payroll and pay the bills to keep the legitimate business running, especially if those loans have personal guarantees.

All the thieves need is photo identification, a Social Security number, date of birth, a legal business name and a physical address. In most states, it only costs a few hundred dollars to create a new business, and the criminals could have the articles of incorporation and an employer identification number in less than a month. The new beneficial ownership rule adds another layer of security by requiring banks to collect information on more than one person, but it won’t deter determined criminals.

Another trend is schemes that focus on electronic wire transfers. People hack emails or use social engineering, which is when criminals trick their victims into providing the information, to gain the necessary material. Then, an employee at a company who usually wires $5,000 to a vendor every month might get an email that looks like it always does, but uses a different email address. So, the employee processes the $5,000 transfer. Then the bank gets another email asking to wire $50,000. While the second request might throw up a red flag because it’s out of the ordinary, the $5,000 is already gone.

How can business owners mitigate their risk for these types of fraud?

Make sure you’re reviewing any statements that may come through the mail. Monitor your business accounts daily. Online and mobile banking can let you see in real time what’s happening in your bank accounts. The bank can set up authentication controls to help make sure that fraudulent wire transfers aren’t being sent from your account. It can also help you set up alerts so if a debit card is swiped or a check is paid, you get a text, email or phone call.

Educate your employees about the risks. They need to read all emails carefully, pay attention to the details and make sure whatever they’re clicking on is legitimate. They also need to be careful when replying to emails because some criminals are now spoofing email addresses, so it still looks like it’s going to the right email address.

Emails that tell you to change your password are a concern. They may be trying to get your password — instead of changing your password within the email platform, you’re taken to another stream. Then, they can go through your emails, while locking you out of the account. If you get a message from someone who claims to be from your bank, asking you to verify your account number through a text message, email or by clicking on a link, it’s probably not legitimate. Banks are more likely to tell you to call them. If you’re unsure, look up your bank’s number and ask them. (Don’t call the number in the email.)

While you should check your credit scores regularly, you can also can get services that actively monitor your Social Security number and credit scores. Then you’ll know if a bank has looked at your credit report because a criminal is applying for a loan in your name.
It’s really a matter of staying vigilant and seeing the whole picture.

Insights Banking & Finance is brought to you by Richwood Bank

Technology tools drive efficient cash flow management

Payments modernization is underway. It’s being driven by emerging technologies such as artificial intelligence, real-time payments and data mining, which are helping companies with payments, reconcilements, cash forecasts, and other aspects critical to cash management.

“Given all the technological advancements that have been made in this area, it’s still incredible how many treasury departments are making and processing payments by checks and how much data is rekeyed from one system to another,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank.

He says getting from where things are today to where they’ll be in the future is going to take a lot of work.

Smart Business spoke with Altman about the effects that falling behind the financial technology curve can have on cash flow management.

What is it that tends to get in the way of efficient cash flow management in a treasury department?

Maximizing cash flow is a treasurer’s job. What gets in the way, though, is the disparate ways payments are made and what information from the source of payment looks like. Companies can spend a lot of time massaging data as it comes in from different sources to normalize it in the way they need to see it. That takes time and effort, which distracts from the core mission of maximizing cash flow. Inefficiencies lead to idle cash that doesn’t get invested, or over borrowing, which leads to unnecessary expenses.

Falling behind the technology curve can be costly. There are much better tools to manage the transaction processing activities and working capital of an organization. Companies that are still taking checks to deposit at a bank or putting checks in envelopes to make payments need to modernize their approach.

While there are tools that can be leveraged to help, treasurers often aren’t the decision maker who can make those investments. The CFO might be, but he or she is often concerned with the bigger picture and not the details. But not focusing on the details can obscure the bigger picture.

What steps should treasury departments take to address the issue?

Every task requires the right tool for the job. Treasurers should speak up and make the case to leverage the tools that are available in the marketplace. Take advantage of the investments banks and third-party providers have made to be as efficient as possible.

By leveraging relationships with banks and service providers, treasurers can stay educated on what’s available in the market and what is coming in the future. And it’s more than just using what the bank is offering. Treasurers can ask their financial institutions to connect them to other businesses that have similar challenges so they can network and understand best practices.

Tech used to be considered an enabler of efficiencies. More and more, it’s becoming a driver. Real-time payments and AI are really going to be driving efficiency in the industry. Companies will need to embrace that technology to stay competitive.

What does peak cash flow cycle management look like?

