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How To Profitably Serve Small Business Customers

March 15, 2012 By Banking.com Staff Leave a Comment

Small businesses, especially micro businesses, are an underserved customer within financial institutions. The small business market will grow from approximately 27 million to 33 million in the next 10 years, with many of these being micro businesses. Many organizations outside of financial services are targeting these very segments.

In this video CeCe Morken, president and general manager of Intuit Financial Services, sat down with Greg Wright, to discuss how Intuit can help you better and more profitably serve small business customers.

Filed Under Videos Tagged With CeCe Morken, Intuit Financial Services, small business

Community Service

March 15, 2012 By Banking.com Staff Leave a Comment

It’s rightly said that the SMB market, which employs a majority of the American workforce, is often overlooked in the national business discourse. Similarly, community banks and credit unions are too often neglected in the mainstream dialog over the financial services industry. This is a glaring oversight: these sectors not only play a critical role in the daily lives of many Americans, but also offer a fresh and distinct picture of the economy at large. Some recent stories, still more the exception than the rule, prove the point.

First, SNL Financial is out with its annual list of the nation’s best-performing community banks, and true to form, there are some very interesting angles. For example, Atlanta-based State Bank Financial Corp. (the holding company behind State Bank & Trust) ranks No. 1 among banks on the larger end of the spectrum, between $500 million and $5 billion in assets for 2011. This would seem to be an unlikely location for a success story of this caliber—Georgia has suffered through nearly 80 bank failures since the market tanked in 2008. However, SBFC has since acquired a dozen of those fallen competitors and assiduously built up a strong, and now market-leading, portfolio.

Coming in second is American First National Holdings of Houston, which has a very different story to tell. Founded by six entrepreneurs barely 15 years ago, it is focused on the Asian American market. And then there’s Citizens National Bank of Bossier City, La., launched in 1985 by a small group of local businesspeople who saw the need for a locally owned and managed bank that could provide modern banking services “without the cold and impersonal delivery. . .so prevalent in today’s financial institutions.”

The entire list exhibits this kind of national diversity. Texas has the highest number of ranked banks, with 12 entries in the top 100. California comes in second with nine, followed by Virginia and Pennsylvania with eight each.

SNL casts a separate look at banks with assets of less than $500 million, and here too there are pleasant surprises. Topping the list of community banks in this category is Amerasia Bank, located in Flushing, N.Y. That’s literally a stone’s throw away from Wall Street and its conglomerates. Launched less than 25 years ago, the bank has earned recognition from financial rating companies.

Meanwhile, The Street offers a different perspective on this very issue by pointing out that long-term growth investors would do well to “look beyond the largest bank holding companies and consider profitable, growing community banks.” The simple, underlying reason: While the multinationals get all the attention, it’s their smaller counterparts, working at the community level, that have more room to grow.

For the record, most of the largest banks are healthier now than they were even a few years ago: All but four of 19 major institutions got a boost last week after the Federal Reserve, reporting on rigorous stress tests conducted over the past few months, determined them strong enough to survive another harsh downturn. J.P. Morgan Chase and Wells Fargo, among others, got the thumbs-up; Citicorp did not, and the market seems to reacting accordingly.

The reality is that community banks play a critical role important in the daily economy, just like their much larger counterparts. However they get much less attention in the process, unless there’s a scandal, or something of political significance, such as last year’s much-heralded Bank Transfer Day.

But for the most part, community banks do what they do quietly—serve with dedication and innovation, effectively using the technologies and tools most needed to survive and thrive. For that, they deserve far greater recognition than they typically get.

Filed Under Financial Management Insights Tagged With Bank Transfer Day, community banking, small business

Video: Tomorrow’s Small Business Customer: Helping You Crack a Tough Nut

March 13, 2012 By Banking.com Staff Leave a Comment

CeCe Morken, president and general manager of Intuit Financial Services, sat down with Greg Wright, small business solutions leader for Intuit Financial Services, to discuss specifically what Intuit is doing to help financial institutions engage small businesses.

