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How does international banking work?

International banking or offshore banking is often a plausible solution for small business owners. By definition, offshore banking is banking done in a foreign country. Typically, the country offers favorable tax regulation; it even considered as a tax haven.

With those being said, there are some typical reasons for small business owners to use international banking services:

1. Your small business wants to secure hard-earned profits

You work hard to bring in healthy profits; it’s time for you to secure them, especially when your small business resides in a region with uncertain local economic situation.

2. You are dealing with overseas clients and partners

With an offshore banking account, you can access your money worldwide, making it an ideal solution for you to do business – wherever you are.

3. You want to explore opportunities to plan your small business finance better

Offshore banks allow you to have an account in multiple currencies. With those, you can avoid exchange rate fluctuation. What’s more, you can access your account from anywhere in the world, making it easy for you to secure opportunities easily.

How things work

The concept behind offshore banking is not that complicated, really. Let’s say that offshore banking is a set of products launched by a bank to cater those who have needs to do banking in other countries.

Offshore banking products can consist of offshore savings, offshore investments, forex services, International current account, and more. Typically, offshore banking supports online banking, so you can do transactions over an Internet connection.

International banks are typically for a company doing business internationally and wealthy people. But it’s good to know that there are banks catering to a wider group of people, enabling them to enjoy the benefits of international banking.

International banking: Pros and cons

International banking is certainly not the “ultimate” kind of banking. Just like any other banking products, International banking has its own set of benefits and drawbacks.

Pros

Offers competitive interest rates
Your account is less impacted by local interest rate fluctuations
Easy to access – internationally
Can accommodate you with multiple currencies option for better currency exchange rates
More financial planning and wealth building options via offshore investment, tax planning, and more.

Cons

Due to the issues of international banks (often exposed to money laundering, tax evasion and other illegal financial activities), the government will keep an eye on your account activity – closely.
You can still lose money, as the foreign currencies also fluctuate like domestic currency does.
Due to the location restrictions, physical access is not as easy as domestic accounts.
It’s often available for businesses and individuals with higher incomes.

Should I open an international banking account?

The answer is rather cliche – it all depends on your situation. If you are doing business internationally, opening an offshore banking account might be a good decision. Whichever decision you make, be sure you do your homework in choosing the right offshore banks. You don’t want to be involved with banks related to illegal activities!

How does international trade affect small businesses

When your small business has finally made it to go beyond the local boundaries, you will soon realize that it’s a whole different ball game out there. There are great markets to tap, meaning there are more golden opportunities available for you. Indeed, International trade is lucrative, but if you are not careful, you will get burnt out trying to putting off fire here and there.

International business
Image by bpsusf / Flickr

To help you do your due diligence, there are some issues you should address when trading Internationally – either exporting or importing:

1. Foreign exchange rate issues in making and taking payments

The fluctuative nature of foreign exchange rates can pose a threat to your small business in the form of currency risk. If you are not careful, your business might not be as profitable as expected. With that being said, you should start to benefit from corporate FX.

2. Shipping woes

Shipping is very important in getting your products delivered to your customers. There are some issues you need to be aware of, such as late delivery, damaged products during shipment, and so on – not mentioning how to handle returns effectively from your clients abroad. Making sure you understand the shipping terms and conditions can help you avoid potential disputes in the future.

3. Regional policies and regulations

Getting your products rejected and returned by the customs office – even worse, seized – abroad will negatively impact your reputation – not mentioning the loss of profits. Understanding the policies and regulations is the right thing to do when you are about to export your products overseas.

4. Cultural clash

Building a partnership with an International partner can be a complex issue as there are some sensitive matters involved in the deal making process. Understanding the culture of your International partners can help you close more sales, as well as opening up more windows of opportunity for you.

Responding to those warnings above will not only give you the edge in International trading, but also help you to gain trusts. And believe me, a trust is not something you can buy; it’s earned.

5 ways banks are attracting more customers

For a bank, getting customers are pretty difficult these days; launching great bank account offers is a plausible way to get new customers, but having great programs alone is not enough; you need to get your hands dirty and be active.

Since what you are offering are pretty much similar with your competitors, your bet way in soaring above the competition is by adding value to your conventional banking products. One of the most effective ways to add value is via rewards.

unique bank ad
Image by IK’s World Trip / Flickr

If you are involved with any banking institutions here are some ways banks can attract more customers to give you an idea or two:

1. Offering unique – even quirky – rewards

Giving new customers rewards are quite common (and still effective, somehow.) However, sometimes banks need to spice up their offers. Offering something unique that has never been offered by other banks will surely make a bank stands out above the rest. For example, Hanmi Bank has given customers a bag of rice (!) for opening a checking account (source: MyBankTracker.com) The sky is the limit!

2. Ask customers for referrals – and reward them

Customers are banks’ best evangelists. If a bank’s service is top-notch, chances are customers will likely to tell their friends and colleagues about it. How about encouraging your customers to get you referrals by giving them rewards – shopping vouchers, etc. ?

3. Partnership

A good partnership is always crucial for any type of businesses – including banks. Partnering with, say, an education institution can allow you tap onto a strong customer base (students, teachers, etc.) How about cross-selling with a, say, department store to give customers special discounts if they have an account with your bank?

