Businesses need banks, and banks need businesses. But as a business owner, how do you decide which bank to trust your money with?

I have helped a number of organisations choose a bank – some for the first time, some because they wanted a change, and some because they needed to change!

There are many considerations to weigh up, including: cost, secondary services, knowledge of your business sector, location of branches, access to help. To me, the most important factor when deciding who to bank with is the Relationship Manager.

It is perhaps a little unfair to say that all banks are alike, however, there is generally very little between them in cost, in location, and in the general service they offer. To my mind therefore, the biggest difference between banks is in their staff.

When I needed to set up a bank account for my business, I walked down the high street in my home town, and walked into every bank. I asked the same question in each branch, “Please can I talk to someone about setting up a business bank account”. Within 30 seconds of walking in, I felt I knew how much the person I was talking to cared about me and my business.

I would not want anyone to think that choosing a bank is a decision to take lightly – particularly in today’s economic climate. Never forget who is the customer. As ever, more than numbers and statistics, it’s the people we do business with that matter, and I suggest that this includes your bank’s Relationship Manager.

I read an interesting statistic recently. In ACE’s recently published 2008/09 submissions from Regularly Funded Organisations, combined ‘Contributed Income’ (sponsorship, trusts, donations, and lottery revenue partnership funding) fell by over £12.6 million (11%). But this was more than made up for by combined ‘Earned Income’ (ticket sales, workshop fees, merchandising, sale of books and magazines, etc.) which rose by £52.8 million (12%).

If you have read my blogs over the last couple of years, you will know that I hold a particular view of the “recession”; it was patchy, not universal. Its impact ranged from the catastrophic (if you were in house building, car manufacturing, or banking), to the liberating (with interest rates at an all time low, many households were between £100 and £150 a month better off). Public money was drying up, but private/personal money was plentiful.

Reliance on public funding has become an increasingly high risk strategy. I speak from personal experience as the ex-treasurer of an excellent provider of arts education which closed due to withdrawal of its core funding. Other organisations I know well are also starting to think the unthinkable – what if we can’t rely on public funding anymore?

So what is Plan B?

Well, I think public funding will become increasingly scarce, and with the hoops to jump through and numerous forms to complete, it will become harder to maintain.

There has been an interesting debate on LinkedIn to do with factoring as a way of improving cashflow. What caught my eye was a comment that said “payment terms has, and never will, kill a good idea”. I see this as a clarion call to every organisation that has a good idea – if it’s that good, someone will pay for it.

Listening to the radio today, I was struck by the speaker’s complaint about how “the credit crunch” was still causing problems to his business.

It got me thinking. What was really at the heart of his problem?

The Credit Crunch refers to a bank’s unwillingness to lend money. Was he looking for a loan? If so, what for? To invest in greater capacity? To launch a new line of products or services? To help with poor cashflow?

If it was the last reason, I can understand the bank’s reluctance to lend, and crunch his credit.

Banks have not helped themselves in recent months, but their core purpose remains the same: to lend money to businesses. In return they expect a profit on their investment.

If you are having difficulties convincing your bank to lend money to you, maybe it’s because of something you need to do, or say.

If you need help talking to your bank, let me know. I might be able to help.

One of the oldest concepts in international economics is the theory of purchasing-power parity (PPP). PPP argues that, in the long run, exchange rates should move towards levels that would equalise the prices of an identical basket of goods and services in any two countries.

The Economist uses just one item: the Big Mac.

If a Big Mac costs £2.50 in the UK, at today’s exchange rate (£1 = $1.46677), a Big Mac in the US should cost $3.67.

If it costs more than $3.67 then the PPP concept suggests that the pound is overvalued (or the dollar is undervalued). The consequence of this is that, all things being equal, either the pound will go up, or the dollar will fall.

Too simple? Possibly, but as a measurement of exchange rates, Big Maconomics has endured.

Sometimes I think we make life too complicated and not enough fun.

Much is being said in the media these days about what economic recovery will look like. I suspect that life is too complicated to find generalised answers to this question, and that we are better looking at more specific areas.

One measurement of economic output I was told about many years ago was the “crane count”.

Very simply, how many cranes can you see on the skyline of your city?

Each crane represents an army of workers delivering a building project. Each one represents confidence in investment. There is no such thing (unless I’m much mistaken) as an idle crane.

How many cranes can you count, and are there more, less or about the same as this time last year?

