Blog   Tagged ‘industry insights’

Focus Items for Small Business Owners

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In December, the NFIB Small Business Optimism Index‡ had its highest reading in 12 years. In the report seven of the 10 index components rose, including small business owners expecting better business conditions and higher sales.

Optimism is currently at a high point allowing for owners to focus on their next big idea, their bottom line and how they can make things better for their employees. Their bankers should be thinking about those things, too.

If you’re a small business owner, make sure you’re talking with your financial partner about these business-critical items as you venture into 2017 and beyond.

Top Talent Identification and Retention
Companies requiring vocational talent can face challenges finding the right type of employee. As businesses look to expand, growth can be difficult without a sound workforce and could potentially force companies to outsource to other cities or move operations entirely.

As part of their talent acquisition and retention efforts, small businesses should ensure they are offering solid compensation and benefits to build and retain a strong workforce.

Business Growth
With an ultimate goal of growing their company, small businesses need to evaluate what other potential clients exist and if there are new segments where they can introduce their product or service.

Companies that did not survive the 2008 economic downturn left behind certain voids that need to be filled. Existing companies should evaluate this as an opportunity to expand to a new business target.

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Employee compensation and benefits
Currently, there are two big issues that could pose a threat to small businesses: the minimum wage discussion and health care. If minimum wage increases, many businesses will face challenges with revenue and cash flow, particularly if they employ lower-wage workers. With no offsetting revenue increase, this would affect a company’s cash flow and could create unprecedented challenges within the business.

The other topic of note for business owners is healthcare. The rules and regulations of the Affordable Care Act may change with the current administration discussing extensive healthcare reform. This could mean an extra expense without incurring any additional revenue for small businesses.

Fraud and Protection
Fraud continues to be a top concern among business owners, and the latest statistics prove it is a legitimate fear. In the 2016 Association for Financial Professionals Payments Fraud and Control survey, 62 percent of companies were subject to fraud during the survey period, and wire fraud has nearly doubled from 14 percent to 27 percent.

The truth is, businesses can plug one gap and another one opens up somewhere else. The key is to stay vigilant with your employees, train them and understand the latest tactics that are being used to commit fraud.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Dominic is a executive vice president for the Business Banking division at UMB. He joined UMB in 2013 and has more than 20 years of experience in the financial services industry.



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How to finance your dental practice: the most important questions to ask

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As a dental professional, you’ve probably spent at least eight years in school preparing for your career (12 to 14 if you are a dental surgeon). After that, your focus will be on growing your new practice by building your patient panels and providing quality dental care to the community you serve.

dental practice financing

But what’s next? There are questions you need to ask yourself as soon as you open a practice:

  • Does your practice need remodeling or construction?
  • Do you see yourself bringing on a new partner at some point?
  • And most importantly, are you adequately planning for your retirement?
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As we work with dental practitioners, we’ve noticed a trend within this profession. A lack of strategic borrowing to pay for their practice’s expenses is a leading cause that prevents dental practitioners from retiring when and how they want. Only around 8 percent of dentists are able to retire and maintain the lifestyle they had during their working days.

Dental practitioners face many challenges in today’s market. Those challenges are further motivation to properly manage your funds. An important aspect of your finances is considering the best borrowing practices for your office. Some questions to consider when thinking about a loan for your dental practice:

What are your goals for your practice?
Determine where you see your practice over time. Figure out how quickly you want to grow your practice or if you have aspirations to open multiple locations. Identify a plan and partner with industry professionals who will help you achieve your ultimate objectives. Then discuss with your banking partner what financing structure will help – not hinder – this plan.

Are you borrowing with the best interest of your practice in mind?
Ask your banking partner to explain all loan options so you can align the loan structure to the best interest of the practice.  For example, some loans have a balloon payment at the end, which could require you to pay additional interest. The money you might have to pay in additional interest could be used instead to help expand the practice or could be committed to your retirement.

What are your ramp-up and wind-down strategies?
In addition to determining the long-term growth of your practice (ramp-up), you will also need to eventually consider succession and retirement strategies (wind-down). Have you considered hiring an associate to purchase your practice as a component of your exit strategy? Have you engaged a CPA firm to complete an evaluation of your practice? These are potential issues to consider as part of a succession plan.

