Over the last couple of months, our team has focused on financial literacy. Our team has explained how to set and track financial goals for your firm. We have outlined the importance of a great business credit score. We also tackled capital structure—introducing many readers to the value of debt and equity financing for interior design firm owners. This post will underscore the importance of fostering great banking relationships. Learn why interior design firm owners need established banking relationships to support continued success.
Here’s Why Banking Relationships Matter for Firm Owners
An excellent banking relationship is essential for any business owner, regardless of industry or size. Banking relationships are more than just financial transactions. They offer valuable services and benefits that empower businesses to achieve their goals.
Banking institutions provide a range of products and services that cater to different needs of customers. For example, many banks offer loans with flexible terms and rates, enabling businesses to manage cash flow better. This is especially helpful for firms with uneven cash flow that ebbs and flows throughout the year.
Below are a few other reasons relationship banking makes sense for firm owners. An excellent banking relationship can:
Help You Manage Business Finances as a New Firm Owner
According to this resource from Bank of America, your banker could help you “uncover causes of cash-flow problems.” With their experience and insight, bankers help you with financial problems even if they don’t make money directly.
For example, a banker might offer a list of grants you qualify for if your ability to borrow is minimal. Your ability to borrow might be less than other firm owners due to a short business credit history or high DTI.
Offer Access to Special Programs
A good banking relationship enables firm owners to access special programs that offer insights into insider strategies for managing finances. This allows them to stay informed about the latest trends in financial management, enabling them to make more informed decisions.
Some institutions even offer mentorship opportunities to clients who bank with them. For example, Chase recently launched a free mentorship program for minority-owned businesses.
According to this article from Business Insider, Chase provides “free one-on-one coaching [and] banking and credit solutions” to minority business owners. It also offers “community resources and year-round educational training.”
Sometimes, your banker might help you connect with other professionals in your industry or adjacent industries. They might provide access to vendors or partners you would otherwise have missed out on.
Provide Timely Support When Unexpected Needs Arise
For example, you might need to extend your line of credit to cover employee wages if experiencing a dry spell or waiting for an overdue invoice. You might need a large loan immediately to seize a dream opportunity that pops up unexpectedly.
Building a relationship with your bank can empower you to grow your firm when opportunities arise. It can also help you protect your firm when opportunities are scarce.
Offer Better Rates and Lower Fees Designed to Solidify Client Loyalty
Firms can benefit from a strong banking relationship by opening a checking or savings account designed specifically for business owners. These accounts often have lower fees, higher interest rates, and other exclusive benefits contributing to increased wealth management.
Maintaining a long-term relationship with a trusted bank creates loyalty between the customer and the institution. This serves both parties. For interior design firm owners, it often results in better rates and greater value over time.
Help Firm Owners Leverage their Savings through Wealth Management Services
Many banks offer wealth management services. These services allow you to invest in the stock market or other financial instruments that can grow your savings over time. Your banker can also help you make the right choice when deciding on an appropriate loan amount or how much credit to use.
Educate You About Laws, Regulations, and Risks
According to Bank of Utah’s Cari Fullerton, in a resource on the institution’s site, bankers can help business owners understand whether financial plans are viable. A great banker will educate you about laws, regulations, and risks that apply to you and their institution.
Fullerton notes that “a banker can show business owners…how lending decisions are made and what the federal regulations are.” In turn, this can “help business owners see themselves and their businesses from the bank’s perspective.” With this kind of insider knowledge, business owners can edit their plans to reflect the financing options that are actually available to them.
A good banker will also inform you about any changes in laws or regulations affecting your industry and help you manage risk accordingly. By receiving this kind of insider information, you can adjust your strategies and make informed decisions based on current trends and market conditions.
How to Build Great Banking Relationships
As noted above, building a good rapport with your bank can benefit you in many ways. It might lead to better cash management, increased savings, and insider knowledge on financial regulations. A great banking relationship could also afford you the ability to receive unique value-added solutions that align with your business plan.
Firm owners often assume that they must invest a significant amount of money with their bank to benefit from the kind of relationship described above. Thankfully, this is not usually the case. By taking the following steps, you can foster a great banking relationship no matter your firm’s annual revenue.
Meet in Person
Meet regularly to discuss your financial needs and goals to ensure an advantageous relationship with your bank. It’s important to maintain open communication about your business operations, such as upcoming projects or challenges you may be facing.
This will allow your bank to provide support and offer custom-tailored solutions that solve problems unique to your state of affairs. Meeting in person helps create a personal connection with your banker. They’ll have a face to tie to your name each time you chat via phone or email!
Trust Their Expertise and Experience
Don’t underestimate the power of trust when building a long-term banking relationship. When you work closely with your banker, they’ll understand your needs and become more invested in helping you achieve your financial goals. Trust enables both parties to feel comfortable discussing sensitive matters and ensures transparency in all financial transactions.
Value Their Feedback
Another important element of building great banking relationships is to value your banker’s feedback. As noted above, bankers understand industry rules, regulations, and restrictions better than most firm owners do.
In an article by Laura Newpoff for the Minneapolis/St. Paul Business Journal, TCF Group President Joe Gaffigan explains. Gaffigan tells Newpoff that” ‘the most successful owners realize they can lean on their banker to help them make strategic decisions.'” They value the fact that they can “‘run ideas by a third party who is going to give them honest feedback.'” According to Gaffigan,” ‘access to that [kind of] relationship is important.'”
Be Transparent About Your Plans for the Future
A banker can only help you improve your firm’s financial picture if you are open and honest about your goals and challenges. Come to them with a carefully-crafted business plan that outlines your needs, expectations and struggles.
Put simply, building a great banking relationship requires effort from both sides. As a firm owner, it’s crucial to communicate openly, show loyalty, and maintain professionalism. In return, you’ll receive valuable insights, customized solutions, and resources that will help grow your business over time.
By utilizing strategic planning and offering tailored products and services, banking institutions play a vital role in helping firms reach their financial objectives. Therefore, entrepreneurs must take the time to know and understand what their chosen bank offers to receive the best possible value and financial support.