Cutting the Fat: Make the Most of Your 2017 Budget

By Paul Manchester, Senior Vice President – Business Relationship Manager

For many small to mid-sized businesses, the details of a budget can take a back seat to producing the best possible product or providing the best possible service. You’re profitable. You’re managing cash flow. And you have a big picture idea of where your money goes.

You can do better.

Controlling your expenses can improve profits, free up extra capital for growth opportunities, help you take advantage of tax benefits, and put you in a proactive rather than reactive mindset.

Understanding Expenses

The first step in developing a disciplined approach to budgeting is analyzing your profit and loss statement from the previous year.

  • What worked?
  • What areas went over budget?
  • Which months were your most profitable and why?
  • Did you have a slow period?

If you aren’t sure how to create or read a financial statement for the month or the year, consider reaching out to one of the many business resources in the area, such as UW’s Small Business Development Center, the online tools offered by the U.S. Small Business Administration (SBA), or your local chamber of commerce.

You also may want to think about outsourcing your financials to an accountant or bookkeeper. The expense of hiring someone to manage this part of your business is usually more than offset by the time and money you save over trying to do it yourself without the necessary expertise.

Tips for Finding the Fat

Once you have the information you need at your fingertips, the following areas are a good place to start looking for extraneous expenses:

  1. Efficiency. What’s your process for getting from A to B? Is each document passing through 10 people when it really only requires two? Understanding your workflow can lead to efficiencies that save time, money, and manpower.
  1. Where are your best customers coming from? It’s important to measure and analyze the return on investment for your marketing efforts. Don’t forget to maximize some of the no-cost or low-cost opportunities available via social media and public relations.
  1. I read somewhere that most people use about 10 percent of any given technology’s full capabilities. If you’re paying for the technology, consider investing in some training for yourself or your staff to take advantage of its full power. In addition, there are tools that might replace traditional ways of doing things. For instance, face-to-face meetings are important, but not necessary every time. Look into online meeting technology to manage travel expenses.
  1. Accounts Payable. Turn your vendors into partners. Find out if there are incentives for paying quickly or paying in a certain way, such as PayPal. Could you pay for the year all at once for a discount? I’ve seen businesses get very good at reducing expenses by talking to their business partners and creating mutually beneficial arrangements.

State Bank of Cross Plains has an entire team of professionals ready to help you add to your bottom line. From our business banking tools to treasury management consultation, we’re here to serve as your business partner, resource, and secret weapon.

Member FDIC


Watch Your Pennies…

By Stan Koopmans, Senior Vice President – Business Relationship Manager

Watch your pennies, and your dollars will watch themselves. Watch your dollars, and your hundreds of dollars will watch themselves. Watch your hundreds of dollars, and your thousands of dollars will watch themselves. You get the idea.

The Penny Rule Makes Business Sense

I remember when I first heard the “Penny Rule” as a small boy, I thought it would be a good practice with my personal finances. After all, I was just starting to earn money as a paper boy.  A short time later, I realized the greatly expanded application of the Penny Rule during a conversation with my dad.

Driving home from a farm auction we attended, I asked, “Why did that farmer need five hacksaws?” My dad explained that the farmer didn’t need that many hacksaws, but that he didn’t keep track or take care of his tools. So when he needed to use a tool  – a hacksaw, for instance – he would just run to town to buy another. In other words, he didn’t watch his business, and because of squandering and wasting money over the years, it ended with him having to sell out in a farm auction due to too much debt.

I don’t remember what my dad bought at the auction that day. What I do remember is realizing that the Penny Rule had applications to the business world, as well.

Good Examples of The Penny Rule

It has been many years since I first heard the Penny Rule, but it still holds true. As a long-term commercial lender I have had the privilege of observing numerous great managers and owners watch their pennies when leading their businesses. For example, I have an existing customer that needs several expensive specialty tools (much more expensive and complicated than hacksaws) on job sites scattered throughout the Midwest. Every tool has its assigned place on peg boards at the main office and must be signed out. As a result, tool costs are controlled, and time and money aren’t wasted searching for existing tools or buying duplicates.

Another way to watch pennies add up is energy costs throughout the year. Money and energy saving considerations can include:

  • Occupancy sensors that shut off lights in rooms that are not being used
  • Timers that turn the heat down during the night and back up again early in the morning
  • Fuel-efficient vehicles
  • Door closers
  • Heat tape
  • Solar panels
  • and more!

Going Overboard

Can frugality be carried too far?  Absolutely. Like most everything in life, balance is essential!  If taken too far, penny pinching can be considered extreme (even bizarre) with no real buy in except for ridicule from observers and participants.

Two examples from my days as a bank examiner come readily to mind.  A former co-worker would stop his car along the road to pick up one aluminum can because there was a 5-cent rebate. Another example happened when reviewing the official minutes of a bank’s board of director meetings. Only every other page made sense because the minutes were kept on the back side of “used” paper.  This was also the type of paper they loaded into the copy machine.

So I hope you think of ways to watch your pennies, tens, hundreds, and thousands of dollars, but with proper moderation!

Member FDIC

Investing in Bonds: Should Your Strategy Change in a Rising Rate Environment?