The best evidence that a company has reliable cash flow forecasting is the number of departments in the company that are using that forecast. If the treasury department is doing its job, it’s a financial center of excellence for the entire business. The more complex that business is, the more complex the tools will need to be to serve it. Businesses that are still using spreadsheets for cash flow management need to apply new tools.

In what ways can a bank help a treasury department?

Leading-edge banks developed many of the financial management tools that companies use and all banks continue to invest in technology. Businesses should take advantage of the investments that have been made because it’s too expensive for many businesses to do on their own.

The world is changing rapidly. Companies might not be able to get ahead of the tech curve, but they need to see the curve coming up in front of them to remain efficient and maximize value.

Insights Banking & Finance is brought to you by Huntington Bank

How banking locally benefits your business, the economy

You’ve probably heard of shop local campaigns, which are designed to help stimulate the local economy by supporting small businesses. But did you know you can also help your local economy by supporting your friendly neighborhood bank?

Banking locally can help both your business and the economy in a number of ways. Chris Massie, divisional vice president and senior commercial lender at Northwest Bank, has seen first hand the positive effect local banks can have on their customers and community.

“Banks have a tremendous impact on the communities they serve,” Massie says. “They not only provide resources for local businesses, they also serve their communities through volunteerism and contributions to organizations that benefit the community at large.”

Smart Business spoke with Massie about how banking locally can be a smart way for small businesses to make an impact on the area they serve.

What should a business look for in their local bank?
Your bank should be viewed as a trusted adviser that you can turn to for guidance and advice. A good banker should be familiar with not only your industry, but also your local economy. That puts them in a position to provide you with valuable insights you can use to run your business.

What are some common misconceptions about banks?
One of the most common misconceptions about banks has to do with the underwriting process. Many businesses believe only one individual, or underwriter, makes the final decision regarding their credit.

However, there’s more to it than that.

The credit process is actually more collaborative than you might think and involves the whole relationship between your business and the bank. The better your banker understands you and your company, the easier he or she can determine what type of financing makes the most sense for your needs. This can also help your banker uncover other potential opportunities that you may not have considered.

What should a business do before meeting with a bank?
Before meeting with a bank, business owners should have a meaningful discussion with their accountants and legal partners. Preparation is key and can help you through the loan process. Without proper preparation, your banker may not be able to help you meet your needs.

Banking locally gives you an advantage because your banker is easily accessible to answer any questions you may have. This not only can help speed up the loan process, but it also helps solidify a lasting relationship with your bank, which can be useful in the future when it’s time to expand your business.

How can a business benefit from a strong relationship with their local banker?
It may sound cliché, but good communication is key to a meaningful and long-lasting relationship. A strong relationship between customers and their bank is beneficial, as they can celebrate your successes with you and help you out during the times when you need it.

How do businesses and banks work together to improve the local economy?
A healthy local economy often results from collaboration between businesses and their banks. Because of their access to resources and shared interest in the community, they both often work with the same overall goal in mind.

They both also serve the same community — you’ll see them helping out with similar efforts like charitable giving, employee volunteerism and providing assistance to community members in need.

It’s this shared vision toward bettering their community that makes banking locally a smart choice for small businesses. Not only do you help by keeping money in your area, but you also can benefit from personalized service by having your banker close by.

Northwest Bank is Member FDIC. Equal Housing Lender.

Insights Banking & Finance is brought to you by Northwest Bank

Financing is a central, but not exclusive function of a bank

Beyond financial support, banks facilitate connections that help build strong teams of advisers — accountants, insurance brokers, bankers — to surround entrepreneurs with people who can help them succeed. They also facilitate connections between clients, matching vendors with potential buyers, etc.

“There are a lot of B2B connections that happen among a bank’s clients, and there’s something to be said about the institution’s realm of influence,” says Matt Sprang, president of agency banking at Westfield Bank.

However, busy entrepreneurs typically don’t have the time or interest to talk with their banks unless there’s an immediate need, which means they’re not taking advantage of potentially business-changing opportunities.

Smart Business spoke with Sprang about the benefits to entrepreneurs of having a relationship with their bank throughout the many iterations and stages of their businesses.

What can a bank provide beyond financing to help a company grow, get established or expand?

Lending aside, the role of a banker is to be an adviser and help entrepreneurs connect the dots to get their companies to the next stage. One way to do that is by bringing people together, facilitating connections that can lead to sales opportunities, partnerships, referrals and more.

