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.

Northwest Bank is Member FDIC. Equal Housing Lender.

Insights Banking & Finance is brought to you by Northwest Bank

The loan you think you need may not be what you need

When business owners approach a bank for a loan, most are not exactly sure what they’re asking for.

“They might say they need a line of credit to grow the business, or a loan to buy equipment and raw materials, but those may or may not be the best options for their needs,” says Rick Hull, Executive Vice President and Regional President at Home Savings Bank.

These business owners know their industry well, but often aren’t familiar with the financial products available to support specific initiatives. A good banker will take the time to help them determine the best way forward. But before a banker can help make that decision, they need to have the full background, which means asking the right questions to make sure they have all the information they need.

Smart Business spoke with Hull to explore the difference between assumptions and reality in lending.

How often is it that what business owners ask for in the initial bank meeting is what fits their needs?

Business owners typically come to a bank and say they want a term loan, perhaps to increase inventory. That would give them all the money they want immediately, but it comes at a cost they often don’t realize.

For instance, a customer who owned an ancillary business to the oil and gas sector recently wanted to borrow money in a term facility to buy raw materials. The owner was expecting a significant increase in business. Borrowing on a term facility would mean paying interest on the entirety of the loan when all that money wasn’t immediately needed. Rather, the business would be better off drawing as needed on a line of credit financed by receivables, saving the company a considerable amount of money in interest.

How is it that a business could end up with the wrong financing?

Some bankers are intent on making a loan, or may only have one product available, something seen more frequently in really small banks. They might not be capable of doing receivable financing or financing based on inventory or cash flow because they’re incapable of monitoring receivables, aging and monthly reports. So they might shoehorn the customer into the wrong product.

What should business owners expect when they first talk to a bank about financing?

Customers should expect a conversation. A bank wants to get to know both the person and the business. Collateral and cash flows are obviously a major factor, but character is a big deal.
Banks tend not to be interested in purely transactional situations. They want to build a relationship with their customer. History is also important. Reviewing the historical performance of the company may highlight some cyclicality or other repeating aspect of the business that wasn’t previously recognized. Banks will also look at a business’s client base, as well as its processes and procedures. Banks want to know if they are maximizing their position, ramping up, or if they can survive a drop in revenue or income if there were a downturn in the industry.

What is it that most commonly holds up a transaction between a bank and a business?

Typically, the holdup is a lack of comprehensive financial information — many small business owners don’t have their last three years of tax returns, current profit and loss, or interim financial statements. The bank needs all of this information to understand the business’s financial situation and to underwrite it appropriately.

Come prepared to answer questions regarding how well equipped the business is to handle events that might compromise an ability to repay. Be open and honest about what’s going on in the business. If things aren’t going well, what evidence is there that it will be better? Transparency builds trust, and increases the chances that a bank will be there to support the business through all its ups and downs.

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

Understanding the stages of the financial life cycle

Ideally, business owners would take a comprehensive approach to managing their wealth over their entire financial life cycle — a life cycle that aligns closely with that of their business, a significant source of wealth generation. However, most don’t.

“Business owners are often so focused on growing their business that they don’t pay enough attention to putting together a personal financial plan to manage and protect their wealth,” says Robert Klug, senior vice president and regional manager for Western Pennsylvania and the Ohio Valley at Huntington Private Bank.

Smart Business spoke with Klug about wealth management for business owners.

What are the stages of an individual’s financial life cycle?

There are four stages to an individual’s financial life cycle. There is the accumulation of wealth, growing or managing wealth, preserving and protecting wealth, and transferring wealth. Each phase of the cycle overlaps and needs to be managed using a comprehensive approach.

For business owners in the earlier stages of their company, often all of their wealth is tied up in their business. As the business grows and helps the owner accumulate wealth, the owner has to transition into managing that wealth — a critical stage of the financial life cycle because those who don’t manage their wealth well will have nothing to work with in the subsequent stages.

As individuals move into the preserve and protect stage, the decision comes down to risk. A reduction of risk typically means stepping back their potential returns in exchange for less volatility and a portfolio that stays just ahead of inflation. It’s also thinking about how to complement their portfolio with life insurance, and how to offset their health care costs or pay down debt.

