Tag Archives: management team

Team Resource – Your Banker Or Investor

Bank Cash BagWhen we think of a bank, some business owners think of it as a necessary evil.  That sentiment is likely due to the feeling that the bank uses the funds it has on deposit  to make more money loaning it to others, that they are stingy on lending money back to business owners, and charge fees for virtually every transaction they make.

While there may be an element of truth to some of those concerns, remember that banks are a business and also need to make money to stay in business.  What business owners often overlook are the positive outcomes of having a good business relationship with a banker.

First on the list is reduced risk.  Imagine a business where all the cash and payments are kept on site in a vault.  Any guarantee against loss or theft is gone.  Although it may seem like a viable way to conduct business and keep your cash close by, the scenario also means your business, by definition, relies on being conducted only through cash transactions.  That also limits how your customers can pay for your goods or services.

Banks provide a means to process checks and credit card payments, although credit cards can be processed apart from a bank through a company such as Electronic Payments.  These options for customers enable your business to accept more than cash.  Even businesses (a few restaurants come to mind) that accept only cash have automated teller machines (ATMs) in the lobby or close by where customers can get the cash they need by swiping a debit or credit card.

The most important reason to have a banker or an investor as part of your non-staff management team, however, is to help you manage your business.  A strong, professional relationship with a business-oriented banker enables you to control cash flow, keep abreast of banking regulations, and manage your financial assets.

Too often, business owners only approach or talk to their banker when they need money.  People I know in the banking industry hate that as much as the business owner.  Bankers want to help you but need to know how.  If it’s merely depositing your revenue into a checking account and using that account to pay your invoices, just talk to your banker about the best options for that type of account.

To get more value from your relationship, however, you need to get your banker involved in your business.  Obviously, the first step is to establish parameters regarding confidentiality and other concerns, especially if it involves sharing your financial statements on a regular basis.  Next is to give them insight into your business, which can be done with a business plan, a tour of your facility, and perhaps even a spot on the board of directors.  Then stay in touch with your banker on a regular basis.  Keep them abreast of your situation so they can be prepared to extend a line of credit or help with a short term loan if finances are getting tight or cash flow becomes an issue.

Talk long-term strategies with your banker as well.  Let them know what you have planned, when you anticipate any expansion efforts to take place, and besides what you expect the costs to be, when you plan on being able to pay off the capital improvement loan.  The old saying that if you work with them, they’ll work with you is valid when it comes to your banker.

Keep in mind that since the economic crisis around 2007-2008, banks have come under much closer scrutiny from the federal government and all the regulatory agencies.  That implies that banks are now required to be more careful in what loans they add to their portfolios, which may mean you need personal guarantees or stronger collateral to get the same kind of loan you used to get before that time … and they may turn you down.

The questions you need to ask your banker should cover interest rates, penalties, loan procedures and requirements, and how best to manage your relationship with them.  Getting free business checks is less important than avoiding monthly account service fees, although both may be negotiable.

Your relationship is still what’s most important.  You want a relationship with a banker who’s responsive and honest.  You shouldn’t have to wait four weeks for an answer about a loan, and you want them to tell you up front what to expect, even if the loan possibilities look bleak.  You want answers and want to know where you stand so you can make informed decisions.

Keep in mind, too, that if you face rejection for a loan from one or more banks, there are other options, such as private equity and angel investors.  These may be long shots as well and require a higher rate of return, but they are options for your business to continue to flourish and serve your customers.

Team Resource – Your Insurance Agent

What in the world does an insurance agent have to do with managing your business and being part of your non-staff management team?  Your agent is worth far more than you may want to believe.

