Ramp Up for Small Business Success (part 1)

Small businesses need a full range of sophisticated financial products and services as they look for ways to better manage their business and cash with minimal resources.




Small businesses represent big income and membership increase potential for credit unions. Every year, small businesses spend an estimated $353 billion on financial products. 1 With more than 24 million businesses in the U.S., 98% of which have annual revenues less then $10M, 2 the war is on to capture the small business banking relationship. And many of these “minor league” businesses just might be tomorrow's big league all-star.

Traditional thoughts and practices dictated that the small business relationship had to begin with the loan. However, small businesses need a full range of sophisticated on-and offline financial products and services as they look for ways to better manage their business and cash with minimal resources. With the average number of cash management services used by businesses projected to double from 3.5 in 2005 to 7 cash management services in 2009, 3small businesses can be a lucrative business unit for you.

After all, credit unions are known for their focus on member service and the ability to build relationships - consumers rank credit unions as a clear leader in customer advocacy when compared to other financial service institutions 4- making a credit union the ideal fit for a business owner who wants that personal touch.

Take Stock

Before you hang your Businesses welcome here' sign, start by taking inventory of what your credit union does internally - and make a list of what products, services and processes you may need to add.

  • The right product mix:Yes, business-oriented lending products are vital to offer small business accounts. But think further out of the box: traditional in-branch products like business-specific share checking/savings accounts, overdraft protection, corporate credit cards and more are vital. Business-specific online products like remote deposit, payroll services and ACH are also must-haves - especially since online banking continues to grow every year in the small business sector (close to 60% of small business bank online).5
  • Focus on long-term value: When shopping for new online and offline banking products, don't think solely in terms of up-front cost to the credit union. To ensure your potential to grow with your business members, it's important the features and services you offer meet businesses' current and future needs. The key concern should be value to the business owner. If you provide value, revenues, relationships and deposits are sure to follow.
  • Align your technological capabilities and business goals: Technology can help reduce your costs to serve and improve member service. You're entering a new market so be sure the back-end processes of your financial institution support the new products and services you plan to deliver.
  • Price according to value: Again, value is the most important quality to the business member so price your products and services accordingly. As business members use more products and services (and receive more value), they will understand that price increase accordingly.

Prepare Your Team

From rank and file senior management to in-branch retail staff, every one needs to be engaged and aware of the quest for an enhanced base of small business members. Senior management is a great place to start prospecting, a grassroots resource for connecting with small businesses. Tap into friends, partners and associates of top brass to forge new - and trusting - business banking relationships.

From there, make sure your member service team is well-organized and well-informed, with full buy-in at all levels of the organization from the top down, including:

  • Strong Leadership: Assign each branch location a Sales Leader to coach retail member service staff on the rigors and expectations of business members, as well as how to identify and consult on how your credit union can be off assistance. Above every 4-5 credit union branches, assign a Sales Consultant a pitching coach of sorts - who works with the Sales Leaders of each location as well as branch managers, lending managers and front line staff on how to recognize prospects, receive referrals, make cold calls and actively sell your suite of business-specific products and services.
  • Compensation: Tie your compensation at the branch level to a commission structure that includes referral quotas and business member acquisition incentives.

So there you have it: your road map to business member acquisition. In the next two articles of this series, we'll delve further into what you need to build a small business member business base as well as how to manage the life cycle of your small business clients to maximize share of wallet and improve retention.

In the meantime, don't forget business leaders often share common expectations: improved money management, ways to save time and reduce costs, convenience, minimized risk, and robust yet simple and easy to use technology. A constant reassessment of how your credit union meets these demands is critical in order to meet the needs of today's business members.

1 The Small Business Market Survey, Aite Group, June 2006
2 The Small Business Market Survey, Aite Group, June 2006
3 The Small Business Market Survey, Aite Group, June 2006
4 Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages and Insurers, Forrester Research, May 2006
5 Small Business Survey; Edgar, Dunn & Company and Collective Dynamics, LLCN=203 U.S. Online Small Businesses, January 2005.




Sept. 18, 2006



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