J. Michael Drewes is a Business Development Officer for North Coast Bank. A former business owner himself, he provides business owners with both business banking advice and business growth consulting.
What do you see business owners "missing" when it comes to their financial needs?
I think the number one thing is that business owners under-utilize their bankers. In the case of North Coast Bank, we're about educating business owners in business best practices, from financial reports to management issues. You're banker shouldn't just be the 'numbers' guy, in other words.
So you suggest a business owner take the necessary steps to develop and deepen the relationship with their banker?
Absolutely. Not only do most Business Development Officers like myself have business ownership experience, we're free!
What's a 'quick tip' you can provide, something you see savvy business owners doing?
That would be setting up a Money Market Account in which excess funds in your checking account get 'swept into' the money market at the end of each day. It's a way to keep more of your money in interest bearing accounts rather than in a checking account. Now the the amount of interest might not be much, but over the course of a year, or two or three, it can really add up.
What else would you suggest a business owner do to take control of their finances?
We do a lot with Lines of Credit. Those are excellent for businesses with cash flow issues, such as seasonal businesses. A general rule of thumb is that you can obtain a Line of Credit that's 10% of annual sales. So if your sales are, say, $100,000 in one year, you can expect to receive about a $10,000 Credit Line. Now what most people don't realize is that this is expected to be at zero for 30 days during every 12-month period. Again, this isn't necessarily for a loan. If a business owner needs a loan for a longer period of time, a Credit Line probably isn't the best solution.