LET’S TALK STARTUP BANKING.
So who loves banking? Well, people with huge bank accounts, who gets all the banking privileges and preferential or the “first class”treats obviously would love to bank more.
How about the hardworking but “broke” startups? How do they also enjoy best banking services?
Let’s face it, banking in Ghana has become undoubtedly atypical and less innovative. Harsh huh!
My first few years, I never had a bank account; and the reason was quite simple – “frustrating” and to date I do not enjoy banking in Ghana. Most banks will chase you to come save the little you have with them (it’s a tradition now, “chasing the mass”) and when they succeed, bingo! – All you become is a mere client who saves some “peanut” with them and they are off to chase other peanuts” – The terrific banking experiences we get all the time. Nevertheless, there are also some good banks in Ghana and we know them, right?
Heading on to the point, startups do not have any business whatsoever with banks during their first few years because, they are either considered a “heap”of debt or not a priority banking. Times have changed and startups are the new money making machines. They actually are the future of these banks and the earlier they are made to develop early banking habits in their early stages, the better these banks to grow with them. Growth in value (wealth) with them..
The rate at which startups are sprouting every seconds of the word, it’s important to get them saving with the banks for their financial growth.
Startups business banking comes with so many benefits.
We will look at the importance of startup banking. First let’s take a brief look at personal and business banking
PERSONAL BANKING VRS BUSINESS BANKING
First, note that your personal bank account is not your business account and should not; can not serve as a business account.
As a startup business owner you’ll need to start treating your personal and business finances separately. By distinctively noting the differences between the income you earn as a business and your own personal finances or income. Treat your business as an independent entity. It is not a family owned supermarket where every family member is entitled to pick at ease whatever they want. Your business account should always be independent of your personal savings.
“Do not dip into it like offertory bowls” for your personal use. It is quite a habit to grow as a startup because you will have many financial challenges but it is not your personal savings. Stay off!.
This will help you evaluate the financial performance of your business and plan for its growth and moving forward.
By separating your personal income, you can continue to fulfill your personal obligations and responsibilities based on what you have available in your personal account without impacting the profitability of your business.
SOME IMPORTANCE OF STARTUP BANKING
a. Adequate Financial records/history for your future business investment opportunities, business valuation in the early years of sale off, etc
b. Financial security ( safe money keeping)
c. Easy management of cash flow
d. Eligibility for bank loans with your bank after some years of good standing
e. Healthy Financial management practice
f. Credit business identity
g. Financial advice and support
h. Easy management of tax returns for your business
i. Easy bills payment to clients, payees and the list goes on
WHY STARTUPS DO NOT BANK?
a. Too many bank account requirements
Have you ever tried opening a business bank account, especially as a startup? The list is outrageous; it is a jaw dropping list; to think that banks have no separate banking requirements for startups who wants to open an account with them is unbelievable. I recently visited some banks to ask for a form to open a limited liability small business account with them and I had to “drag my jaw” out of their banking halls with the forms I picked to return later.
How many, for God sake, how many startups who are just starting to set up or even perhaps have been running a little over a year have the following;
1. A resolution of the board of directors and bank mandate
2. Letter of introduction from auditors
3. Tax certificate particulars of all directors and the list is unbelievable.
Let’s be very realistic, this will certainly turn away the startup, s/he may pick up the forms alright but will never return.
Even though the list varied from banks to banks as I went round to check, they were all directed at the same path. Startup businesses in this country need friendly banking environments and economy to be able to grow past just some few months.
These requirements certainly needs to be critically looked at again by whoever set them to enable small businesses banking or a little friendly startups saving with the banks.
b. No special standard/premium startup bank offers (packages)
Well, this is another issue that needs to be dealt with. Most banks do not have special tailored package services for startups in this country and its very sad to talk about. Last week, I took a look at an excellent business plan and products of another startup and I was so emotional about it. This is a viable business; a business that has survived the startup years and could provide 100s of job opportunities for other youths as well as add up to our economic growth. But this business is stuck, simply because there is no valuable help any banks can offer it apart from the large collaterals and huge guarantees. Can’t banks own shares in small businesses to monitor their growth? That’s something a bank should consider; if they can borrow you some notes, they can as well invest some notes too. Is it a common banking practice?
Startup businesses are falling out because, banks have not strategically positioned themselves to work with startups in this country. Government can not obviously solve every situation. If government fails to provide adequate supports for startups to move to their next phases, why do we have the banks? Something is obviously not being done right.
c. No money
How do one save, when they have absolutely nothing to save? Startups are not saving because they do not have the money to save. If the systems are right and supportive, perhaps, startup business owners can generate some “pocket change” to save for their business growth.
HOW CAN BANKING BE MADE STARTUP FRIENDLY?
a. Less banking requirements
Moderate banking requirements suitable enough to encourage startup business early savings. If the lists I mentioned above can be considered to give startups a more flexible requirements to adjust to while they grow and the lists gets updated with their growth, many and I mean many startup businesses would feel confident enough to to walk to the banks and save for their businesses.
b. Special banking offers for startups (special packages)
Banking industries should catch up with startup rapid growth and provide for them; bridge the gap. Banks should not only develop banking products and services for individuals and employees. Startups are the new “wealth” and it will be great if the Ghanaian banking industry can develop innovative banking packages, not just services for startup owned businesses. ( Commec Ghana Ltd where I head as CEO, is opened to banks who have such special packages to offer startups. We have a complete banking business packages that would move viable startup businesses from their stuck point to their next phase. We are not a bank, we a business development company providing business solutions for startup businesses. Banking partnership services are also available)
c. Banking support systems for startups
What support systems do banks have in place to aid startups to save with them?
What banking networks, are in place to shape startups banking problems?
How reliable are these systems, can they sustain startup banking?
It is not just about saving and saving with banks. Banking innovations and systematic business development services are here to stay and banks have got to adjust a little more beyond the traditional savings accounts, currents, corporate accounts and the kiddie accounts services.
“Startup businesses are the new economic wealth and banks have a role to play beyond the traditional services” – Harmony Attise