Let’s Get Down to Small Business
Tuesday, September 30, 2003
Business Services
Presented By: Kevin Lytle, Vice President, Strategic Business Development CUNA Center for Research & Advice
Business Services
Presented By: John Hollander, Assistant Vice President, Sales and Strategic Relationships CUNA Center for Research & Advice
Outline for Learning
• Small Business Market • CU Products to Offer • Importance of Relationship • Recommendations
Small Business Market
• 10.3 million companies and firms
• Small office-home office (SOHO) • Small companies
Source: TowerGroup
Small Business Market
• •
$200 billion in financial services per year Growing at a rate of 5% to 10% annually
Source: TowerGroup
Small Business Ownership Among Members
27%
Yes
18%
9%
10%
No, but plan to
7%
NA
0% 5% 10% 15% 20%
From survey CUNA estimate TowerGroup estimate
25% 30%
Small Business Market
• • •
14% of SOHO use a credit union 67% use a commercial bank 3% of small businesses use a credit union 99% use a commercial bank
•
Source: TowerGroup
Likelihood of Using Small Business Services
Business checking 83%
Business credit card
76%
New/used vehicle loan for business
73%
Commercial mortgage/real estate/rental property loan
69%
Equipment/furniture loan for business
69%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Definitely would Somewhat likely
Service Opportunities
• •
Wider range of financial products and services Numerous service segments
• • •
Business needs Personal needs of entrepreneur Employees of the business
Source: TowerGroup
Service Opportunities
• Deposit and credit services • Cash management
Source: TowerGroup
Serving Small Business
• Deposits are the most important • Checking account is universal
Source: TowerGroup
Serving Small Business
• Checking account = PFI • PFI leads to loans
Source: TowerGroup
Serving Small Business
• Primary factor is personal •
relationship Betters rates are secondary
Source: TowerGroup
Small Business Views
• • •
Generally successful in obtaining credit Dissatisfied with service Smaller FIs favorite of small business
Source: National Federation of Independent Business
Satisfaction With Current Small Business PFI (Average = 3.1)
Not at all satisfied 2% Not very satisfied 18% Very satisfied 35%
Somewhat satisfied 44%
Small Business Views
•
Key drivers for satisfaction
• • •
Customer Service Credit relationship Relationship manager performance
Source: Greenwich Associates
Small Business Views
• Personal knowledge and trust • Relationship with loan officer • Low FI staff turnover
Source: Greenwich Associates
Small Business Views
•
Satisfaction drivers with relationship manager
• • •
Follow-up Meet credit needs Provide advice and ideas
Source: Greenwich Associates
Key Drivers of Small Business Customer Satisfaction with Banking Officers
Follow up promptly - 36% Convince bank to meet credit needs - 29% Provide advice & creative ideas - 19% Effectively coordinate product specialists - 9% Knowledge of cash management - 9% Frequency of visits - 5%
Source: Greenwich Associates, January 2003
Strategic Considerations
Consider offering Small Business
Administration (SBA) 7 (a) guaranteed loans, either as an approved SBA lender, or through a third party SBA loan provider such as Newtek Small Business Finance, Inc.
Visit www.newteksbfinance.com
Recommendations
• Offer deposit services, especially
checking
Source: Greenwich Associates
Recommendations
• Develop long-term deposit strategy
Source: Greenwich Associates
Recommendations
• Make a commitment to personal
service
Source: Greenwich Associates
Recommendations
• Branch is most important
Source: Greenwich Associates
Recommendations
• Offer a range of business services
Source: Greenwich Associates
2003/2004 Credit Union Environmental Scan Resources
Report
#20583
PowerPoint Presentation
#23507
Video
#30006
Order by phone: Order online:
800/356-8010, ext. 4157
http://advice.cuna.org and click on “Reports”
TowerGroup Small Business Research Reports
Opportunities in the Small Business Market in 2002 and Beyond Profiles of Small Business Market Companies Clicks or Bricks? Internet and Online Banking Adoption and Usage Behavior Among Small Businesses Small Business Market Financial Services Trends At the Core—Small Business Credit and Depository Needs Expanding Financial Services Needs of the Small Business Market Embracing the Small Business: Optimizing Relationship Management Competing for Small Business Financial Services Market Share in 2003 and Beyond
To order, go to advice.cuna.org, and click on “Reports”
CUNA Center For Research and Advice Small Business Resources
Small Business and SEG Surveys
MBL Portfolio Review Custom Business Plan for Business Services
Business Services IT Assessment
Business Services HR Assessment The Point for Research and Advice http://thepoint.cuna.org/
Contact Information
• Kevin Lytle, KLytle@cuna.com • John Hollander, Jhollander@cuna.com
Phone: 888-837-4589