Banking services you need to be familiar with before becoming an entrepreneur


Whether you dream of setting up a business or are in need of fresh work prospects, deciding to become self-employed or an entrepreneur takes courage.  But, as well as a good idea and the right professional skills, you’re going to need a bare minimum of financial knowledge, some of which may be entirely unfamiliar to you.

The first step is to draw up your business plan, which needs to focus just as much on financial management as on the great idea that inspired you. Among other things, you’ll need to consider how much you will initially need to invest, how you will finance it, what turnover you expect to make, and what your fixed and variable expenses (including your salary) will be each month. Your dream is undoubtedly essential, but don't let yourself get carried away by it. You’ll need to be realistic and prepare for a tough start: it may take some time for your initial effort to turn into positive cash flows and you may have to rely on financial support for longer than you would like.

This financial lifeline can come, among other sources, from family and friends, crowdfunding, “business angels”, venture capital, government support and/or the banking sector:

  • Most banks have specific loan/credit facilities for entrepreneurs, although they may require that you provide guarantees (be they personal or from guarantors). They also manage the facilities offered by the ICO (the Official Credit Institute) to support SMEs and entrepreneurs.
  • Obtaining guarantees from mutual guarantee societiesAbre en ventana nueva can also help.
  • Leasing or renting can be good options if you need to acquire vehicles or machinery.

Once your business is up and running, other financial services are available to you:

  • Factoring and reverse factoring can help with your cash management.
  • Having a POS terminal is practically essential in today's world.
  • If your business is online, you will need to arrange a payment gateway or virtual POS.
  • Setting up online banking will undoubtedly smooth your operations and save you time when paying taxes and salaries or managing your invoice batches, for instance.
  • If you wish to rent an office or premises or bid in some type of public tender, you will likely need a bank guarantee of some kind.

Even if you’re starting a business by yourself, it’s a good idea to open a specific bank account for your business or economic activity and not to mix personal transactions with business ones: this will help you control your project's finances better and provides greater transparency to the tax authorities and banks. And if you embark on this venture with someone else, you’ll need to determine how funds are to be drawn from the account.

You should also know that the regulations set out a series of rights specific that banks must observe in their relationships with the self-employed and small business owners.

As an entrepreneur, having a sound financial education will give you more peace of mind and help make your ideas a success.

This was one of the motivations for the recent agreement signed by the Banco de España and the National Securities Market Commission (CNMV) with the Ministry of Education, which seeks to enhance financial literacy across all stages of education, from primary education to vocational training. The signatories to this agreement are convinced of the need to increase financial literacy in the classroom, which will lead to more capable future entrepreneurs and the smooth functioning of our economy.

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