The last phase is really about making sure the accumulated and preserved assets go to the people the individual intends them to go to. It means having a sound estate plan to transfer wealth.

What are the keys to successful wealth management?

Primarily, business owners should have a sound financial plan that’s dynamic — it changes as they move through their financial life cycle to make sure it’s in alignment with their changing goals. Ideally, it also involves a trusted team of advisers that include a tax professional, attorney and a wealth management professional, the latter of which should be capable of coordinating the efforts of the entire team.

The other major aspect is managing risk because risk determines return — the greater the risk, the greater the potential return, but it also increases the chance of a downside return. Just like a business owner manages risk in his or her company, it’s critical to manage risk in an investment portfolio.

One way to manage risk is by using an asset allocation strategy to divide the wealth among the three major assets classes: cash, bonds and stock. There are specialty assets — alternative investments, hedge funds, commodities — that can complement a wealth management strategy.

How do individuals commonly derail their wealth management efforts?

Beyond simply not taking the time to plan, another way they derail their efforts is to overreact to market volatility. Sometimes investors sell off everything in their portfolio at the first sign of trouble and miss the next run-up.

Portfolio management requires a sound asset allocation strategy. They’re best served if they stick to their plan, one built to account for their risk tolerance, from the beginning. People get themselves into the most trouble by not understanding their risk tolerance and abandoning their plan far too early.

Wealth management means taking into consideration a person’s entire financial livelihood. It’s not just deposits and lending, their business or how much they have invested in the market. It’s putting all of it together and developing a plan so they can grow, preserve and transfer wealth. That requires a plan assembled with trusted advisers that is dynamic enough that it can change over time. It means understanding personal risk tolerance and managing through risk.

Insights Banking & Finance is brought to you by Huntington Bank

How culture affects performance in an increasingly competitive market

Culture is the base upon which everything else in a company is built. And like a building’s foundation or a tree’s roots, it needs to be strong to support all that’s built and grown on top of it.

“A company’s culture affects how well it attracts and retains employees as well as its ability to attract and retain customers,” says Jon Park, Chairman and CEO of Westfield Bank. “Having a culture of caring and helpfulness, a culture that’s solutions oriented, makes an impact in the market.”

Company culture has received greater attention in recent years. A low unemployment rate has given candidates more options, so they are shopping around to find the best opportunity. Also, information on companies’ cultures has become more available as people share their experiences on the web, and websites have been created to collect and catalog what employees have to say about their work experience.

“Many prospects are looking for that type of information,” he says. “And with the greater transparency brought on by the internet, they can find it.”

Smart Business spoke with Park about culture and the many ways it affects a business.

What difference does a company’s culture make to its business relationships?

Happy employees who have a can-do attitude translate to satisfied customers. A caring culture goes a long way toward building strong customer relationships.

Banking, in particular, is a relationship-based business that’s founded in trust. Customers have plenty of choices when it comes to banking, and any business for that matter. They want a partner that’s authentic, consistent and reliable, and that listens to and respects them. Culture has a lot to do with all of those things because customers experience a company’s culture through the behaviors of its employees.

It’s human nature to want to do business with people who are likeable and who can be trusted. As customers consider where or with whom they will do business, ideally they want to work with a company that’s trustworthy, fair and responsive.

What are some signs that a company has a healthy corporate culture?

A company’s cultural health can be seen in the caliber of talent it employs and how long it’s able to retain its people. A strong culture reduces turnover.

Internally, a company can get a sense of the state of its culture through employee engagement surveys. Anonymous feedback on a variety of topics helps executives understand what’s important to their staff. The results can be compared to those of their peers to gauge how well they’re doing compared to the market, and the feedback can be used to make internal improvements.

Customers can learn about companies online. Some companies talk openly about their culture through videos, posts to social media pages and blogs on the company website. Also, how active a company is in the community can help others get a sense of the culture.

What is important for companies to focus on if they want to have a strong corporate culture?

Core values are central to culture. Companies should bring the focus to those values by communicating and demonstrating them through their leadership.

