Amid a turbulent year and a half for UK small business owners, there has been a surge in first-time entrepreneurs – the number of new businesses registered at Companies House in the third quarter of 2020 increased by 30%, compared with the same period in 2019. But to turn a winning idea into a successful business, you first need to get the basics right. Here’s how having the right bank account can make a pivotal difference.
Getting started with a business account
It’s perhaps a sign of the difficulties some face when opening a business account that 63% of sole traders are using personal accounts to conduct their business affairs. Limited companies are separate legal entities to their directors and must have separate bank accounts, but even sole traders can benefit from doing so. You’ll be able to keep business and personal transactions separate, simplify administrative tasks and tax returns, and build your new business’s credit rating. Some personal accounts also have terms and conditions prohibiting the use of the account for business purposes.
“One of the first questions founders ask is: ‘How do I get started?’,” says David Thomasson, Metro Bank’s chief commercial officer. “I can’t stress enough the importance of getting a business bank account. It sounds basic but that’s not always an easy thing. We know some of the more traditional banks leave founders waiting weeks or even months for an appointment to have that initial conversation.”
Metro Bank’s current accounts for business customers can be opened in about an hour in any of its 77 branches, or online in just 15 minutes.
Improving your cashflow
Keeping on top of the incomings and outgoings, making business decisions based on up-to-date financial information, paying bills on time and chasing outstanding payments is no easy task, particularly for those who can’t afford a bookkeeper or accountant initially. Research has found that small businesses in the UK lose 15 days of paid work a year separating business expenses that have been incurred on personal accounts. That’s time and money that busy founders can’t afford to waste.
The right business account should make these tasks as straightforward as they can be. Metro Bank accounts come with integration with the accounting package Clear Books (with a free trial and 25% discount on subscriptions built in), and receipt capture technology via the mobile app, so it’s easy to keep on top of expenses and VAT returns.
The extended opening hours of Metro Bank’s branches, open early until late, seven days a week, 362 days a year, also make it easy for those business owners who need to deposit cash and cheques at the end of the working day.
Securing investment to grow
With loans, overdrafts, invoice and asset financing, peer-to-peer lending and crowdfunding options, it can be difficult to know which option to explore as a small business founder looking to grow. Research by the British Business Bank (BBB) in 2020 found that 52% of smaller businesses that sought finance the year before contacted a provider outside of the big five traditional banks, with asset finance, equity finance and marketplace business lending all seeing significant increases in the past five years. During the pandemic, according to the BBB, 45% of all SMEs reported that they applied for external financial support in 2020, compared with 13% in 2019. Nearly one in five SMEs applied for a Covid-19 related loan.
Metro Bank has lent more than £1.5bn to 36,000 SME customers through government-backed loan schemes, and is participating in the recovery loan scheme too. As a full-service bank, it’s also able to connect customers to more traditional lending options, such as fixed loans, invoice and asset finance.
“Getting access to lending when businesses are looking for that next step up is vital,” says Thomasson. “We’re also investing in developing a range of new lending options – including unsecured loans – for businesses to access in the future.”
Accessing local business expertise
It’s rare to find the personal touch in banking that takes your particular circumstances into account. At Metro Bank, business customers are assigned a named local business manager (LBM) who will work with founders (in person or remotely) to develop their business plans, spot growth potential and connect them with local opportunities. Metro Bank LBMs are appointed for their expertise of the surrounding business landscape, and have won praise for their customer service. During the pandemic, for example, one founder was supported to pivot from a physical store to selling online, including setting up the relevant card-payment services.
Three-quarters of small business owners say they set the strategy for the company themselves, but often it’s helpful to bounce ideas off someone else, explains Thomasson.
“Everything has been driven away from that in-person interaction in banking,” he says. “You’re either pushed to a call centre, or online chat, or you just don’t have a named contact in the way that we would offer. Even if you just want a friendly chat about how to use your online banking, we provide that.”
Building a support network of other founders
Among all the excitement, entrepreneurship can be a lonely world. It’s often an unpredictable journey, with founders wearing multiple hats, working unsociable hours and taking risks on decisions they’ve never had to make before. Building a support group of like-minded founders and having access to relevant digital resources can help during those tricky moments.
Metro Bank business accounts come with a year’s free membership to Enterprise Nation, which provides an array of online tools and access to networking and wellbeing events. LBMs have also run more than 11,000 networking events and webinars over the past decade, covering topics such as female entrepreneurship, access to finance and providing more general opportunities to connect with other local founders.
“It’s about knowing who those people are that you can trust to provide you with advice when you need it,” Thomasson says. “That might be your bank, it might be an accountant, or another founder. The important thing is there’s always help available.”
To find out more about what Metro Bank can do for small businesses, go to metrobankonline.co.uk/start-up-stars