Filed Under Videos Tagged With Intuit Financial Services, small business, video

Small Business, Big Lending

March 8, 2012 By Banking.com Staff Leave a Comment

After such a prolonged period of doom and gloom in the global economy, any uptick in lending from financial organizations is cause for celebration. Now maybe, just maybe, we’re headed that way.

First, the good news: Flush with deposits, banks around the world have money in their coffers. Next, the better news: They’re more inclined to make loans in 2012 than they have been for a while (as in, the recession). Finally, the best news: Small businesses, often seen as the true engine of growth, are likely to benefit the most.

That’s the word in a new report from Omega Performance Corp., based on a survey of 409 respondents around the world, and it offers an interesting snapshot of how bankers see the near future. And by all accounts, what they see is good. In fact, 69 percent of global bankers reported a positive outlook for the global economy over the course of the year. For the record, no one’s looking through rose-colored glasses just yet: Only 12 percent predict “drastic” improvement on a global scale, while 57.2 percent see it improving “slowly.”

It’s in the area of lending practices that we see the greatest changes. Well over half the banks surveyed forecast greater lending on the consumer front, and the numbers are even higher for EMEA. It’s an even better story on the commercial side, but this time, the outlook is rosier in the North America, particularly the U.S., with a whopping 72.5 percent.

Going one level deeper, there’s an even brighter spot. Nearly three-quarters of the respondents said that their financial institutions will increase small business lending. Of those, 61.1 percent will do it slowly, while 12.7 percent see a drastic jump. The corresponding numbers for the U.S. are even higher, collectively clocking in at 77 percent. In fact, this sector dominates the target markets for banks—76 percent globally, and 78 percent in the U.S. On a related note, more than two-thirds of respondents in the U.S. plan to actively pursue leading to mid-sized and larger business as well.

It’s not all good news: For example, construction and multi-family homes (considered bellwethers of the industry) still rate below credit cards and auto loans around the globe. As for individual housing, the number for Canada is significantly higher than the U.S.: 57.8 percent over 42 percent.

Again, like all surveys, this is just a snapshot in time. But considering the cascade of gloomy reports and dire forecasts that we’ve almost become accustomed to, any positive signs are welcome. Here’s hoping there are many more, and soon.

Filed Under For Financial Institutions, Surveys Tagged With small business, Small Business Lending

Serving Small Businesses: A Tough, but Important Nut for Bankers to Crack

October 4, 2011 By Banking.com Staff 1 Comment

Intuit Financial Services’ CeCe Morken explores how bankers can best serve small businesses, a critical customer segment for financial institutions.

Filed Under Videos Tagged With CeCe Morken, customer behavior, customers, Intuit Financial Services, small business

Google Buys Motorola Mobility…And So Begins The Dark Ages

August 22, 2011 By Gene Marks 1 Comment

By Gene Marks, originally posted on Forbes.com.

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

Last week I finally, finally purchased a Motorola D3 smartphone. I’m loving it! And I’m loving Google! So you’d think that I’d be loving the news that Google is purchasing Motorola’s cell phone business, right?

I’m not. This is like the beginning of the end of the Roman Empire. And the beginning of technology’s dark ages. At least for many small businesses like mine.

Lots of reasons are given for the acquisition. Most experts believe that it’s motivated by certain patents that Motorola owns which will help Google defend itself against infringement lawsuits brought on by Apple.

ZDNet’s Jason Hiner agrees, but also offers this reason: “…it’s pretty clear that Google also wants to have the option of producing its own hardware devices so that it can build prototypes, concept hardware, and leading edge devices to demonstrate its vision and point its ecosystem partners in the right direction. With Apple’s continued success in mobile, BlackBerry’s large (albeit fading) market share, HP’s new hardware/software unification with WebOS, and now the Google-Motorola deal, it’s becoming clear that vertical integration is winning in mobile. Going forward, look for the latest, greatest, high-end devices to all be vertically integrated, while many of the low-cost, copy-cat devices will come to the market later and be made by mass market manufacturers like Samsung.”

This is all great for Google. But will this news help my small business? Unfortunately, no. The empire is breaking up. Chaos is approaching. Life, particularly for my business, is about to become more complicated.