Sometimes those connections take shape as an advisory team. This group of knowledgeable, experienced professionals offer entrepreneurs real-time advice on the best next steps, and test out ideas so that those with little hope of success can be abandoned before time and money are wasted.

Peer analysis is another way banks can help entrepreneurs outside of financing. Their companies’ performance metrics are benchmarked against the industry to give a sense of how they stack up. Targeting the top quartile of the best-performing businesses in their industry enables an entrepreneur to aim to be among them.

In what ways does an entrepreneur’s banking relationship affect financing decisions?

When a bank underwrites loans and lines of credit, it matters that the bank knows the entrepreneur, understands the industry and is familiar with the business’s management team and how they perform to feel comfortable taking on the risk.

An entrepreneur may not be an expert in capital and debt structures. A banking partner provides that expertise. If there is an opportunity to expand in certain parts of the business, a targeted, smart deployment of capital can accelerate the process. Whether it’s a private equity investment or a line of credit, the financial injection can hasten the progress to the next stage of the business.

What is a bank’s role when a business owner decides it’s time to exit his/her company?

Many business owners who want or need to exit their business haven’t constructed a formal plan. It’s daunting, so they delay. Sometimes, something catastrophic can happen and the people left behind at the business have to pick up the pieces as best they can. That’s why when a bank builds a debt facility, it typically wants to know if the business has a perpetuation plan in place, or at least an insurance policy that can assist in funding the financial obligations that might arise from such an event.

Those entrepreneurs who are eager to move on and build their next business need to plan how they’ll pass the business on to someone interested and capable of maintaining it, or how they’ll profitably divest. Banks offer entrepreneurs ideas for structuring the potential timing of their exit and the associated debt facilities that may be required to pass ownership internally. There are many ‘right’ answers to solving the exit dilemma. The bank’s role is to match solutions within the context of the legacy the entrepreneur wants to leave.

Entrepreneurs should know they can count on a banking relationship for more than loans and deposits. A bank can provide analysis and benchmarking, connect them to crucial contacts to help the business grow, and make plans for the future. By investing a little time, entrepreneurs can expect a significant return from their banking relationship at any stage of their business.

Insights Banking & Finance is brought to you by Westfield Bank

How to make the best use of your balance sheet

Some companies are focused on driving sales. But a narrow focus on sales often means overlooking collection of accounts receivable or improperly managing inventory turns, which can lead to cash flow problems that can cause serious difficulties.

“There comes a time when the financial sophistication of the company has to be upgraded,” says Dan Culp, vice president and commercial relationship manager at Home Savings Bank. “Otherwise, sales might continue to grow, but margins stagnate or shrink.”

Smart Business spoke with Culp about the importance of a company’s balance sheet, and how to put it to best use.

In what ways are companies not making the best use of their balance sheet?

Many companies are not diligently monitoring accounts receivable and inventory, and converting to cash quickly, which can cause a cash flow crunch. When this happens, companies stretch their accounts payable to their vendors, which can potentially harm the relationship.

Another common practice that is not recommended is that many companies distribute nearly all of their profits to shareholders on a yearly basis. However, completely distributing earnings annually does not allow the capital base to grow on the same potential trajectory. If the company hits a road bump in future years, there may not be a nest egg to fall back on.

Also, stretching out debt over the useful life of any fixed assets can hinder the balance sheet. Companies should always want to be in a positive equity position on any income-producing fixed assets. Don’t buy an asset with a seven-year useful life on a ten-year loan or you’ll have debt left to pay after the equipment has been disposed.

What should companies do to make the best use of their balance sheet?

Keep some cash on the balance sheet. Although in today’s interest rate environment, that may seem unproductive, it is still wise to have a rainy day fund.

Focus on the conversion of accounts receivables and inventory into cash.

Maximize terms provided by your vendors, but always pay within those terms so the relationship stays strong. If a company is paying its vendors on an average of 14 days, but their receivables are averaging 30 to 45 days, the company becomes upside down from a working capital standpoint and a cash flow crunch will quickly ensue.

Use debt as a growth tool, but do not become over-leveraged. Most banks will monitor debt levels and use covenants to make sure leverage is in line and appropriate for the company. Ideally, companies implement strategies that improve cash flow to a point where they are funding their own working capital and growth.

What should companies expect to see once they make better use of their balance sheet?

A company can expect to see improved cash flow, equity positions, overall health of the organization and value of the company. This puts less stress on management and the entire organization.