Employees appreciate a family-friendly culture, and they want to know the company cares about their best interests. It’s human nature to want to make a difference and be on a winning team. Companies can foster that by recognizing employees’ achievements, rewarding top performers and generally offering encouragement. Employees should also be given latitude to make decisions on behalf of the business.

As companies, banks included, compete for increasingly limited resources, they should consider telling their story from a cultural standpoint. Shoot videos of company outings and post them to the company website so candidates can get a feel for what it’s like to work for them. Talk about the company’s history, tell stories and use examples that enforce the culture that forged the business’s image in the market and that continues to live through the actions of its people.

A strong culture can draw out the passion of employees and release the potential of the company. Anything that can be done to improve it is well worth the effort.

Insights Banking & Finance is brought to you by Westfield Bank

How to make the exponential benefits of philanthropy work for you

Philanthropy is the right thing to do. There’s no question about it, says Chad Hoffman, president and CEO of Richwood Bank. Not only does it build stronger communities where we live, work and play, it can also benefit your business.

“People in today’s society, especially millennials, like to get behind causes. If you support organizations that they follow or are passionate about, you have a better connection with that group of customers or potential customers,” Hoffman says. “There is a business benefit — people like to work with people who connect to the things they believe in.”

For example, Richwood Bank created three coffee shops to help people see the bank as a destination, a place for interaction. Customers (and noncustomers) come to the lobby and donate to one or more of the bank’s 20 community nonprofit partners. In return, they receive a gift card for “thank you” drinks based on their donation-giving tier level.

Smart Business spoke with Hoffman about the intersection of philanthropy and business.

How does philanthropy benefit businesses?

You can use philanthropy as a sales tool to create a connection, because there are so many choices. Customers often don’t buy a product for being a product; they buy from the person or business. It can be as simple as providing a service, pro bono, to a charity and then letting potential customers know so they’re more apt to shop with you.

Philanthropy can be used for recruiting. If an employee is passionate about an organization or serves on a nonprofit board, then your company could support it, too. Job candidates see you supporting the causes of your employees and know if they become a team member, you’ll do the same for them. Nonprofits also will acknowledge you, which can boost employee morale. It helps validate that they’re in the right company.

Philanthropy is an expense on your books, even though it’s tax deductible, but you can consider it marketing, too.

What are some options for a charitable giving strategy?

You’ve got to know your purpose, like it says in Simon Sinek’s book “Start with Why.” Why are you in business? What are you trying to accomplish? You want to tie your philanthropy to that mission and vision. Once you know what your company is passionate about, you can start building relationships with organizations that support or believe the same things that you do.

One of the best things you can do is help a nonprofit create relationships. If you give money, that’s good for this year. You can volunteer and that’s good for today. But if you bring that charity five people who are interested, who may give or volunteer in the future, you’re helping build a network. Also, you’ll get the largest impact by aligning the values of everyone involved, so the charity and your business work hand-in-hand. For example, let your employees pay to dress down and then put that money toward a charity with your values or that relates to what your business does.

How should business owners communicate? How do they make it informative without sounding like they’re bragging?

Make a list of the organizations that you support financially or as a board member to try to attract customers and staff, but you don’t have to share the details. Otherwise, you risk people thinking: No wonder my prices are so high; if you’re giving that much money away. Some causes are political or divisive, so avoid publicizing those. Also, don’t stretch it past what you’re actually doing or try to make it sound bigger than it is. It could come back to haunt you.

Internally, discuss your philanthropy on an ongoing basis to keep your employees engaged. Also, list your efforts on your website. You could proactively promote it to the community on an annual basis, letting people know what nonprofits you supported for the year, while making sure that it was true and significant support.

How can companies set up a charitable foundation, trust, scholarship, etc.?

Community foundations can help you set something up, handling the technical aspects. Organizations like The Columbus Foundation, Union County Foundation or Delaware County Foundation hold it for you, so you can direct the funds. They make it as easy as possible to support a good cause and benefit your business at the same time.

Insights Banking & Finance is brought to you by Richwood Bank

Companies must identify, quantify risk to brace for turbulent future

Globalization has led to exposures to new and different risks. Large, multinational companies have risk management programs and experts dedicated to managing those threats. Many mid-market companies, however, do not.

