The news is littered with articles about the powerful banks taking advantage of the small business man. Because of some of these stories many people feel that they are powerless against the banks and their bank holds all the cards. However, the latest Scottish Pacific SME Growth Index highlights some opportunities for SMEs to take greater control over the banking and show that they actually have more control than they thought.
1. Review your banking at least every 2-3 years
Generally you will get a better deal if you periodically shop around than simply trusting your bank to tell you about new products or services and discounts. We know the idea of changing banks seems worse than the prospect of moving house. But banking products change and it is important to review your current products and services are that you may have signed up to some time ago, against what is now available. This doesn’t always mean changing banks, it might mean that you change products with your current bank. But going through this process can be really important in ensuring that you review what products and services you need and then making sure that the products you have meet those needs. Your current bank will be happy to help you review your current services, but then it doesn’t hurt to take that information and compare it to a few competitors.
Don’t ask advice from friends or family that aren’t in the finance sector. The worst thing you can do is choose a bank or product because a friend has that one. Make sure you gain independent advice from a your accountant or financial planner in determining what will be the most effective solution for you. Only 17% of small business owners turn to their accountants for this advice. Only 12% of small businesses seek banking help from a broker, instead preferring to talk to the banks themselves.
3. Keep up to date with new developments
Make sure you review new products and suppliers. There are a number of new banks and banking solutions entering the market, you should be aware of these and keep up to date with how this is affecting the marketplace. Although this takes time, you could find you save a significant amount of money in doing so.
4. Look to spread your banking business around where you can.
Don’t put all your eggs in one basket! Many SMEs are content to remain with one long term lender. However, spreading your banking can mean that you get the benefit of different options and savings. While one bank might have great lending, another might be good at day to day banking. You are in the driver seat and are able to choose which products you use with which bank. Even your borrowing, you can have your car, home and business borrowing all with different banks! Sometimes banks will give you an attractive discount in order to gain all of your business, this may suit you, but if it doesn’t then make sure you choose what you want.