Newbie entrepreneurs often underestimate the role a bank plays in the development of their business. Therefore, they tend to choose a bank without due attention. A blind choice in favor of a bank is not a rational solution. That’s why within a couple of years after a business launch, a significant number of entrepreneurs have to consider changing a bank and with that all the inconveniences this move may involve. In order to help business people make a reasonable choice, we have prepared this guide on how to choose a bank for your startup.
Step 1. Identify what is Important for Your Business.
Start off with identifying a set of banking services and operations that you will need. To do this, imagine the first 1-2 years of your business. Think about what kind of banking services your startup requires. Will you work with foreign partners and carry out export-import operations? What will be the volume of cash transactions? Do you need a payroll project? Will you use loans? Write down all the possible needs. Also, try to think about services you will need in the near future and add them to the list.
Step 2. Calculate a Planned Volume of Payments.
Open excel and draw up a cash flow plan for the first few months. Think about how many monthly transactions you will make with your settlement account. What will be the volume of tax payments? If you are planning to import products from abroad, estimate a number of customs payments. A clear idea of the volume of monetary transactions will allow you to accurately predict the costs associated with your bank account and choose the most favorable option.
Step 3. Make a List of Banks.
Now that you know exactly what you need, you can move on to drawing up a preliminary list of banks. Research banks using queries with the services that you need. Also, make sure to include banks with positive feedback from your acquaintances or business partners. This is what you should pay attention to when making such a list. Focus on the offered range of banking services and select only those banks which services fully meet your current and future needs.
Secondly, look at how a bank takes care of the content of its website. Of course, this is an indirect factor but if you see that a site is very outdated this might mean that a bank is not very interested in servicing new clients. This could mean that the level service is likely to be unsatisfactory.
Step 4. Sift the List of Banks.
The next step is the most responsible and laborious. You should carefully study each bank and, based on the results of this analysis, make up a short list. Your final list should include 2-3 banks from you will make the final choice. It’s best to create a comparison table, in which, opposite a name of each bank, you will put a score or pros and cons for each of the factors considered.
What factors you need to take into account when making a short list:
- Availability of information about shareholders
- Cost of service
- Cost of the Internet banking
- The possibility of overdrafts
- What do you need to open a bank account
- Quality of service
- Duration of an operating day
- The flexibility of service
Step 5. Make a Final Choice.
When you have your short list, you need to decide which bank to work with. To make a final choice, you need to study feedback as reviews can tell a lot about a bank. However, you need to be careful – not all feedback should be trusted. Unfortunately, fake feedback has become quite commonplace, which is why you should not trust suspiciously brief cookie-cutter comments. If feedback is sufficiently detailed so that you can see a history of working with this bank, then there’s a good chance it’s trustworthy. If it’s a brick and mortar bank, it’s smart to visit the banks on your short list and assess how everything is organized inside a bank. You should also pay attention to the level of service and staff qualifications. A visit to the bank can tell a lot about important aspects of its work and will help to make an educated choice.
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