By Dan Savage, Senior Vice President and Senior Trust Officer

The wait is finally over! Just a few short weeks ago, the Fed increased the Fed Funds Rate for the first time in a year and only the second time since the onset of the financial crisis. That may leave you with a few questions:

  1. Why did the Fed raise rates by 25 basis points? The short answer is that the Fed now believes that U. S. economic growth and employment characteristics are sufficiently strong to warrant a rate increase.
  1. When will the Fed again raise rates and by how much? No one knows for sure, but most economists and financial analysts believe that it will be a gradual process over three or more years. One popular view is that 2017 will see two or three modest increases leading to a Fed Funds rate range of 1 to 1.25 percent by year-end. More importantly for investors, however, is the 10-Year Treasury, which has recently been trading around 2.5 percent. Many analysts predict little if any change over the next year.
  1. Should bond investors be concerned? Although rising rates can depress bond valuations and disturb equity markets, it’s not all bad news. The plus side is that rising rates are beneficial to long-term investors and savers over time. More importantly, as stated above, we believe that rate increases will be gradual. If true, this will help manage price volatility while offering slowly improving yields.
  1. What strategies might help make the best of this environment? First, remember why people typically include bonds in a portfolio: bonds provide stability when stock market volatility increases. Said differently, successful portfolio construction isn’t only about returns; rather, it’s also about diversification and downside protection. Second, don’t chase yield by excessively extending maturities. You can benefit by including short- and intermediate-term maturity exposure. Finally, laddering individual bonds (staggering their maturities) can be very beneficial when rates are still near historic lows. Yield-to-maturity is knowable and locked in at the time of purchase…provided the investor does not sell the bond prior to the maturity date.

In summary, focus on your overall investment goals and risk tolerance rather than on interest rates alone. Your exposure to bonds should be tailored to your personal financial goals in relation to your other investments. A seasoned Wealth Manager can help design your portfolio to accommodate changing economic circumstances.

Investment Products:

Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value


2017 Checklist: Get Your Financial House in Order

By Jeff Supple, Certified Financial Planner®

The beginning of the year is a great time to assess your financial situation and find out if there are things you can or should be doing differently. While a comprehensive list of ways to get your “financial house” in order would be based on your individual situation, below are some universal issues that everyone should consider as the new year begins:

The beginning of the year is a great time to make sure your estate planning documents are up to date. When reviewing beneficiary designation, don’t forget:

  • Group term life insurance policies at work
  • Old 401 (k) plans
  • Health care power of attorney
  • Financial power of attorney

Account Consolidation
It’s a good idea to occasionally reassess your accounts and find out if consolidating those make sense. Sometimes you can eliminate or reduce costs via consolidation. Regardless, whoever settles your estate will be grateful. The less they have to track down the better

  • Checking/savings accounts
  • IRA/Roth IRA
  • 401(k)

Make sure you haven’t misplaced any money
Check the free government search for missing accounts, insurance settlements, etc. It’s unlikely you’ll uncover much of anything, but you never know.

Update your passwords

  • Compile a non-electronic list of your online user name and passwords.
  • Keep your list in a safe location (e.g. safe deposit box) with instructions on how to access it.

Upgrade your financial security
With the increase in data breaches and cyber-attacks, the probability that some aspect of your financial life will be exposed is ever-increasing. An identity theft protection service might help you sleep at night. Below is a sampling of companies that offer this service. we don’t recommend one over the other:

Life changes. Dust off those documents and make sure they’re still relevant to your current life situation. If you need help with your review, contact State Bank of Cross Plains to speak with one of our Wealth Managment experts.




With the cost of borrowing increasing with each Fed rate increase, leasing the equipment your business needs may make more sense than ever. This is true for two reasons; First of all, leasing equipment means no down payment, leaving more cash available to move to better performing investment options that should follow the Fed rate increases and secondly, leasing requires smaller monthly payments to help guard your cash flow if your money borrowed with a variable rate of interest becomes more costly.

The real value of your equipment comes from operation-not necessarily ownership. With owned equipment, you’re allowed to deduct depreciation and interest expense from your taxable income, but not the principal payments. And the depreciation deductions follow a schedule set up by the IRS.

With a lease, you can deduct your entire lease payment as an expense, which will allow you to write off expenses quicker. This shorter period means a larger deduction each year, lowering your taxable income and decreasing your taxes.

Lease approvals and paperwork can be available in 24-48 hours for smaller transactions. You can complete larger transactions in about a week. For more information about which type of lease is best for you, speak with your banker and accountant.

-George Ohlendorf, VP Business Relationship Manager

Member FDIC

Save time – any time – with electronic banking tools

Gone are the days of a regular 9-to-5 work schedule. Why shouldn’t your bank work the same crazy hours you do? Today’s online banking services make it possible for you to do all your banking whenever it fits into your schedule. It’s fast and easy:

  • Convenient access from anywhere at any time. You just need an Internet connection and any device (PC, tablet, or smart phone).
  • Real time information. Our interactive OVERVIEW page gives you an up-to-date snapshot of all your accounts and transactions.
  • Advanced security options. Flexible permissions let you designate who has access to each banking function.


Safety First

Most people agree that online and mobile banking tools are convenient. The thing that holds some people back is concern over safety and privacy. In reality, transactions handled electronically travel through fewer hands, offering fewer opportunities for mistakes or security issues. In addition, State Bank of Cross Plains uses a variety of security methods to ensure your accounts are safe from online breaches:

  • Login credentials and password
  • Device ID
  • Geographical location verification


Time-Saving Tools

State Bank of Cross Plains offers a variety of electronic banking tools to help you manage your business and personal finances. Our Online Education Center hosts more than a dozen brief videos that not only explain our online and mobile banking tools, but also teaches you how to use them. Click on any of the following links to learn more:

You can also visit our Frequently Asked Questions page or call SBCP’s Online Services team at (855) 256-7328 for information or assistance.

Member FDIC and Equal Housing Lender