Every practice is unique and you might even find that long-term goals change over time. Start planning early and understand what financing options are paramount for your practice. Find a banking partner who will help you determine the best loan options for your practice and your eventual retirement and succession plans.

For more financial advice, take a look at my video on Business Banking for Dentists.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


Dave Bauer is a Vice President / Region Manager for UMB Business Banking. He is responsible for leading the Business Banking teams in the St. Louis and Oklahoma City regions. He joined UMB in 2011 and has eight years of experience in the financial services industry.



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How to secure an ag loan

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If you’re in the agriculture business, you know that securing a loan is an important step to reaching milestones like purchasing new equipment or additional land. When you decide it’s time to borrow money – no matter if it’s your first loan or for additional funds – there are a few tips that can help make the process more efficient and effective.

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The four phases of securing an ag loan:

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1) Application Phase

Determine what you want and why. The amount, term and purpose of the loan will be essential to understanding the risks and cash flow burdens you will incur as well as for the lender to understand your needs. This may sound basic, but it is the most important and often times overlooked portion of the loan request process.

It’s okay to be a little unclear as to the right structure for the loan as this is a task that should be done in collaboration with a lender. The lender should work carefully with you to determine how the loan will work going forward and what it will be used for. Loans borrowed for one specific purpose and then used for another is the most frequent cause of stress and problems between ag borrowers and lenders.

2) Information Phase

During this phase, it is important that you be open with your lender. There are three areas you should be prepared to discuss:

  • Copies of your last three years of tax returns and a current financial statement (balance sheet) with complete and full disclosure of all assets and liabilities
  • A realistic value of your assets — Any exaggeration will make a negative impression of your approach to the borrowing process and financial matters.
  • How your operation has changed over the last several years, as well as your expectations for the years ahead — A realistic valuation is one of the most significant aspects of a lender’s assessment of your financial and operational planning capabilities. If you have been through a difficult time period, be prepared to discuss this candidly and to share the causes and cures for these troubles.

3) Analysis Phase

Meet with more than one lender. This may allow for more options on loan terms, rates and structure. Be candid with the lenders in telling them that you are talking to more than one lender.

Ask the lender’s opinion on your loan request, financial strength and plans for the future. If the lender is vague or reluctant to share an opinion, you may need to speak with another bank. Whether their opinion is good or bad, a clear understanding of their thoughts on your financial situation and the direction you are headed is critical to your financial future with this lender. This conversation is one that many avoid because it can be stressful and awkward, but this is where you can receive the greatest value from a lender. This exchange will also provide insight as to the quality of the lender and financial institution you would be working with.

4) Decision Phase

Plan on learning from this experience. Whether the decision on your application is a yes or a no, you have the right to understand the reason and the rationale behind it.

  • With a yes comes the requirement that you understand what the decision means to future operations and cash flow and whether or not it meets your initial needs.
  • With a no comes the difficult but important personal understanding of why the decision was negative and how your operation needs to change so that it will be more credit worthy going forward (at least in the eyes of this particular lender).

In all borrowing discussions, the most important aspect is candor, both with you and with a lender. A realistic third party assessment of your operational and financial affairs can be a valuable insight that can only be gained through a candid and open discussion with knowledgeable people.

For more tips on securing loans, read our lender’s inside scoop.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Watson serves as president of the UMB Agribusiness Division. He joined UMB in August of 2005 and has also served as the president of the UMB Kansas region. Watson is a graduate of Wabash College in Crawfordsville, Indiana with a major in Psychology. He has also attended The Colorado School of Banking, The National Commercial Lending School (where he has also been an instructor), and the Stonier Graduate School of Banking.



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Business Banking for Dentists

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Should new dentists purchase their first home or buy their practice? Watch to find out our recommendation and some pitfalls to avoid when financing a dental practice.

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Dave Bauer is a Vice President / Region Manager for UMB Business Banking. He is responsible for leading the Business Banking teams in the St. Louis and Oklahoma City regions. He joined UMB in 2011 and has eight years of experience in the financial services industry.



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