These expanded concerns could affect companies’ income and operating statements through volatility in currencies and commodities. And the expectation of interest rate increases only adds to the worry.

“This is the first time there has been volatility in these areas in more than a decade,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank. “Most people haven’t experienced a lot of volatility. Markets have moved in earnest over an extended period, so companies that are focused on the day-to-day can lose track of the bigger picture.”

Smart Business spoke with Altman about areas of increasing risk and forming a strategy to address them.

What are some of the more pressing risks companies face today?

Those who follow the news from the Federal Reserve could get the impression that interest rates will continue to move. Until now, an entire generation of people have traded instruments and run businesses who haven’t had to manage through a rate cycle with rising rates.

In currency, there is a weaker dollar environment. This could help multinational companies that are selling overseas, but it poses a risk for others depending on where their exposures lie.

There is also some concern that the price of commodities could increase, with reports from The World Bank predicting rising costs for energy and agriculture commodities.

How should companies address these threats?

Businesses need to understand not only the risks they face, but quantify how exactly those risks will affect their company. If interest rates go up 3 percent, is that really a problem for the business? If aluminum or copper goes up 25 percent, is that something to worry about? And if the dollar depreciates 10 percent against the euro, will the company feel any effect?

The best way to manage through volatility is to be disciplined. Understand the potential risks and create a plan to deal with them. But know that exposure hedging is a risk-mitigating exercise, not a profit-making activity, in part because forecasting unexpected movements is too difficult to predict.

How well do companies identify threats with enough time to put a plan together to address them?

Some companies are extremely well prepared to face risk. They have veteran managers who are capable of identifying and quantifying the threats facing their business.

Others are less prepared. They tend to operate intuitively or hold on to the notion that markets will settle down soon because in the past five or 10 years, that’s what they’ve done. However, past performance doesn’t guarantee things will be the same in the future.

It’s very difficult to fix a problem once it has manifested. Managing risk means thinking of what could happen in the future and making a plan to brace for a potentially bad scenario.

Banks and risk managers take a long view. They understand the importance of quantifying risk and know that hope is not a strategy. They measure multiple types of risk in a global context. They also know that not every risk needs to be hedged. It’s not possible or recommended to try to hedge against all risks, but where a company faces the chance of significant damage from a threat, there needs to be a plan in place to mitigate or avoid that.

It’s easier to execute against a strategy when a company has a plan that everyone agrees on. Otherwise, there can be a lot of indecisiveness. Discipline works when volatility is on the horizon.

Businesses are coming out of a period of low volatility and potentially a period in which things aren’t going to behave as calmly as before. Companies should identify and quantify risks, and talk to advisers to develop a plan to withstand volatility.

Banks can frame up the problem and work with companies to find solutions. But ultimately it’s up to the company to take action on its own.

Insights Banking & Finance is brought to you by Huntington Bank

Important considerations when applying for an SBA loan

If you’re a small business owner, you may have questions about the best type of loan for your needs. Whether you’re just getting started or have been in business for years, you may be able to benefit from an SBA loan.

“SBA loans can be a valuable financing alternative,” says Kirk Jacobson, Senior Vice President of Small Business Lending at Northwest Bank. “With an SBA loan, you get longer terms and more flexible structures than conventional financing. However, in order to secure financing, preparation and working with an experienced SBA lender is key.”

Smart Business spoke with Jacobson about how businesses can leverage an SBA loan for their needs.

What qualifies a company for an SBA loan?
Securing an SBA loan isn’t much different from obtaining a conventional loan. There are a few steps a business should take to help the financing process go smoothly.

  Build your personal and business credit scores. Your personal credit score is important because it demonstrates your level of commitment to your business. However, it’s also important to include financials statements, tax returns and projections with your loan application, which give your bank a full picture of your business.

  Check with your bank to see what they require as part of the loan process. This may include a personal guarantee, collateral, insurance documents and accounts payable information.

  Gather financial and legal documents to prove ownership.

  Develop a business plan that shows your bank how you will use the loan and gives them an idea of what your repayment terms might look like.

