ome of the best counsel Michele Schuh, executive vice president and CFO of First National Bank Alaska (FNBA), ever received is to build a good business plan that includes a cash flow model. That step helps ensure that financial decisions and desired outcomes are tied to the business mission and stakeholder goals. “From a financial view, planning where sources of cash are generated, along with how money is utilized, is critical to success,” she says. “Every business will have competing demands for resources to meet objectives for growth, diversification, efficiency, or productivity. Funding decisions on when to raise capital, when to borrow, and how to use existing cash generated from operations can be effectively modeled in a good business plan and executed with confidence.”

Travis Frisk, CFO of Credit Union 1 (CU1), says he was told at an early age that you should always try to pay yourself first if you can, before you pay others. So he extends similar advice: “I am not suggesting that you not pay the obligations you have committed to. What I am saying is that you should utilize any and all avenues to save for retirement. Take advantage of a company-offered 401(k) if available or use IRAs as a means of saving for retirement. This can all be accomplished by sitting down and establishing a reasonable budget. Set a goal for an amount to have in your savings and retirement funds by the end of the year and regularly review your progress. Start early if you can. Speaking from experience, I wish I would have.”

Northrim Bank’s executive group—which includes Joe Schierhorn, chairman and CEO; Mike Huston, president; Jed Ballard, executive vice president and CFO; Amber Zins, executive vice president and COO; and Ben Craig, CIO—heeds the advice of founder Marc Langland: “Banking is a people business. Make the customer comfortable by caring for their needs, and that’s how you deliver value.”

Northrim, CU1, and FNBA have exercised sound financial decision making on top of a solid financial foundations to become Top 49ers. These basic principles apply to every organization, as well. Given each institution’s prudence with customers’ assets and with their own, they must know what they’re doing. What other advice do some of Alaska’s most prosperous depositories have to share?

Sound financial decisions start with a clear framework built upon risk and reward considerations, Schuh says. A structured approach considers a list of beneficial outcomes and associated risks. “Good decision makers incorporate the likelihood of various outcomes in conjunction with the business’ risk tolerance,” she says. “Financial decisions are often made in the context of some uncertainty, so an approach that includes risks, rewards, and probability offers a good framework to help generate a sound financial decision.”

Frisk applies intentional restraint with his personal decision making. His first inclination is to not make a quick decision. From there, his approach depends on the type of financial decision at hand. For example, he usually takes longer than normal to make a purchase—large or small. “I want to have time to review options,” he explains. “I want to run scenarios of what happens if I do this (or don’t) and what the outcomes may be. Do I need the item, or can I wait? Do I pay cash, or do I finance? The same goes for financial decisions in my professional life. The only difference is, instead of basing a decision on what is best for me and my family, I base it on what is best for the members of our credit union.”

The executive group at Northrim Bank leverages its collective expertise when making decisions. “Each of us in our organization brings a different perspective to our overarching philosophy of providing flexible, responsive service and customized solutions to customers,” the team says. “We work from a foundation of integrity and honesty, coming together often to discuss and share ideas to make sure we’re aligned in our decisions. We have a sense of personal responsibility for the relationships we have with each other and our customers and understand every customer is an individual and unique in their banking needs.”

Consequently, Northrim strives to share financial preparedness information with its customers early so that they aren’t caught off guard by any shifts along the way. “Being prepared helps our customers survive and thrive,” the bank’s executives say. “We call this SurThrival: overcoming challenges and seizing opportunities.”

Discussing money can be awkward for many people. Starting the discussion with a desired goal and breaking the process into a series of simple math equations can help remove some of the emotion and subjectivity from the planning, says Karl Heinz, senior vice president and branch administration director at FNBA. “Our job as bankers is to break down the numbers and help find the right financial tools to help customers reach their goals,” he says. “That starts with establishing a relationship where the customer understands that we want you to be successful. Relationships are vital to making people feel comfortable discussing their money because when the customer is successful, their success supports our community.”

Northrim’s top executives say trust is a key part of community banking, and they are focused on building trust by engaging in the community and actively listening to customers when they talk about their businesses, challenges, and plans. “When we do this, we can better understand their needs and respond with open conversations and local financial expertise,” the executives say. “Throughout the state, our employees are passionate about helping our customers excel and grow their businesses. We meet our customers where they are, whether that’s through our electronic banking channels or any one of the new branches across Alaska, so that we can have open conversations with them.”

Frisk says the most important aspect of discussing money is to start by letting individuals know they are not the first person who has run into financial difficulty or issues. “There is nothing to be ashamed of and nobody is judging them,” he says. “We are here to help, but we are not here to force them into doing anything. They have to be comfortable making changes if they are needed. We are not here to sell them a product or service. We are here to provide sound advice on what we have seen work for individuals in similar situations and who have been able to work their way out of a crisis and into a better situation.”

According to Northrim’s executive group, some of the common financial mistakes that businesses make are linked to myths about banking: banks don’t want my business because I’m too small; banks don’t make small loans; I need a perfect credit history; loan applications take months; and fees are not affordable. “Instead, get to know your banker and let your banker get to know you,” the executive group says. “By building this relationship, you will be able to alleviate any concerns you have and move forward quickly when you need to. Make sure you discuss your options, sources of financing, and lending readiness, so you know what to expect.”

Frisk says many small companies—which are often sole proprietorships or family-owned enterprises—are extremely talented at the business they conduct but may not be as good at paying attention to their cash flow and ensuring invoices and vendors get paid in a timely manner. “The lack of financial acumen has led some business owners to enlist bookkeeping and accounting services to take over and run their finances,” he says. “There is nothing wrong with this, as the majority of these types of service providers are reputable and do a good job. I would only recommend that you do your due diligence by reviewing your financial activities often to ensure the health of your business and that your finances are being handled correctly.”

In a similar vein, Heinz emphasizes that running a successful business is more than being an expert in your field and providing outstanding service. It is also beneficial to have a team of experts available to help support the business. He explains, “The BAIL acronym is a great starting point—B for banker, A for accountant, I for insurance broker, and L for lawyer. By building their business team, business owners can lean on these experts to support business decisions and spend their time pursuing their passion and growing the heart of their business.”

In addition, new businesses are focused on growth and sometimes pay more attention to revenue than net profit. “It is important to remember that bigger is not always better, especially when you don’t have a healthy financial foundation,” Heinz says.

Schuh says businesses have a much better chance at success with a solid financial foundation, a robust planning mindset, and decision-making excellence when a diverse group of capable and experienced people is developed into a leadership team. She explains, “Financial performance falls into place only when coupled with smart, passionate, forward-looking leaders at the helm. Build an outstanding team and watch the performance follow.”