The Life of the Business

by Elizabeth Sherman 15. May 2013

Business Insurance

A few years ago the air conditioner in my car started making very ominous groaning sounds which I was a little slow to hear on account of the fact I cannot drive without the radio blasting at ear splitting decibels. By the time the groaning turned to sickening grinding and hot air began spewing out of the vents, I knew things were beyond hope. Not having air conditioning in August was bad enough, but the thought of taking my car to the dealer and paying to replace the entire system made me break out into a real sweat. I began asking around at work to see if anyone knew of a local mechanic who would look at the situation and not charge me 3 months’ worth of mortgage payments. A coworker gave me the name of a mechanic who diagnosed the problem (I did not need to replace the whole system!!) and only fixed what was wrong. I was able to escape the whole episode for the cost of my normal monthly cable bill – quite a relief.

From that day forward, I have taken my car to the same mechanic. His shop is not conveniently located near my house or my office; as a matter of fact I have to rent a car every time I go in for service. However, Rick knows my name; knows my car; doesn’t fix what’s not broken and never goes by the standard hourly charge. I trust him and have referred many friends to him.

The economy has taken a toll on his business but his doors remain open. But every once in a while, I wonder what will happen to the business if something were to happen to him. Does he have a plan to cover the expenses of the business should he be injured (on the job or off)? What if he dies unexpectedly? Will his family have enough money to survive without his income? Is there someone to take over business?

While all of these questions should be asked, they are frequently not addressed. Whether it’s because the topic is too morbid or no one ever thinks something bad is going to happen, planning for the continuation of a business is not glamorous, but it is necessary. If you get injured on the job, how are you going to make sure the day-to-day expenses of running your business are covered? How is your company going to survive if the person who brings in the most business suddenly dies? What happens to the business if you, as the owner, suddenly die?

It's for these situations that life insurance products such as Business Overhead Insurance, Key Man Life Insurance, and Buy Sell Agreements were invented. All of these products provide protection for the business itself and the family members left behind should something happen to the heart and soul of the business – YOU!

Waiting until something happens is too late. Take a look at your business now and see what plan you have in place for the future.

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by Elizabeth Sherman 26. September 2012

Is Your Business in the Right Checking Account?

Recently, I got a call from a potential new customer inquiring about our business checking accounts. These calls always get my blood pumping with the anticipation that the business on the other end of the line will need every service I can offer. It can be very exciting!

In this case, the business was a startup and not expected to carry very high balances for the first year. In an attempt to put this business in the right account, I asked a few questions. How many deposits will you make each month? How many checks will you write each month? What is the anticipated average balance each month? Based on the answers, I was able to suggest an account that mirrored the needs of the customer. Okay – end of story, right?

WRONG!

The type of account that may work during the infancy stages of a business will most likely be detrimental to the business as it grows. With any luck, as the business grows, so will the volume of transactions processed through the account. It is for this reason that banks offer a multitude of business accounts. Each account offers something different, whether it’s a higher number of transactions allowed or a higher balance requirement.

It is imperative that you, as the business owner, keep an eye on your account and assess the activity that flows through the account. If you suddenly start to see service fees where there were none the month before, look at the volume of transactions. Has it increased dramatically over the months? If so, touch base with your banker to find out what options you have to upgrade to an account that will fit your growing business. The most basic business account that initially appears to be the best value could end up costing you a bundle in fees.

As a Business Banker, it is my job to sell business products, but more importantly, to bring in new business and help business owners navigate through the product jungle we call banking. I can suggest every product under the sun, but if it isn’t a good fit, I won’t have that business for long.

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by Elizabeth Sherman 5. July 2012

Lending There have been many articles written on the topic of the “Personal Guarantee” as it relates to commercial loans.  Traditionally, when a business owner comes to a bank requesting a commercial loan, one of the requirements is the owner’s Personal Guarantee.  In a nutshell, the bank wants the owner’s promise that if the business fails to generate enough income to repay the loan, the owner(s) will step up and make sure the obligation is satisfied. 

This requirement is often a sticking point in the negotiation process.  Business owners are reluctant to put their personal assets on the line and banks are reluctant to provide financing when it appears the business owner doesn’t fully stand behind his/her business. 

In some cases, the Personal Guarantee may not be required.  If the business has been around for a long time with documented financial strength or if there is a significant banking relationship already established, the bank may forgo the Personal Guarantee.  For small businesses that have only been around for a short period of time or have a history of financial ups and downs, banks will, in all likelihood, require the business owner(s) to sign a Personal Guarantee.  

This document is a promise to repay the company’s debt and to insure the bank’s interests are protected.  There are no liens filed and no collateral pledged. 

However, if the business income cannot support the debt, or the business goes under, the owner(s) need to be prepared to utilize personal assets to repay the loan.    

Banks want to help you.  We want to see your business succeed.  We also want the same commitment from you that you expect from us.  We believe in you and your business. 

Do you?

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