From a financing perspective, a stronger balance sheet will lead to more favorable lending terms for the company because the risk profile is lower. This can lead to lower rates and fees, longer terms, higher advance rates, or the reduction or release of personal guarantees. If the company can stand on its own merit, without the shareholder’s support in a downturn, non-recourse can be considered.

Having a strong balance sheet also shows a history of strong earnings. This gives the company more buying power as an acquirer or drives up its value/sales price as an acquisition target.

Once cash flow is not a stressing issue, the company can focus on other items — driving profitable sales, strategic growth initiatives, making other investments in the company — without the need for debt or expense reduction. It also takes a lot of stress off the owners and the organization when they know they have enough cash to make the next payroll. The entire energy of a company can change.

Having the right accountant, banker and a capable controller or CFO is critical. Having a strong team of outside partners is just as critical as the internal partners.

Insights Banking & Finance is brought to you by Home Savings Bank

Planning and consideration for executives near retirement

Executives tend to be very focused on their careers, working to drive profitability at the companies they lead. However, if some of that attention isn’t paid to funding their retirement, it may haunt them.

“A career in the C-suite is highly compensated, but it can be relatively short,” says Robert Klug, regional executive at The Huntington Private Bank. “The average executive’s tenure is five years at a particular company, and they’re usually between the ages of 53-54. These are peak earning years, so it’s important to save as much as possible for retirement, and minimize the risks facing those savings.”

Smart Business spoke with Klug about the retirement challenges facing the C-level.

What are the major retirement assets of high-level executives and what miscalculations might plague this group when it comes to funding retirement?

Usually the majority of C-level retirement funding is some form of company stock, be it shares held directly, restricted stock or stock options. There also are deferred compensation plans that pay out after an executive’s exit.

A surprising number of executives fail to exercise their stock options. C-suite professionals can get so hyper-focused on their job that sometimes their stock options go unexercised and are lost.

Another common problem is a lack of portfolio diversity. Instead, they rely entirely on company stock. They may have amassed significant wealth through restricted stock and stock options, but there comes a point when the executive needs to manage and reduce the risk of a position that’s too concentrated.

There’s also the timing and payout of deferred compensation plans to manage. An executive could miscalculate the rate of deferment, or elect to have it all paid out in one year and get saddled with a huge tax bill on the one massive payout.

Executives might feel they don’t have the time to get caught up in the details of their retirement plan. They may not recognize the risk of having their wealth tied to one company, which places their retirement plans entirely on its success. There have been cases where executives believe they’re on track for retirement, then the company’s stock takes a huge hit and the whole plan is blown. Very late in the game, these people need to rethink their entire plan and likely make sacrifices that delay or drastically alter their retirement plans.

What should high-level executives use as a guide to determine if they’re able to lead the retirement life they want? What adjustments can be made to ensure the money they have will last?

Just like anyone looking to retire, the guide should be the person’s expected lifestyle and spending habits. One way to calculate this is to look at average annual spending and divide by 4 percent. That is the net worth that’s needed before retirement.

Executives in their peak earning years should increase their savings rate. Some may need to extend their career by a few years to reach the number they need.

They may also need to adjust their projected spending. Take a close look at the lifestyle and cost of it and try to cut back. Even finding a way to reduce spending by a few hundred dollars per month could make a big impact over the long term.

Another option is to find ways to supplement retirement income with other income, such as through consulting work or serving on boards.

How can C-level executives ensure they have the retirement life they want?

More than anything, planning is key. Developing a plan with a trusted adviser can be a big help to busy executives.
A retirement plan isn’t something that can be developed in one meeting and forgotten. It takes oversight because circumstances change and markets fluctuate. An adviser can provide that oversight, keeping an eye on investments and giving regular updates to ensure the plan stays on track.

Work with a trusted attorney, CPA or wealth manager who can have a frank conversation about the executive’s retirement position. There may be challenges along the way. It’s important to work with some who can deliver difficult news and be trusted to find a solution.

It’s never too late to plan. Don’t go into retirement without one.

Insights Banking & Finance is brought to you by Huntington Bank

How to configure key performance indicators around a business strategy

You can’t aimlessly operate your business. You need a strategy — a conscious, deliberate intent of how to move into the future. But strategy is something every company struggles with.

“It’s hard. The phone rings, the customers come in and the day to day whirlwind can eat you up,” says Chad Hoffman, president and CEO of Richwood Bank. “We’ve all had days where you get nothing done that you planned. But if every day is like that, especially at the top of the organization, you don’t have a strategy. You must spend time on what your future will look like and how you’ll get there, or you’ll be moving backwards.”