What can companies do to increase their chances of obtaining an SBA loan?
When applying for an SBA loan, organization and preparation are key. The more prepared you are, the easier it will be for your bank to understand and process your loan. The SBA’s website,, also has resources you can use to prepare before you meet with your bank.

Your banker should be seen as a trusted advisor that you can rely on to help your business succeed. The more information you provide them, the more likely they’ll be able to help you secure financing.

How does your current status or the nature of your plan impact whether an SBA loan is right for your company?
If your company is still relatively new, your loan request could require an SBA enhancement. SBA loans also require borrowers to provide all available collateral, but many times there’s not enough to cover the loan. In this case, SBA loans are excellent financing alternatives because they can help offset the required collateral.

What are some misconceptions business owners have about SBA loans?
Many busy business owners assume it’s time consuming and expensive to get an SBA loan. However, when you work with an experienced SBA lender, the process should be relatively smooth and efficient.

Most SBA programs also give you the flexibility to incorporate any fees and other costs right into the loan, so there’s less you have to worry about upfront. This not only makes SBA loans an attractive financing alternative, but it also enables you to keep operating costs available for your daily expenses.

Never assume your business doesn’t qualify for an SBA loan. Talk with your lender about the current state of your business and any future plans for expansion. They’ll be able to help you decide if an SBA loan makes sense for you.

Northwest Bank is Member FDIC. Equal Housing Lender.

Insights Banking & Finance is brought to you by Northwest Bank

The benefits of working with a private banker

Private bankers serve as a conduit between a bank and its busy professional clients.

“They are a single point of contact who act as a personal CFO,” says David Hall, vice president of private banking at Home Savings Bank. “They listen to their clients’ needs and use their experience and connections to give their clients the best financial advice and guidance regarding their unique set of circumstances.”

Typically, private bankers help their clients with deposit products and customized lending solutions. However, they also help guide clients through financial planning, investment needs, trust and estate planning and other areas of financial expertise.

In some cases, a private banker’s help can extend outside of the financial realm.

“It wouldn’t be unusual for me to help a client who lived in Ohio and was selling a Florida condo find a real estate agent and negotiate the commission and terms of the sales agreement, or help decide how to make the condo saleable and pick a contractor to do the renovation work,” Hall says.

Smart Business spoke with Hall about the role of a private banker in the lives of busy professionals.

Who should consider working with a private banker?

Busy professionals benefit the most from a private banking relationship. These people spend most of their time running their businesses and are looking for a knowledgeable banking resource to help simplify their financial life so they can focus their extra time on hobbies and family. They are experts in their line of business and are looking for someone knowledgeable who they can trust to help them manage their finances.

What is the relationship of a private banker with an individual’s other financial advisers?

Private bankers are typically part of a wealth team that should have access to a financial planner, trust planning and administration, investment portfolio management and retirement planning. They work hand in hand with them and the client’s external advisers and are not looking to replace them. Rather, their seat at the table helps busy professionals evaluate and manage their financial lives and relationships.

Once a relationship is established, what should the client expect from the private banker?

It should be expected that the private banker conducts regular financial check-ups, though their frequency should be dictated by the client’s personal preference. It’s advisable for clients to have at least an annual review of their finances, including their insurances, to make sure they are on track with their financial plan.

A client’s financial documents should be reviewed, such as their will, living will, durable power of attorney and health care powers and directives at least every three to five years to make sure they are still up to date and aligned with their goals.

Private bankers can also look after the finances of their clients’ spouses, partners and family, at the very least knowing where the finances could be found so that the appropriate steps can be taken in the event of an unexpected death.

Clients should be able to call their private banker outside of normal business hours and get a response. It will be clear that the relationship has value if the client is happy with his or her ability to transact banking in an easy and efficient manner.

What should someone look for in a private banker?

While it is good to know if a private banker has any specific accreditations, it is also important to know what experience a private banker has and whether it is diversified.

It’s good to work with a private banker who is involved in the community, serving on nonprofit boards and actively volunteering. Bankers who are active in the community are generally well connected and have a lot of resources to help guide clients in any request.

Generally, private bankers are inquisitive and not afraid to ask questions about their clients’ personal finances and goals. Bankers also need to listen to their clients’ answers and be able to help put a solid plan in place to achieve their goals.

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