4. Use social media

Just like many traditional industry, banks are slow to adopt social media. According to The New York Times, banks are slow to embrace social media. Given the success of others in social media arena, banks should embrace social media more.

5. Go back to the basics

This is probably the best way to attract customers to your bank: Build a relationship in a good, old fashion way. Help customers with their needs – nurture and care them well. No advertising budget to spend; just focus your efforts in serving your customers. Local customers are indispensable, indeed.

So, there you go – some of the most effective ways for banks to attract more customers. Of course, there are many other (creative) ways a bank can do to get new customers; so if you have any please share with us by leaving your comments below.

How to grow your Business with a clever use of Space

If you’re a small business, expansion isn’t always about getting bigger, it can also mean a more effective use of the resources you already have. Take storage for example. Whether you sell products and need space to keep merchandise, or run a business working out of a spare room at home, the right storage can not only remove hassle, but can streamline your business to help it move forward. Here are our top tips:

1. Re-evaluate your office space

For anyone whose business has grown overnight can testify, space comes at a premium. If you’re moving offices, expanding or (in this economic climate) downsizing, a short-term storage solution can be a life raft. But storage can also help your business make money too. Most SME’s have unused space in their office, or space that’s not being used well (often filled with filing cabinets or extra furniture). As shared office spaces are getting more popular, by putting the items you don’t need into storage, you could sublet the space to another company or a freelancer (sites like Office Genie can be a good place to start), helping keep your overheads as low as possible.

compact office space — *Image from apartment therapy*

2. Plan for overspill

Whether you’re an eBay seller or a traditional retailer, planning for the unplanned is vital. Most businesses don’t consider overspill until its too late, but by future-proofing your storage needs, you can make sure you have a cost effective solution. Consider access, security, and location and of course – cost. Making partnerships with other local businesses ahead of time can ensure you always have a next-door area if your stock room is full (and offering extra space for their overspill can mitigate extra costs).

3. Don’t get tied into long contracts

No one knows what the future holds, but making sure your business isn’t locked into long contracts will help you stay flexible. With warehouses you’ll need to consider the necessary evils of business rates, service charges, utilities and VAT (you will get VAT back eventually, but its an initial outlay) – plus upfront deposits. This outlay can make it unappealing, especially for start-ups wanting less overheads. One solution might be to look at space sharing with other smaller companies, finding partners that will contribute to hiring a room in a warehouse, a floor or the whole building. Consider how you would segment the warehouse space to make sure stock isn’t mixed up, and think of the security ramifications if you’re sharing an open space.

4. Go virtual but take precautions

Cloud based, or virtual storage for businesses, is very topical right now. Using online storage is a great way to save physical space – scanning documents and uploading them to a safe repository, for example – and many small businesses are making the shift. A vital thing to consider first however is support (is there someone available to answer questions if you have them?) and back up (is there any chance you can lose your online data?). Google offers limited support for its free suite (gmail, google docs) and so it might be worth upgrading to a more comprehensive service that can guarantee your stored information will be secure. Apple, Dropbox, Amazon, Microsoft all have online storage solutions.

About the Author: Drew Davies writes for Big Yellow Self Storage. Check out their business section for more information.

5 Ways to Get Your Small Business Out of Debt

Businesses typically start under a cloud of debt. Most people starting up small businesses today simply do not have capital just lying around in their personal bank accounts which leads to the need for loans or credit cards in order to get their business going. Once you begin in debt however, it can seem more than difficult to get out. If you feel that your small business is literally drowning in debt, there are a few things that you can do to pull yourself out without having to consider bankruptcy.

Stop Spending – This is the most important thing that small business owners can do to eliminate debt. If you do not have to spend, then don’t. Think about what you need regarding actually running your business and eliminate all unnecessary or unwarranted costs. If you do not need new computer systems then continue to use your old systems until your finances are in a bit better shape. If you have office equipment that you are not using, consider selling it and adding a bit to your cash flow. However you do it, eliminating excess spending is critical in getting your business finances under control.
Consolidate – If you have several loans or credit cards, think about putting them all together into one product. Loan consolidation can help you to lower your payments and enjoy a bit of a breather from that pile of debt. You may find that interest rates are lower if you choose a consolidation loan over credit cards and you can turn many different loan payments into just one convenient payment.
Restructure Your Budget – If you are unable to pay your debts then perhaps your company is not sticking to a strict enough budget. Take some time and go through your budget, cutting out anything that is unnecessary and ensuring that you are allowing enough each month to meet your debt obligations. Ensure that you are actually making enough money to cover your fixed monthly fees such as rent and utilities. Once you have enough allotted for these costs, add an amount in for bringing down your debt a little at a time.
Call Creditors – If you know that you are having difficulties in paying your creditors, call and speak with them. They may actually surprise you and offer you a lower payment plan or many may give you a settlement amount that is lower than what you actually owe. You never know unless you ask so be sure that you call and speak with your creditors to see what you can do.
Get Help – If all else fails or you find that your creditors are a bit less than enthusiastic about helping you, seek the assistance of a professional debt management company. Professionals can help you to better structure your budget and ensure that you have enough set aside each month to actively begin paying down your debt. These companies are experienced and can assist you in getting your business out from under those piles of bills and operating completely debt free.