Achieving Financial Success: Tips for Small Business Owners on Planning, Financing, Cash Flow and Negotiation Skills

At Middlesex Savings Bank, we’re committed to supporting the growth and success of small businesses throughout Massachusetts. In addition to lending to small businesses, our business banking team draws on years of experience to serve as a trusted advisor to business owners. 

Through our relationship with SCORE Boston, we recently sponsored a four–part webinar series to get your business moving forward. Geoff Homoliski, EVP, Chief Commercial Banking Officer and David Bennett, SVP, Business Banking, were joined by local industry experts who shared their insights on several key topics, including business planning, financing a business, the importance of cash flow, and negotiating tips. 

Here, we’ll share the valuable insights directly from our small business lending experts on what banks like Middlesex specifically look for when working with business owners.

Business Planning the Easier Way 

Creating a business plan can seem like a daunting exercise. This is especially true for those running a small business, which can be an all–consuming undertaking. No matter how you slice it, a business needs to know where they stand and where they're going, as defined in a succinct business plan. It doesn't guarantee success, but the plan will keep you focused and in tune with the important matters that affect your business. 

When it comes to your business plan, a bank would like to see the following: 

1. That a business owner can articulate the plan and that knows all aspects of the company. This includes clear information on the management team, funding requests, and supporting documents that demonstrate the business’s viability and growth potential. 
2. Solid financials, including two-year projections of an income statement, balance sheet, and cash flow, in which you can also articulate the assumptions. 
3. How you arrived at your financials and preferably have a technical service provider review those with you. 

Successful, growing businesses have a good plan and they pay attention to the details. They always put the customer first and they take good care of their employees. It’s advised that business owners stay focused on keeping personal and business cash flow separate, to determine if a business is truly successful. 

View the webinar to learn more. 

Business Foundation: Financing A Business 

Securing adequate funding is one of the biggest hurdles for small business owners. Our second webinar focused on various financing options available and how to choose the best one for your business. These included traditional bank loans, SBA loans, grants and alternative financing methods. 

When it comes to financing a business, banks specifically look for the following:
  

1. Owners and operators with good credit and character.
2. A feasible business plan that is thorough and makes sense. 
3. Management expertise and commitment necessary for success. 
4. Sufficient funds, including an SBA guaranteed loan, to operate the business on a sound financial basis.
5. Adequate equity investment in the business-borrower’s stake in the business. 
6. Sufficient collateral - does it provide sufficient protection to the lender?
7. Repayment - will the loan repay from the earnings of the business? 

To get a loan from a bank, the timing to receive financing varies greatly and depends on the cash flow, the business plan, and the financial backing of the company. Lenders like Middlesex may even refer the applicant to SCORE Boston, to review the business plan and address key topics to help position a business for growth. 

View the webinar to learn more. 

The Importance of Cash Flow

Cash flow is the lifeblood of any business. Our third webinar emphasized the significance of managing cash flow effectively and practical tips to ensure a business remains financially health. This included a brief overview of financial reports, focused on the importance of the cash flow statement. 
 
When it comes to cash flow, some must-haves banks specifically look for include: 

1. Projections and income statement, a balance sheet, tax returns, and a cash flow statement of 12 to 18 months.
2. Positive cash flow. 
3. Consistency and stability.
4. Liquidity.
5. Accounts receivable and payable.
6. Profit margins.
7. Contingency plans. 

When it comes to cash flow, it depends on how developed your business is, how much money you're looking for, and how long you've been around. A lot of business owners are very good at whatever they do for their business. But as a word of advice, don't let the financial side of the house suffer, and don't avoid paying enough attention to that important aspect of running a business. No matter how good you are, the accounting side could potentially trip you up. 

View the webinar to learn more. 

Seven Best Negotiating Tips

Our final webinar focused on honing negotiating skills, essential for business interactions and helping business owners make better deals. These topics included the value in negotiating, leverage, strategy, and closing the deal. While banks don’t inherently look for negotiation skills, having strength in this area enables business owners to have better business relationships and secure better terms with suppliers, customers, and service providers. This can ultimately lead to cost savings, higher profits, and improved cash flow, which makes the business more finically robust for the long-term. 

View the webinar to learn more. 

Taking the Next Step

By building a solid foundation, securing the right financing, managing cash flow, planning effectively, and mastering negotiations, business owners can be well-equipped for growth. 

If you’re looking to have a conversation, our dedicated business bankers at Middlesex Savings Bank are familiar with the hurdles that small business owners in our community face.​To learn more about Small Business Lending solutions contact Dave Bennett, SVP at 508-315-5424 or email him at dbennett@middlesexbank.com.