When your business does its banking locally, it is doing its part to keep money in the community that can then be invested to retain existing jobs, create new jobs and support the local economy, says Ralph Lober, president and CEO at Consumers National Bank.
“When you’re supporting that local hardware store or grocer, you are helping them maintain employment and their ability to invest in the community,” Lober says. “It’s the same thing with your local bank. It creates a cycle of money where the same dollar is spent repeatedly. If you pull that dollar out of the community, it can be hard to get it back and the economic impact is multiplied.”
Companies often underestimate the capacity of community banks to help them manage their business as they grow, Lober says.
“If you keep your bank informed and in the loop and let them help you grow, that bank can grow with you for quite a while,” he says. “If it gets to the point where you’re growing too fast or you need a larger credit facility, your banker will tell you that and help you make adjustments or transition to a larger bank. But for most businesses, that scenario is quite a ways off.”
Smart Business spoke with Lober about the benefits of banking locally, both for your business and the community.
What are some misperceptions that may prevent businesses from banking locally?
One factor that often pushes a company to go with a larger bank is name recognition. Smaller banks can’t afford to blanket the airwaves with advertisements, so they may have less visibility in the market. You may also have concerns about whether a locally based bank has the industry expertise you need to grow your business.
In actuality, community banks have the ability to get more involved in your business and can act as a consultant for you as you develop your growth plan. There is also an element of familiarity when smaller, growing businesses work with community banks. Your bank understands the moving parts of your business and can relate to some of the challenges of growth, but then use that knowledge to help you pursue your company’s goals.
Most community banks invest heavily to stay up to date with the latest payment, cash management and security systems, and offer all of the delivery channels and products necessary to meet the needs of busy business owners and managers. In a highly competitive, customer-focused industry, these investments are critical to attract and retain business.
How do you determine whether a bank is a good fit for your business?
You need to get to know your banker. Talk to the commercial lender or business banker and ask questions about how they would get involved with you to support your business. Sit down, have a conversation and gauge your comfort level.
You should also ask for references and talk to people who work with this bank on a day-to-day or week-to-week basis. Ask how the bank keeps pace with technology and what systems it has in place to make banking easier. Learn how the bank supports the business and contributes to its success.
What should you do before you meet with a bank?
Be prepared to discuss your growth strategy. Have solid, well-thought-out projections that demonstrate you have thought about the future and you understand what your company needs to accomplish to remain competitive in its industry. If you go to your bank and say that you need $1 million to help your company increase sales, you need to explain the specific investments necessary to achieve that goal. Document what product or service lines you are looking to boost, how you will do it, and how the investment will affect revenues, operating expenses and net results.
You should also keep your accountant in the loop and use their expertise to develop your projections. When you take those steps, you give your bank the tools it needs to support your growth plans.
All economies, whether local, regional or state depend on give and take interaction and a reliable flow of money. When you work with your local bank you support local investment that benefits the financial future of your business and your community.
Insights Banking & Finance is brought to you by Consumers National Bank