Smart Business spoke with Hoffman about setting up a strategic plan with the right key performance indicators (KPIs).

What’s the difference between leading and lagging indicators?

Lagging indicators measure past performance and compare it to targets you’ve set. They don’t predict the future. A return on assets, net interest margin or profit are all lagging indicators. A leading indicator is an assumption of the future, based on predicting what’s going to happen. It helps you stay ahead of problems.

You’ve got to take things like profit and ask, what is holding it down? What leading indicators can be measured and improved to make the lagging indicators better? Can you raise your customer services scores, for example, to improve your bottom line? The balanced scorecard approach believes KPIs in three areas — customers/stakeholders, internal processes and organizational capacity — help drive financial performance.

It’s also important to realize you need to be good at key performance questions, before you can actually measure the KPIs.

How should KPIs be included in a strategy?

Leading indicators are the most important because that’s the future, but you need both. The leading indicators are the ones you work on a day-to-day basis, but lagging indicators tell you if your day-to-day work is paying off. You can think you have great questions and your assumptions are fantastic, but if your profit doesn’t improve, it’s time to re-examine those questions and assumptions. Strategy is only great if it shows positive results. You can make assumptions, but they’re assumptions for a reason. If they’re wrong, the lagging indicators will tell you that you haven’t met the customers in a place that they really want to be met.

It’s a good idea to review your KPIs quarterly. Are you seeing a benefit? Is there a reason to wait another quarter? Also, strategy must be practiced, and it cannot be a tightly kept secret. Leadership has to drive this, but let everyone know what those measurements are and why they’re there. A frontline employee might have a different perspective.

Where do companies go wrong when developing KPIs?

They set up too many measurements. You can waste a lot of time measuring everything that moves. The rule of thumb is no more than three, or it will start to get overwhelming. If you have a bigger staff, maybe each department gets three KPIs. Remember, if everything is important, nothing is important. Once you accomplish a KPI, whether completing it or improving a number, you can shift to something else. Don’t add more; replace one with another.

If you’re comparing measurements, keep this benchmarking in context. Every organization is different, and you have to decide what’s important to you. Yes, if everybody in the state is trending up on their income and you’re trending down, that’s worth paying attention to. Trends are important, but don’t focus so much on the numbers themselves.

Again, if you choose the wrong KPI, be willing to say, ‘We screwed up. Let’s ask some more questions.’

Is there anything else you’d like to share?

As your organization grows, strategy only becomes more important. You’ll hit some on the head and miss others completely, but as you track KPIs, it’s not so bad to be wrong. The best thing you can do is choose the right KPI. The second-best thing you can do is choose the wrong one because you’ll learn what’s not important to your customers. The worst thing is not doing anything at all. You’ve got to start somewhere — and if it’s the wrong somewhere, at least you’ve eliminated that piece.

Insights Banking & Finance is brought to you by Richwood Bank

How to successfully set yourself up to grow globally

The internet has made the evaluation of going global much easier, but an abundance of information shouldn’t be a stand-in for situational due diligence, says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank.

“To be successful in a foreign market, a company needs to gauge the viability of its product in that market, both in terms of its value proposition and price point, as well as understand the local competitive and regulatory landscapes,” he says. “That requires assessing whether or not the competencies that made the company good domestically are transferable overseas.”

Altman says an effective approach is to build a network of competent advisers that can serve a fundamental role in assembling the company’s foreign market strategy.

Smart Business spoke with Altman about what it takes for companies to grow successfully outside of the domestic market.

How can companies determine whether they’re ready for the global stage?

Before making an entrance into a foreign marketplace, companies should have their domestic house in order. Mixing global complexity with domestic challenges can make difficulties at home much worse.

Next, develop a qualified list of target countries, in partnership with advisers, to determine where to go and why it makes sense to go there. Then define how to approach the market, knowing that the aggregate global strategy is a compilation of the specific country strategies. When selling internationally, there’s a need for precision.

What commonly gets companies in trouble when they venture beyond the U.S. borders?

The biggest challenge and often mistake that companies make is they assume business practices are the same in other countries as they are in the U.S. But in reality, buying behavior and even day-to-day business practices are all different country by country. To be successful, companies need to get to know the local landscape very well.

