Here's Why You Need a Business Savings Account
Yes, Strings Attached – Please
I came across an interesting piece on Entrepreneur.com. It’s by Frank Wazeter, whose expertise is keeping small businesses relevant online. I’ve come to appreciate his crisp, realistic approach as well as his practical – if occasionally challenging – advice. This particular article involves “the small business model of the future”:
Guess what? Innovative and creative thinking is still a requirement in successfully scaling a small business of any kind. Combine that with the fact that the internet has only exponentially grown since [a decade ago], and you have the recipe for an all new business model: the media-first approach…
Social capital, also known as the amount of people you can reach with your message as an entrepreneur, is worth more than its weight in gold. We've already witnessed the rise of a whole new industry of influencers, thought leaders and content creators across platforms… Someone with thousands, or even hundreds of thousands, of followers instantly has a credibility level higher than that of someone who has little or none, regardless of actual skill level or product quality.
Wazeter’s point is that small businesses should find ways to keep current and potential customers engaged online – to make the internet a tool, not just another overhead expense.
It’s a good piece, and I certainly agree (look what I do for a living), but it also got me thinking…
Anytime we explore the new or look for innovative variations on what we’re doing moving forward, it’s good to balance this by revisiting something foundational – something perhaps a bit “orthodox” – we’ve already learned from our past. When companies first started utilizing social media, for example, those who tied those efforts to their existing commitment to customer service found it far more effective than those who simply tried to be, well… social without much other point. (“Click LIKE if you love our Strawberry Cream! SHARE if you prefer Chocolate!”)
Kites fly highest when the right person is holding the string down on the ground. Don’t just stand there with your string, afraid it will get blown away if you let go. But don’t let go altogether, either, as you test the winds of change.
Let’s revisit something which should be pretty basic for any small business: your business savings account.
Why Prioritize Your Business Savings Account?
When your business is young and hungry, it can be difficult to prioritize savings for the same reasons it’s hard to start saving as an individual. There are so many expenses and obligations! There’s so much you want to do! You’re trying to grow, to keep up with the essentials, to remain flexible and interesting! Savings accounts are great in theory, of course, but they’re just so… boring.
Boring like a good steak dinner or a smoothly running engine, perhaps. I mean, falling out of your second story window is way more exciting than sitting at your desk, right? I’m not sure that makes it better, however.
I’m not going to try to convince you a properly cared for business savings account is exciting. I will suggest that it’s far more than a bragging point, however, or a fallout shelter.
The right business savings account is an important element of any growing, healthy business. There are about eleventeen zillion reasons to prioritize savings in your small business just like you do (or should) in your personal finances. Since we’re all busy and have kites of our own to fly, though, let’s briefly look at five of them.
1. You Can’t Predict the Future
The same thing that makes running your own business exciting can make it one of the most stressful experiences in the universe (right up there with falling out of a window or using social media for the first time). Even the most successful businesses have to endure some form of the natural business cycle: good months, rough months, growth, slowdowns, and oh yes – global pandemics that threaten to destroy the worldwide economy and prompt government lockdowns of your livelihood just as you were starting to think maybe things were going to work out after all what-the-ever-loving-$#%*-is-happening?!?
We can’t plan for everything, and a reasonable business savings account doesn’t solve every problem. It’s a pretty good plan for a whole lotta things, though. For innumerable entrepreneurs over the past year, a decent business savings account has been the difference between struggle and collapse.
And yes, I realize I’m now asking you to start building up those reserves again just as many of us are starting to tentatively begin hoping maybe we can begin reclaiming some lost ground and find our way forward. Dedicating capital to savings may be the last thing on your mind. “Of course I’ll get back to saving some excess once I’ve recovered.” Or, “When things get better, I’ll get right on that whole business savings account thing.” Come now, friend – we both know better than that. The time to re-prioritize saving is NOW.
Yes, despite all the many reasons that’s clearly insane which flew through your mind just now. I’m still right, and you agree with me even though you don’t want to. You can do this. And you’ll thank yourself later – maybe not even that much later than you’d like to think.
2. Carpe Diem (Crescere Tuum Negotium)
The unpredictable isn’t always negative. Sometimes opportunity knocks unexpectedly. Other times, you catch a glimpse of it turning the corner just up ahead and have to jog a bit to catch up. Ideally, growth and change are calculated, carefully considered, and approached strategically. You know, however, that it’s not always possible to take things quite as slowly as you’d like and still seize the proverbial day. Days only last so long, after all – the sun soon sets and at that point we’ve either done what we’ve done… or we haven’t.
A decent business savings account doesn’t mean you can afford to be reckless or impulsive. What it does mean is that when the right moment arrives and you’ve managed as many calculations and considerations as circumstances allow, your decision won’t come down to lack of resources.
Yes, there are times a small business loan is perfectly practical and productive. But you know what’s better than taking out the right small business loan? Not having to.
3. Make Money With Your Money
Entrepreneurs are driven by many things – a desire to be their own boss, the need to do something new or to demonstrate a “better way,” the love of a particular craft or product, or even just because they’re stubborn and restless and unbearable when forced to play by other peoples’ rules. As a practical matter, however, we all want (and need) to make money doing whatever it is that we do. Personal fulfillment is great, and absolutely important – but so is being about to afford groceries and meet payroll and get our clueless kid into college somewhere.
