To establish themselves and grow, small businesses often need to turn to external investment, whether that’s from banks, government, angel investors, VC funds or crowd funding. The challenge is to convince these different investors that the business has the potential to generate a good return on investment.
A lot will depend on the service or product the business is focusing on, along with the potential for it to succeed in its chosen market. But the way the business is run, its vision for the future, and the approach taken by its management team also play a significant role.
Although it may not seem obvious at first, small businesses can boost their prospects of attracting investors in number of ways by adopting virtual banking and digital payments, as explained below:
A well-run organisation
The benefits of virtual banking are numerous but, in simple terms, they make the financial processes of small businesses more straightforward, efficient and cost effective.
For payments, any fees are deducted at source, meaning the balance businesses see in their virtual bank account will be a near real-time picture of the company’s finances. As a result, businesses can quickly find out the amount of funds available to them.
Most virtual bank accounts have mass pay-out capabilities, meaning they can support the quick and efficient payment of invoices, payroll or expense claims with a single click of a mouse button. Virtual banking also promotes a cashless way of doing business, which eliminates the complications of managing physical money.
Often, business accounts from traditional banks will come with monthly charges that increase as turnover does. Virtual bank accounts don’t come with these fees, due in part to the fact that they don’t have the physical branches to maintain that established banks do.
And, for international payments, virtual banks can charge much lower fees than traditional banks – if at all – as they don’t require expensive wire transfers.
Greater potential to develop the business
With the efficiencies and time saving that virtual banking brings, employees have more time to focus on the areas of the business that will help it succeed and drive future growth.
The finance team will be able to operate more efficiently and provide a greater level of support to the business as it develops and grows. And other staff will have more time to focus their core responsibilities as the financial aspects of their role – which they may find difficult or onerous – will take up less of their time.
For example, managers and HR will be able to devote more time to recruiting the right people – a key element in a small company’s future success. From sifting through CVs and devoting sufficient time to the interview process, to making a job offer and integrating a new member of staff to the team, the whole recruitment process can be improved.
Another aspect of the business that virtual banking supports is innovation. Without having to spend as much time managing financial transactions and approvals, all staff can have the extra capacity to think about how processes could be improved, what new technology could help the organisation, or develop ideas for new products and services.
A willingness to embrace the future
Virtual banking is definitely taking off with small businesses due to its natural fit with their requirements.
But many organisations have yet to make the plunge for a number of reasons. It could be that it isn’t a priority, a reluctance to make such a drastic change to the way they run their finances, or concern about risks through a lack of knowledge.
By taking the leap with virtual banking, business leaders are showing that they aren’t afraid to shake things up if there are clear benefits to be had. For investors, this shows that the management team is prepared to take steps to improve the business, even if this involves a relatively new approach.
Not only that, but embracing virtual banking is a sign of a small businesses that is looking to the future.
With the use of cash declining and digital payments on the rise – and the emergence of cashless economies – the fact that virtual banking supports a cashless way of dealing with finances means businesses that have made the shift will be better prepared for what is to come.
A small business that uses virtual banking is one that operates efficiently, has the capacity to improve and develop, and will be in a good position to prosper in the future – all key ingredients that investors look for.