Companies also get burned when they miss the technical risks associated with cross-border transactions. For instance, the potential for local governments to assert currency controls that could frustrate repayment and complicate plans.

How can a banking partner facilitate a company’s growth in the global market?

A good banking partner should have access to risk management products that help protect a business, as well as a global network of partners, including foreign banks and development agencies in the countries that are being targeted. Their collective aim should be helping companies evaluate foreign markets, and if it progresses, setting up shop there. Ideally, the banking partner would be involved in the plans early to help shape what the company is doing and position it for the best effect.

What signals that a banking partner can support a company’s international efforts?

A company should look for a bank that’s large enough to have a dedicated international staff with on-the-ground experience in the targeted country, but small enough to want to work with a business of its size. Many small and midsize companies find refuge in regional banks that have made investments in core products and relationships to help clients globally, while truly wanting their business.

From a product perspective, look for a banking partner that has an actively managed correspondent banking network, foreign exchange products, trade finance and services products as well as access to trade credit insurance, preferably from a bank-owned insurance brokerage, to ensure continued alignment of interest. When small to midsize companies try to set up shop in a foreign country, they can struggle to attract the attention of local partners. They should be able to leverage their bank’s experience and relationships in those markets to get the attention they need.

Planning is crucial in order to successfully go global. And there’s great value in doing it in partnership with a trusted adviser, which may include a bank.

There are nuanced risks when dealing outside of the U.S., but the opportunity is compelling. It’s the strongest global economy in two decades. Most emerging and developed markets are trending upward, giving companies with the right plan a good chance to succeed.

Insights Banking & Finance is brought to you by Huntington Bank

How your banker can help you expand your business

If your product is in high demand, you’ve retained a quality, dedicated team of employees and day-to-day operations are running as well as they could, business is probably booming. That means it might be time to take your business to the next level and consider expansion. To do that, you need to have the right people in your corner to help you get there — including your banker.

Smart Business spoke with Molly Gordon, a business banker with Northwest Bank, about how leveraging the right resources is key to your business’s success.

When a business is looking to expand, how does it get started?
When you’re planning an expansion, you should streamline your daily operations to free up resources that will be valuable during your expansion. Meet with your banker early in the process to review your operations and financial situation. Your banker will be able to evaluate your current position and make recommendations to help you prepare for future growth.

When preparing to expand to a new location, what should businesses consider?
Before looking at new locations or talking with a builder to plan new construction, determine what you can afford. If you’re not sure, consider your business goals. Do you want to expand your existing location to keep up with demand or attract new customers, or are you looking for a new location to house your growing operations?

When visiting potential locations, take a look at the surrounding area to see if your business makes sense there. If you want to open a boutique-style bistro, for example, it may not make sense to open in an area heavy in manufacturing facilities.

You’ll also need to decide if you want to rent or buy your space. Both options have benefits and downsides, so carefully consider your current needs and future plans before making this decision.

Other things to take into consideration include local taxes and potential building repairs, which could impact your overall costs. You should also check with your local and county governments for economic incentives aimed toward business owners. It helps to work with a financial partner who has experience lending in your geographic area and is familiar with your local market.

Remember, each market is different and someone who understands yours will have a better handle on the everyday circumstances that affect your business.

Moving or expanding takes capital. Your banker can answer questions about financing and help you determine what you can afford; help you understand all the variables, including your current situation and future goals; and structure a deal that works best for your business, whether it’s a conventional loan, line of credit or a Small Business Administration (SBA) loan with lower down payments and longer repayment terms.

How can a business stay on track during expansion?
Business doesn’t stop during times of expansion. Although you can become preoccupied looking at spaces, analyzing your balance sheet and developing strategies for growth, you’ve still got to meet customer demands, keep up with your industry and maintain a happy workforce.

You also must continue to pay your employees, ensure there’s enough inventory and that equipment is up to date and functioning. That means freeing up working capital by cutting back on expenses, selling excess products and meeting with your banker to talk about a loan or line of credit, which you can use to hire the right people, increase your inventory and replace or upgrade equipment.

Although you’re likely focused on your long-term growth strategies, day-to-day short-term goals are particularly important in ensuring you stay on track. You’ve got to keep your eye on the near future while envisioning what your business can be in the long-term.

The stronger your relationship with your financial partner, the better they get to know you and can look out for what’s best for business. Talk with a banker if you’re planning to grow. As your trusted adviser, they are as invested in your business’s success as you are, and will be more than willing to work with you to help it thrive.

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