Today, it’s standard for banks (specialist niche banks and major banks) to offer it’s business banking clients services like internet banking, rewards programmes and even the use of apps, in an attempt to make banking even easier for SMEs.
But what should entrepreneurs really be looking for when choosing the right bank for their business? And do all the bells-and-whistles matter, or should you be looking for more concrete offerings?
Riaan Klopper, Head of Business Banking at Mercantile Bank, says finding the right bank is an important decision that can affect your bottom line. Here are his five questions that every entrepreneur should ask before choosing their bank.
1. What do you need from your bank?
Like with any relationship, be careful to define your expectations to ensure that they are met.
Points to consider:
– Do you merely require a transactional account where pricing is most important?
– Do you want a bank that understands your business and values personal relationships?
– Does the bank offer access to specialised advice and capital to grow your business.
“What is the bank’s approach to accommodating you when business is slow?”
2. Does the bank specialise in business banking?
Entrepreneurs potentially require a wider range of services than an individual, which in most instances are more complex.
Points to consider:
Find out if the bank offers the services you might need in a few years’ time when your business has expanded.
– Ensure that the bank understands your needs and can demonstrate in-depth knowledge of the industry you operate in.
– Find out if the bank can give you access to decision makers.
3. Does the bank offer a single point of contact?
It’s important that a bank help business owners avoid the frustration of having to engage with different people within the same bank, depending on their financing or investment needs.
Points to consider:
– Ensure that the bank offers individual attention, a single point of contact for all their banking requirements
– Find out if they have relationship managers who take the time to visit them on site and understand their specific strengths and weaknesses.
4. What is the bank’s approach to accommodating you when business is slow?
In the life cycle of any business, there will be good and bad times. At some point an entrepreneur will need capital to expand or even keep the business going in the event of weak economic conditions.
Points to consider:
– A bank should understand your company’s cash flow and seasonal borrowing requirements – this is only possible if you keep your bank up to date about your operations, challenges and opportunities.
– Find out what the bank’s policy is on decision-making around finance applications. Sometimes an entrepreneur needs a quick answer and it is helpful to know if the bank is able to make decisions quickly.
5. Can you approach the bank for advice?
For a business owner, a bank should be nothing less than an integral business partner.
Points to consider:
– It’s important that you choose a bank that understands your industry with the ability to provide meaningful advice and tangible support to grow your business.
– Your bank should be able to identify with your opportunities and challenges and provide financial solutions based on that knowledge.
