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Beyond a Bank Account- The Essentials of Building a Relationship with Your Bank

Posted on 11/17/2021 by EDTP Coordinator in LAEDA News

Banks offer a wide array of services and opportunities you can use to grow your business. Building a relationship with your banker early on is a critical strategy you can follow to set the stage for the growth of your business. At LAEDA’s virtual event, Beyond a Bank Account - Leveraging Your Banker Relationship To Grow Your Business, many aspiring entrepreneurs came together to discuss not only their views of banks and what experiences they had with banking services but also to learn about the why a business banking relationship is important to an entrepreneur or business owner.

During this session, we got to meet Joanna Nicasio of TD Bank, who gave entrepreneurs advice on how to build a valuable, successful and effective relationship with their bankers, especially in the initial stages of business startup. She also spoke of the many benefits of keeping your money in the bank such as cost effectiveness, safety, convenience, and security.

Since individuals often have concerns about banks customer loyalty, fees, interest rate, and loan rates, they often choose not to use some or all of a bank's services. This leads many individuals and businesses unbanked or underbanked. Nicasio gave a variety of reasons why people are hesitant about going to banks:

  • Negative experiences at a bank or feelings of intimidation
  • Being “blacklisted” by major banks
  • Not wanting to pay a monthly bank fee
  • Not wanting to complete the paper work to open a bank account because sometimes there is lengthy paper work, which also might be confusing
  • Not wanting information about personal finances recorded because identity theft or fraud is a really sensitive issue
  • Not having required identification

After reading this list onemay wonder…how do these groups use cash, checks or even pay bills? Well, as Joanna discloses, these groups use check cashing stores, money orders, neighborhood grocers, relatives and employers which prove to be unsustainable and often cost more time and money than using a bank/credit union. Practices such as these might cause many obstacles in having business owners accomplish their goals and reach their full potential. This also leads to a common yet dangerous issue for small business owners... Commingling of funds. When commingling happens between personal and business transactions it gets unorganized and messy and much harder to prove the transactions inclusing where the money came from or even where it went. If lenders see this process or transaction it is much harder to get a loan or build any kind of relationship with the banker. Thus, this process is really fragile and must be handled with care. “Separate your personal and business funds because lenders will want to see where the money is going and how you are managing your business finances which will eventually help you get the loan you need,” Joanna Nicasio illustrated.

Once business owners understand the importance of having seperate bank accounts, the next step is finding the right bank for their needs. When deciding which bank to go to for business services, it is important to shop around and find the one that best fits your needs before opening an account and proceeding with the next steps of being a business owner. Below are valuable steps of opening and maintaining a bank deposit account:

  • Open separate accounts for business and personal use
  • Make deposits and withdrawals
  • Record interest and fees
  • Keep track of your balance
  • Create a budget to manage your money and track spending

Much in the same way you wouldn’t leave your house and start driving without knowing where you are headed, you should always make a plan and gather the right resources in order to unlock the business' true potential. A plan is crucial to surviving life and navigating in business that is why Joanna went over these three essentials of avoiding pitfalls:    

  • (1) Establish Financial Goals- Make sure you establish your financial goals in accordance with you, your family, and your business. You should make them specific and focused on you want to accomplish within a certain time period.  You should identify, organize, and write down your financial goals then educate yourself on how to acheive them. After, you can evaluate your progress so that way you know what is working and what is not in order to make any needed changes.
  • (2) Use Credit Wisely- “Please make sure you prioritize because whatever gets prioritized is what gets done. Credit is one of those priorities since it is a significant factor that gives you a leg up when you are an entrepreneur; so if you have access to it, use it wisely and only spend what you need and what you can pay back.” spells out Nicasio.
  • (3) Start Saving Wisely- Often business owners forget about themselves. Business owners must realize that paying themselves is important to ensure they and their families are seeing the benefits of operating a successful business. The following saving options allows you to pay yourself first: (1) Individual Development Account (IDA) (2) Health Savings Account (HSA) (3) Electronic Transfer Account (ETA) and (4) 529 College Savings Plan.

Before the closing remarks of the night, Joanna provided valuable information and advice about why building a relationship with your banker is vital:

  • Owners of small and mid-size businesses should understand that selecting the right banking institution is a key component to their business’s financial health
  • As with any relationship, building on a strong foundation will lead to long-term success
  • A Banker will give you financial advice on Money Management
  • A Banker will help you build a strong relationship for future lending needs like (1) Lines of credit (2) business loans (3) business credit cards and (4) grants.

So assemble your team of advisors today and be ready for the endless opportunities ahead by having the following on your team: (1) Accountant (2) Attorney (3) Banker (4) Real Estate Broker (5) Insurance Broker and (6) Yourself.

We all have different talents, skills, knowledge and abilities and with the right resources, knowledge and mentors by our side you can have a winning team that works for you and your business. “The more you know the more you will grow so assemble a team that will work for you. When I can pinpoint what your business does and what it stands for we can help you more and advocate more”, Joanna illustrates.

If you have further questions or concerns or need further assistance please do not hesitant to reach out to Joanna Nicasio by dialing 856-635-9002 or emailing Joanna.nicasio@td.com Monday through Friday from 8 AM to 5 PM.

The Entrepreneurial Development Training Program (EDTP) has been training individuals from to start businesses for over 30 years. EDTP is a nine-week 75-hour training course that is conducted two times per year. Entrepreneurs learn about all aspects of starting and running a business and finish the course with a completed business plan.

In 2012, LAEDA expanded its program area to begin offering training and counseling in Burlington, Atlantic, Gloucester and Cumberland counties. Beyond the Entrepreneurial Development Training Program, LAEDA offers one-night seminars, five-week courses, and business counseling through the LAEDA Women’s Business Center.

LAEDA continues to provide high quality virtual programs that are relevant and impactful to the community in South Jersey. It also strives to offer bilingual programs and services to the public. If you are interested in the Quick Start series or any other LAEDA programs/ services, visit our website at www.laeda.com or call (856) 338-1177 to learn more.