Let’s start off by covering your most vital employee – besides yourself.  Think for a minute who that person might be.  Let’s assume it’s your sales manager and that she has been driving your bottom line for five years already.  Do you have “Key Man” insurance to cover your company if something should happen to her?  Your insurance agent can help you put together coverage to protect you and to encourage her to stay on board for the benefit that policy can offer.Insurance Umbrella

In another scenario, let’s talk about you and your relationship to your business and your employees when you are the office manager, sales person, production manager, human resource director, marketing vice president, and president of the company.  Oh, and you travel a lot to trade shows or client meetings.  Are you covered adequately if you’re involved in an accident and are unable to work for a month or two?  There are important considerations, such as who will run the operation while you’re incapacitated, but more essential is where are the funds going to come from to keep the operation afloat while you’re out of commission?

Talk to your insurance agent about these concerns.  At least once a year you should meet with your agent and do an insurance review.  Ask if you have enough liability coverage for customers or employees getting hurt in your place of business.  Talk to her about the changes in national health care laws and what your position should be on providing coverage for your employees.  Do you have enough, and the right type of, life insurance on your life to take care of your family and the business?

Like your team’s legal counsel, your insurance agent is there to help you minimize the risks that can put you out of business.  Yes, there are costs incurred with insurance policies, but consider the cost should a catastrophe occur and wipe out your place of business with inadequate insurance coverage to get you right back in operation.

Talk to your insurance agent about any concern you may have.  Do you need product liability coverage?  Does your facility lie within a flood plain?  Are you planning a remodeling project, and do you need coverage for the contractor’s faults?  Is your worker’s compensation coverage adequate?  What about potential damage to your intellectual property rights?  Some of these may be a stretch, but the point is that your insurance agent is a valuable member of your team and can give you answers to these and other insurance-related questions.

You should get to know your agent so you can call him whenever you have a question.  You know you have the right agent when you do call, he asks more questions than you thought needed to be asked, and then either tells you you’re covered or you probably don’t need that kind of coverage.  That tells you there’s a trustworthy relationship between the two of you, and that’s good.

Team Resource – Your Legal Counsel

If you have thought that the only time you need an attorney for your business is when you get in trouble, it’s time to eliminate that mindset.  Professional legal counsel should be viewed as an essential member of your management team, especially if your firm lacks the size to have full-time corporate counsel on staff.

Scales of Justice

The problem is that most business owners wait until they are sued to seek out and use legal counsel, instead of preventing lawsuits by the wise and judicious use of a lawyer.

The first step is finding an attorney you trust.  Talk to one you already know for advice and a referral to the correct barrister to fit your needs.  Keep in mind it might be the lawyer you ask for the reference from who becomes your counsel.  Knowing whether you can afford their services is less important than knowing they are able to protect your assets and save you money by avoiding legal action.

The second step is understanding what you need your legal counsel to do for your business. They can draft and review employee agreements and assist in handling employee grievances and complaints.  They should draft and monitor your non-compete, non-disclosure, and confidentiality documents and insist that you use them diligently to maintain your intellectual property rights. Any contracts, leases, or other obligations you are considering should be reviewed by your legal counsel.  Add in corporate by-laws, employee manual review, incorporation, operating agreements, and other legal advice and it becomes quite clear how essential your lawyer is to your management team.

Third, be clear on the role you want an attorney to play on your team.  Discover their areas of expertise and their willingness to learn.  If you plan on franchising your business, look for counsel with franchise experience or allow them time to study up on what is required.  Their knowledge and experience obviously comes with a price, so that clarity is important and has value to your checkbook.

As you get to know your lawyer, make sure you tell them to let you know when you’re on the clock since most of them bill by the hour.  Find out when the clock is ticking for such things as a 10-minute phone call or if they are responding to your E-mail so there are few surprises when the invoice arrives.

Fourth, talk to your lawyer about the steps you can take to avoid litigation in the first place, including proper treatment of employees, return policies, guarantees, product liability, vendor agreements, and any other aspect of your business that exposes your company to legal action.

Remember, your legal counsel is a vital member of your team and can be, must be, trusted to protect your assets.  Take the time to interview several to find the right one to take care of you and your business.  It could be the most important decision you make.