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Find the banker for your business

By Ildar Sagdejev (Specious) - Own work, GFDL, https://commons.wikimedia.org/w/index.php?curid=10755023

A business banker can be one of the best resources for a company owner or anyone considering starting a business.

Owners and prospective owners, however, can be so busy running or starting their businesses that they sometimes overlook this valuable helper, with whom they probably already have a relationship.

A banker can help an owner obtain financing to start or expand a business, purchase equipment or maximize profitability. But he or she also can help with some of the important details of establishing a company as well as ensuring that it is properly structured to efficiently monitor finances and protect personal assets.

The responsibility for developing the relationship doesn't fall entirely on the business owner. The banker needs to be someone with whom the owner feels comfortable and trusts. He or she also must take time to understand the business, along with the owner's immediate needs and long-term plans.

It's important for any business owner or prospective owner to shop around to find the bank and banker that are the right fit and that can invest the time to develop a relationship based on trust and open communication.

For the banker this means understanding the type of business, including the products and services offered, the competitive landscape and the customer or market segments. The banker also needs to have a firm grasp on the structure of the business, whether it be a sole proprietorship, a partnership or a firm with a group of investors. What are the sources of capital to start or grow the business? Where might the business need additional financing?

Too many businesses, especially small and start-up firms, make the mistake of operating the business from a personal checking or savings account. While this is understandable — these are accounts that the owner already has and they often are the source of start-up funds — it's important for the banker to help the owner appreciate the dangers of doing this.

Personal accounts should be personal. They contain important individual and family funds that could be at risk if they are not properly separated from the long-term assets and day-to-day finances of the business. Owners who don't separate personal and business finances can learn the hard way that strong lines of division are critical. Any problems down the road with the business can impact personal finances, impairing funds for needs such as one's home, children's educations and retirement.

Establishing separate business accounts also makes the process of recording, tracking and reporting the company's finances much easier. When the owner wants to know how well the business is performing, or needs to report the company's finances for lending or tax purposes, having separate business accounts makes the process cleaner and faster.

A business banker can be one of the most important resources when it comes time for the firm to grow. Business bankers have experience in the many options available for providing cash for a new office, a larger manufacturing site, equipment or other needs. Business bankers work regularly with firms in many industries and of many sizes. It's their job to know which financing options are best. Tap them for their expertise instead of trying to go it alone.

Finally, business bankers can offer suggestions for other professional services that the business might need. These include insurance, accounting and legal help. The final decision, of course, is always up to the owner. But understanding how other business professionals can provide assistance often starts by talking to a business banker.

Yes, business bankers are there to lend. But they also can lend a hand in other ways, becoming one of an owner's best resources for starting and operating a successful business.

Steven Raj

Steven Raj is vice president of lending at Park State Bank in Duluth. You can reach him at stevenr@parkstatebank.com or (218) 727-8001.

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