Chart 1 (here)

Chart 2 (here)

No one can argue with the above two charts. PC shipments over the past few years have been consistently below the peak levels from the 1990’s. And other devices, like tablets and mobile phones, have taken off. This is the main reason why HP decided last week to get out of the PC business and focus instead on software to power all these gadgets. Workstations and servers are on their way to becoming generic boxes, waiting for the customer to install their operating system and applications of choice.

None of this is good news for small business. Like the people of ancient Rome we complain about our conditions and our leaders. We say we want better choices. But really we just want things that make life easier. And things that work. Inexpensively. Which is the way it used to be.

Because once upon a time there was just one evil empire and it was named Microsoft. Every computer shipped was shipped with Windows. And people complained about them all the time. The company faced anti-monopoly lawsuits from both individuals and governments. We frequently grumbled about Windows: its bugs, the blue screens of death, the bloatedness of it all. Its software was targeted by endless armies of hackers. Of course, these being more civilized times, no on attempted to assassinate its CEO. But pies were thrown. Competing operating systems, like Linux, were more like harassing barbaric tribes.

These were the days of Pax Microsoft. And during those days, technology flourished. Software developers developed software. Lots of it. And primarily for businesses. And business owners like me were more productive. Microsoft’s biggest selling product became Office. And other software vendors created applications for accounting, order entry, inventory management, communications and customer relationship management.

Of course, the Caesars weren’t perfect. And neither was Microsoft. Why? Their Windows software was flawed, annoying, frustrating and an oftentimes faulty platform for which to write software. But, like the bureaucracy of Rome, the system worked. It was stable (for the most part). It was consistent. And, like the Roman Denarius, it was accepted in just about every business in the country. Microsoft partnered with hardware companies but never owned them. They just wrote software for them. And we could buy software knowing that it was Windows compatible.

But now that’s all changing. Microsoft has slipped, and the Pax Microsoft era is coming apart. The Gauls and the Goths are invading. The world has gone mobile. And the empire is losing the mobile market to Apple and Google.

So now we no longer just have Microsoft Windows. We have Apple’s iOS and Google’s Android operating systems. More choice is good, yes? No. There is no one company writing software that’s runs all of our computers and devices. We now have three companies who have created three different and separate operating systems.

And now we have Google buying Motorola, so that (like Apple) the software and the hardware become as one. Before we know it, if we want an Android we’ll be “encouraged” to purchase a phone or other device manufactured by Google, just like we are now forced to buy iPads and iPhones for Apple software. How much time until Microsoft admits it can no longer be just a software company and purchases a big PC manufacturer like Dell so that their software can become as one with hardware too?

And then what? The empire breaks up. The technology world divides itself into three camps. And small business owners, many who do not have the resources to support all these different platforms, will need to make some choices. And live with them. So what will it be: Latin, French or German?

Software vendors will have to develop their products not for just one platform but for three. Most can’t afford to do this. These are not little “apps” for a smartphone. These are business programs which I need to manage my operations. Which means that if I choose, for whatever reason, to standardize my business on Google/Motorola/Android, then I will only be able to choose those applications written for that platform. I would need to replace the software that I already have for software that may be inferior, or lack features that I need to run my company.

And I’ll be limited as to what hardware I can purchase. For now, I can purchase PCs from a variety of different sources because I know they all run Windows and my business applications will be compatible. But in the future will I be forced to only purchase hardware manufactured by Apple because I run Apple applications? And will this hardware have all the features that I need? Will I have a broad choice of local support? Will it be compatible with other devices, like bar-code readers and document scanners that my business may require? Or will I be stuck? Stuck because I was forced to pledge my allegiance to one and only one King.

And what if I want to leave the camp? The Emperors of Rome didn’t much like those that switched sides. And neither will Apple, Google or Microsoft. Suppose, after a few years, I don’t like the software I’m using to manage my orders process. In today’s world, migration from one software application isn’t easy, but it’s do-able. Most major business software applications are Windows-based and run on similar databases like SQL. So data can be mapped and moved. Will this be the case if I want to move from an Android based order entry system to an Apple or Microsoft based system? Or will, by that time, vendors be so territorial that they will encircle their kingdoms with walls and moats, making data too proprietary to move somewhere else?