With thanks to Martins Money Tips (www.moneysavingexpert.com) , welcome to the new tax year, here is a brief summary of the highlights (last year’s figures are in brackets).

The good:

Personal allowance UP! Every man, woman and child can now earn £6,475 (£6,035) before paying income tax. For those aged 65-74, it’s £9,490 (£9,030), and for over-75s, £9,640 (£9,180).

Basic rate tax threshold UP. You now pay 20% tax on the first £37,400 (£34,800) over the personal allowance, meaning under 65s hit the higher 40% rate at £43,875 (£40,835).

National insurance start point UP. You now need to earn £110 per week (£105), before paying for NI, usually 11%.

State pension UP. It’s £95.25 (£90.70) a week for a single person.

Pension credit UP. The minimum guaranteed income’s now £130 for single pensioners (£124.05), and £198.45 for couples (£189.35).

New Health in Pregnancy Grant. All pregnant women will get a non-means-tested £190 in their 25th week.

Inheritance tax threshold UP. You can leave £325,000 (£312,000) tax-free.

And the not so good:

Fiscal drag. This isn’t Alistair Darling in women’s clothes, it’s when increased allowances aren’t as generous as they seem. If wages and/or inflation increase by more than the allowances, effectively the government gets more tax revenue anyway, and the real value of the increase is less.

National insurance upper earnings UP.  You will pay 11% NI on earnings up to £43,888 a year (£40,040) and 1% above that.

ISA limits. No change. Yet again, the amount savable tax-free hasn’t increased with inflation or earnings.

Child Tax Credit family element. No change. Many families get this, and the freeze at £545 is an effective cut. Yet the means-tested element has increased to £2,235.

Remember to take proper advice before making any decisions…

www.moneysavingexpert.com is a great source of advice and help to those seeking to save money.

We have much to thank Donald Rumsfeld for. Although mocked for his listing of “what he knew he knew”, “what he knew he didn’t know”, etc, this analysis of your situation can often distinguish perception from reality.

Compiling a list of things that you know you know about your business might seem like a waste of time, but put it beside a list of things you don’t know about your business, and you might surprise yourself just how many things you suspect, but aren’t sure about.

If you aren’t sure about it, then you don’t know it.

And then ask yourself, what are you doing to find out?

Spent a great afternoon today on a panel presenting to a group of aspiring film makers. I am always inspired by those who have creativity running through their veins. Something about art being the object of their day’s work, not the pursuit of profit.

My input was to help improve the participant’s business skills. Also on the panel were four (yes, four) lawyers.

Art is good, sustainable art is better; be led by your work, not by the corporate structure.

Thanks to The Producers Forum for organising a great session. http://www.producersforum.org.uk/about.asp

I have been wondering what I could “give away” to give you an idea of the kind of support I give to businesses.

The first thing that occurred to me was a simple excel spreadsheet that shows how the P&L links to the Balance Sheet, which links to the Cashflow, which links to the P&L. You get the idea – its a neat pro-forma.

Then there is my list of the various kinds of accountants that businesses use – there are more than you might immediately think. This is helpful because you need someone to look after all aspects of your business’s accounts and it’s easy to overlook something…

Then I have a list of accounting software packages I know, either through using them, or reviewing them, or simply on recommendation – handy when discussing potential changes.

I have a great contacts database, but that’s worth a little too much to just give away…

I keep wondering about a FAQ page for my website. Is there an accounts question you always wanted to know the answer to?

So at the moment I haven’t got anything to give away. Should I have something? Is what I do too intangible? Does a freebie make a website more attractive? What would you like?

Recently my son appeared in a community production of Joseph And The Amazing Technicolor Dreamcoat. It was a great show, with all the drama and fun that being part of an amateur musical entails.

As I was reading HSBC’s January Economic Outlook report this morning, it struck me that leaders have an incredible capacity to forget the lessons taught to us by experiences in the past. Over the last few years we have all read, and talked, about bubbles bursting, and such levels of growth being unsustainable.

Joseph told Pharaoh how important it was to save during the years of plenty, as reserves would be needed when times turned rough. Pharaoh listened (and no doubt received conflicting advice from other experts), and decided to impose regulation that ensured his country would withstand the inevitable downturn in fortune.

Are today’s leaders willing to take the same kind of action as Pharaoh? They haven’t in the last few years…