I’ve known too many small business owners who simply let their checking accounts swell rather than opening separate business savings accounts. Hey, nothing’s more liquid than a checking account, right? And it’s not like your average savings account is paying such amazing interest these days. Hey, look – I earned nearly two dollars last year! Looks like I’m buying a two liter of soda for the entire department to share!
Your business savings account interest won’t make you rich. But come, now – we all know that profitability is often a game of dollars as much as it is a game of hundreds or thousands.
Are you seriously going to tell me that the same boss who insists employees drive an extra two miles to fill up the company vehicle at the gas station selling gas for two cents less per gallon, or demanding receipts be filed before she reimburses for Friday morning donuts, can’t appreciate the difference between making a few dollars a month on a business savings account and making NO dollars a month? Plus, you’re a small business – you can shop around for better rates. You may find that some institutions are willing to work with you on your savings account if it means winning the rest of your business as well.
It’s also worth considering that business savings accounts are typically more secure than checking accounts or company credit cards. When fraud occurs, it usually involves information that’s been typed into a website somewhere or checking information accessible to multiple parties – like the accounts you use to pay your vendors.
Think of your business savings account as a secret, more protected stash hidden behind a concealed panel somewhere. You can get to it easily, any time you like (unlike long-term investments, for example), but it’s unlikely anyone else will even know it exists – let alone figure out how to access it.
4. Those Annoying Realities
Ever notice how those seasonal downturns always seem to occur right before your quarterly taxes are due? How you most need to hire new help just as your resources are at their most strained? You probably don’t make many mistakes with company finances, but that one time you overdraw your business checking account ends up costing you more than the amount of the check you nearly bounced to begin with. In the words of the late, great Roseanne Roseannadanna, “It’s always something.”
Sure, there are other ways to manage your taxes, or unexpected needs that aren’t exactly emergencies but certain qualify as inconveniences. They may even have positive elements to them, if they weren’t always so badly timed or unexpectedly expensive. A small business savings account gives you flexibility. It keeps you nimble and functional and strong and out of unnecessary debt. Athletes don’t just run plays – they do strength training and work on flexibility to minimize injuries. Gangsters have backup plans (in the movies, they’re always named something like “Guido”) if someone starts to get squirrelly, and favors they can call in when stuff really hits the fan.
Entrepreneurs may not need strength training (depending on what business you’re in, I suppose) and hopefully you don’t actually put out hits on your competition or troublesome clients (although I understand the temptation – I truly do). What you do need is flexibility and layers of resources. A good business savings account gives you that.
5. It Makes Your Bank So Happy
Whether you use a local brick-and-mortar bank or credit union or take advantage of the many online options for small business financing and savings, a good relationship with your financial institution is simply smart business.
Some of this is simply dollars and cents. If you have a decent small business savings account, you may decide to finance growth or inventory or other needs with a small business loan rather than dipping into your savings. Having that savings, however, means a far better chance of approval – and on much better terms than you’d qualify for otherwise.
Lower risk for the lender means better terms for the borrower, and you can’t get much lower risk than having money in savings with the same institution.
It’s about more than those quid pro quo exchanges, however. If you’ve been in business for long, you’ve probably developed relationships with suppliers, customers, even peers, which may be profitable of course, but which go beyond that. Just like in our personal relationships, we get comfortable with some people and not others. We do favors for some people but not others. Business relationships aren’t quite the same, but they have similar dynamics. A long-term relationship with a reliable financial institution can be beneficial to your business in ways you can’t even anticipate yet. A great way to start that is to explore options for a good small business savings account, then make it happen.
Getting Started
If you already have a relationship with a local financial institution and you’re happy with how it’s going, talk to them about savings options. Look at rates, terms, and options for improving your returns without sacrificing liquidity when necessary.
If you’re not already in a committed (financial) relationship, however, we can help you explore some of your options.
We don’t loan money, and we don’t want to take yours for safe keeping. What we do have, however, is an extensive database of online financial institutions and quality banks and credit unions with an online presence, which we curate and update ourselves constantly based on incoming information and customer feedback.
We know who’s offering what to whom, and we can help match your specific needs and circumstances to the institution most likely to make you happy.
We can also help you with a number of good ways to save money in the first place, as a small business or as an individual. As this post goes to press (as in, someone with a fancier title than me has to press the ‘Publish’ button on the blog), we’re unveiling a re-imagined approach to personal and small business savings, spending, and investments. This is the 21st century. If teenagers can throw together viral dance videos complete with special effects and a (horrible) soundtrack on their phones while they’re supposed to be in English Class, the rest of us should be able to track our spending, explore investment options, or compare interest rates and terms on small business savings account options without putting on a suit and tie and driving across town.
Explore Possibilities To Save Your Money. Meet Billry.
Plus, we can listen to much better music while we’re doing it. Seriously, what is wrong with popular music these days? And yes, I know our parents said that about our music when we were in high school, too, but that was totally different. Our music was awesome. This time, what the kids are listening to really does objectively—you know what? I’m getting off topic here. The point is, it’s now super-convenient to handle these things from your phone, tablet, or laptop, without having to take time away from running your business in the first place.
Finally,
We can’t make small business success completely painless or guarantee it will all be easy. But not everything about it has to be as hard as it often seems, and you don’t have to do it alone. Let us know how we can help.