Lately, I’ve felt more like a cheerleader than a banker. That’s because I’m doing all I can to correct the misconception banks aren’t making loans. Most every bank in the northern Nevada area, including mine — First Independent Bank — has been working with local businesses to provide the financing needed to expand and grow.
It is in our best interest to help local businesses succeed. It’s how we succeed as well.
Sure, our bank, and every other institution in town, has had to adjust their loan approval process to comply with more stringent qualifying standards instituted by the federal government. Based on what we’ve been through these last few years, those higher standards will protect everyone.
I’m here to tell you on behalf of First Independent Bank (a division of Western Alliance Bank) and the northern Nevada banking community of which I’ve been a part of for more than three decades, we’d all like to be making and approving more loans and helping businesses create more jobs.
Small businesses fuel most of the job growth in our country. That’s true in our region as well.
Of course, big projects like Tesla and the exciting developments at the Tahoe Reno Industrial Center are a huge boost to our state’s and region’s economy. But over time, small businesses are the economic growth engine.
Unfortunately, many small businesses fail within the first five years. There can be a number of reasons, but often the biggest mistakes are related to financing — and are often avoidable.
Want to increase your chances of success? These five steps will really help.
1. Get a banker.
Sure, we’d love to have your business. So would every other bank in town. It’s important to create a relationship so you have a go-to person when you need help. Think of your banker as a consultant and business partner. Someone who can help you discuss plans for growth, new areas of business you’d like to pursue or the best options to refinance an existing loan that might be a drain on resources. There’s no charge for this kind of an appointment — at least we don’t think there should be. It will help you define a future for your business. A knowledgeable and experienced banker can help anticipate some of what you’ll need to accomplish.
However, you’ll need to be able to discuss previous financial information, current finances and your business goals.
2. Importance of a business plan.
You need one! A business plan helps you prioritize your business objectives, plan for the future and plan for employee needs. A business plan will be used by the banker to help understand your business and make sure plans are in place to meet your requirements and goals. A business plan is one way to bring your intellectual capital (plans and goals) and financial capital together. There are lots of great resources to help you with your plan — including the Nevada Small Business Development Center at the College of Business at UNR.
3. Accounting/financial information.
There are a couple options: either hire an accountant or bookkeeper to track this, or use some of the simple programs like Quick Books, which can help you see your profit and loss, assets and liabilities and much more. Incorporate this with your online banking and bill pay so you can produce monthly or quarterly financial statements. Yes, those are important to have and will help you when tax time comes around.
4. Bank account fraud
Technology has changed in this area over the last several years and as a business owner you need to be up to date. As a business owner, you need to limit access to business accounts among employees and, just as important, limit access from external hackers. Review accounts and transactions daily. As a business owner, you need accurate and secure payment systems to be successful. A banker can help with these options.
5. Reducing tax liability
You work hard for your money. Make sure you keep what you are entitled to by taking advantage of all legal options and tactics. A banker can take a look at your profitability and suggest programs that may reduce your business’ tax liability. In addition, an accountant can help find out if deferring recognition of income, pre-paying expenses or accelerating depreciation will benefit your bottom line. These plans need to be balanced with your business needs to meet debt service and other loan requirements.
As a member of the Reno banking community for almost 35 years, I’ve seen incredible growth among local businesses that which work hard and smart. We need to create an atmosphere where more business owners can find success. I’m happy to say it can start with a simple conversation.
Mike Hix is senior vice president and regional manager at First Independent Bank. A graduate of University of Nevada, Reno he has nearly 35 years of banking and lending experience.