… a love triangle you want to be in
By Heather Tully
Senior Manager, Small Business Banking, Coast Capital Savings
Whether you are a new entrepreneur or a long-time business owner, you are the master of your own destiny—but it can be lonely at the top. Sometimes, it’s nice to know someone has your back. As a business owner, you should know that your financial institution can be that someone. They offer services and resources that’ll make your day-to-day back office operations run more smoothly, and ensure you’ve got the resources you need to take your business to the next level. In short, building a relationship with your financial institution allows you to focus on your first love… your business.
Breaking up is hard to do
Co-producing the next blockbuster, co-habiting with your love, co-operating on a community project… all good. Co-mingling your personal and business banking, not so good. Once your business is more than a hobby or an occasional pastime, it’s time to talk to your financial institution about opening a business account.
Having two accounts isn’t designed to make your life more complicated (as a mompreneur it’s plenty complicated already), in fact it’s just the opposite. A dedicated business chequing account will help ease record keeping, bookkeeping and tax compliance, and can lend credibility and professionalism to your business. Look at opening a High-Interest Business Savings account where you can stash five to 10% of your profits for contingencies or planned future purchases. It’s also a perfect solution for storing any taxes you collect throughout the year, like GST. Doesn’t an easier tax time sound good?
I’m just not that into you anymore
There was a time, not that long ago, when cash was king. Since then, there’s been a palace coup, and plastic rules now. As we move toward a more cashless economy (25 million Canadians use Interac debit payment for their purchases each month, totally more than $200 billion annually), many small business owners will need a cost-effective and reliable way to process customer credit and debit payments. It’s what we refer to as merchant services in the financial services industry.
Indispensable if you own a retail business, merchant services is growing in the professional and services sectors as more clients want the convenience of using cards to make payments quickly and easily. A financial institution can help you decide if merchant services may be right for you.
It’s a game of give and take
Financial institutions can be a key resource for entrepreneurs when it’s time to access financing for start-up or expansion. Provided you meet the required lending criteria, there are two key options for accessing the financing you need: a business loan or a business line of credit.
A loan funds a one-time business expense, and you apply for it at the time you need the funding. In contrast, a line of credit (often linked to your business chequing account) can be used to help with short-term funding for day-to-day operations, like meeting payroll, buying supplies or increasing your working capital.
When your financial institution reviews your credit application, they generally look at the “4 Cs”: Cash flow (how you’ll make the payments); Collateral (any security required); Commitment (any funds the business may be putting down); and Character (your credit history).
A conversation with your financial institution is the first step in understanding how credit can help your small business grow.
Things have been a little rocky lately
No one wants to be a pessimist, but bad stuff happens, and as a business owner, you need to have enough business insurance coverage to protect against it. Each business has its own individual needs, so have a candid conversation with your insurance provider to find the right coverage.
In general, insurance should cover the business owner, as well as key partners or employees in case of illness, death or disability. You should also have coverage for any property and your financial assets of the business, especially your premises and business equipment. Liability insurance will protect you should your product cause injury or in case a customer gets hurt on your property. Business insurance protects you so you won’t have to start from scratch if the bad stuff happens to you.
As an entrepreneur, there are so many things to worry about. A great relationship with your financial institution can help ease some of that worry. It’s a solid win-win relationship—you take care your business, while they take care of you.