I Did My 50 in April…How About You?

In 2009, a business owner in Minneapolis, Minnesota, tried to encourage locals to support locally and independently owned businesses by starting an initiative called the 3/50 project.  The initiative took off and today the project has spread all over the United States.

 The premise is simple.  Pick 3 local, independent businesses and spend a total of $50 between them over the course of a month.  According to The 3/50 Project, of every $100 spent in locally owned stores, $68 remains in the local economy.  In contrast, only $43 of every $100 remains local when spent in national chains, and little or no local revenue results from online purchases. 

 This is the sort of effort that makes a community great.  If people are inspired to think and spend locally, then they ultimately benefit themselves by improving the quality of life where they live. 

 Many community banks celebrate Community Banking Month (April) by doing something to celebrate the connection between Bank and Community, because without a strong community, these banks would not be successful.  First National Bank is celebrating the month by participating in the 3/50 Project.  Every FNB employee has committed to participating in the initiative during the month of April to commemorate Community Banking Month.  Even though many of the Bank employees already spend well in excess of $50 locally every month, the exercise is useful because it reminds people why the process is important.

 Feel free to check out the project online and consider making the 3/50 Project part of your monthly routine.

    

So…The Big Banks finally get it

According to today’s Wall Street Journal, “Banks” are getting back to the people business.  The funny thing is that when they say “Banks” they mean the biggest banks in the country.  According to the Journal, “deep customer relationships were the bedrock of the U.S. banking industry, especially at small financial institutions.  That ended at many regional and big banks with the rise of computer-driven credit scoring models…”  The Journal goes on to say that, after a few rough years, those same big banks are trying to go back to the model that has worked so well for community banks–know your customer, and look at credit AND character.  Good community banks never stopped using this model. 

Community banking works because we’re a typically a conservative bunch of businesspeople.  We have high standards but we’re not beholden to a business model that throws out the good clients with the bad.  So we look for business owners that know what they’re doing and that also have strong character. Our customers know us and we know them.  Ideally, it creates an accountability on the part of both the lender and the borrower because we are working with people we know in communitites we want to see grow.  Poor decisions hurt us and the community at large.

So, go see a good community banker if you want to work with someone who cares about you and your business, knows the communities you know, and wants you to succeed.

Small Business Owners: Make the Most of Your Money

Even though the economy has been very difficult to navigate for small business owners in the last several years, it may make sense to actually increase the dollars you spend with your accountant this year.  I realize at first glance this statement may appear to be contradictory to surviving a tough business environment, but give me a chance to explain.

Now, more than ever, it is worth your time and money to make sure you have a handle on your small businesses finances.  Not only are you monitoring the health of your business closely but you are most likely very conscious of dollars flowing in and out of your business on a daily and weekly basis.  You may have had to budget more conservatively, become more efficient, or create new ways to generate revenue to survive this recession.  And, not only are you paying close attention to your finances, your banker (and possible investors/buyers) are most likely paying close attention as well.  And this is not necessarily a bad thing!  Having financials prepared by your accountant could be invaluable to your business for several reasons and could ultimately help you weather the economic downturn.

First, accountant prepared statements can help you stay organized and can leave you more time for running your business.  If your accountant is preparing statements, you have peace of mind knowing it is being done by a professional and hopefully you also have less stress in your life because that particular task isn’t your responsibility!

Secondly, at First National Bank of Pandora, and many other community banks, small business lenders and bankers can be one of your best resources.  Not only are they looking for ways to help your business succeed, but they are also talking to other small business owners who are most likely experiencing many of the same challenges you experience.  Their daily interaction with other entrepreneurs and with other professionals (attorneys, CPA’s, etc) could provide you with valuable feedback on your business practices.  In addition to using financial statements as support to borrow money from the bank, having legible and organized financial statements can help your banker recognize what services or resources your business could use to be more successful and efficient. 

Another benefit to using your CPA regularly for accountant prepared financials is that it provides another layer of feedback and protection for you and you business.  Your accountant will also have ideas and suggestions that could help your business.  And knowing you’ve had a professional work on your books goes a long ways towards giving your financial statements credibility—both to your banker and anyone else who might inquire about your business.

Finally, if you are looking to sell your business someday, accountant prepared statements will actually make your business more marketable in most cases because that second set of eyes provides assurance to potential buyers (or investors) that the numbers are reliable.  This reliability could actually increase the value of your business because there would be fewer questions about the historical performance of the entity over time.  There are several levels of accountant prepared statements (compiled, reviewed, and audited) but even the most basic compilation can be very useful for these purposes.

At the very least, consider discussing your business financials with your banker and your accountant to determine what format will be most helpful for you and your business.  Spending a few extra dollars will be more costly in the short run, but those dollars could be some of the most valuable you spend this year.