And then there’s integration. Because instead of solving the biggest problem that business owners have had since the dawn of technology, the end of Pax Microsoft makes it worse. Even in the world of Windows, most of us have suffered trying to make our accounting systems talk to our service systems and our service and accounting systems talk to our websites. And that’s not to mention our never realized dream of being able to quickly and inexpensively communicate financial information with our customers and vendors too. Most of us endure with entering the same data two or three times into disparate systems and hoping for the best. But at least these were all Windows-based systems. And as technology matured there was some hope that software developers would create applications that can one day make this integration a reality.

But these same developers are now distracted. They’re writing new apps for the Droid or iPhone. And the dream of having seamlessly integrated systems now seems unlikelier as Apple and Google rise to challenge Microsoft and break up the hardware and software infrastructure into competing camps. Maybe one day my Android-based applications and hardware will all integrate effortlessly. But it feels like we’re starting from scratch. And even if that does happen, what if I still want to keep that great Windows app for managing salesmen commissions but also want it to share data with my Windows based accounting system?

Some may say that these issues will all be resolved by The Cloud. But if that’s the case then why does every cloud based provider today have separate applications for mobile devices? Won’t they be forced to ultimately choose sides as well? And what about all those companies who prefer not to have their data delivered through a cloud based application because it doesn’t suit their business model? More choices. More complications.

I’m not saying that life during the Roman Empire was all bliss. And I’m not saying the Microsoft Windows era has been a perfect one for small and medium sized companies. Apple and Google make great products. Did I mention that I love my new D3? But I know my history. And when the Roman empire became fragmented the world entered a period of chaos and suffering. I’m concerned my company faces the same technology future.

Filed Under Financial Management Insights Tagged With Gene Marks, Google, mobile, small business

Are Office Depot, Google and Wal-Mart Disrupting Small Business Lending?

July 26, 2011 By Steve King and Carolyn Ockels 8 Comments

In recent weeks Office Depot and Google announced credit programs aimed at small businesses. Office Depot is partnering with Superior Financial Group, a non-bank SBA lending company, to offer small business loans up to $25,000.

Google is offering small businesses a credit card that can only be used to pay for AdWords, Google’s keyword advertising program. Google’s credit card offers a very competitive interest rate and no annual fees.

These companies join another corporate giant – Wal-Mart – in providing credit services to small businesses. Wal-Mart, also in partnership with Superior Financial Group, started offering small business loans last year.

These firms illustrate a broader trend of nontraditional competitors targeting the financial services industry. These new competitors include some the world’s largest corporations and best-funded, venture-backed startups. They are hoping to use disruptive innovation based on both new technology and the shift to online banking to attract customers and gain share in the financial services industry.

Disruptive innovation is a term coined by Harvard Business School professor Clayton Christensen. It describes a process by which a product or service creates a new market or reshapes an existing market by delivering simple, low-cost innovations to a set of customers who are ignored or underserved by industry leaders.

Industry leaders ignore these customers because they aren’t viewed as important enough, or profitable enough, to pursue. After a disruptive competitor establishes themselves with this group, these firms often move up-market, eventually challenging traditional competitors for their best and most profitable customers.

The classic example of disruptive innovation is Southwest Airlines. Southwest initially targeted price sensitive vacation travelers, a segment considered unattractive by the airline industry. Ignored by larger rivals, Southwest moved up-market and over time firmly established itself with business travelers, the airline industry’s most coveted customers.

We think something similar may be happening in the small business credit space.

The customers targeted by Wal-Mart, Office Depot, Google and others are very small businesses, most with less than $1 million in revenue - a segment seen as unattractive by many financial institutions. But by ignoring this segment, financial institutions are providing an entry point for new competitors who may leverage this beachhead to become significant players in the financial services industry.

About Steve King: Steve is a Partner at Emergent Research. His current research and consulting is focused on economic decentralization, the growth of small business and the future of work and workplaces. Steve has extensive consulting, marketing and general management experience with both large and small companies. Steve is a senior fellow and board member at the Society For New Communications Research, a research affiliate at the Future of Work and an advisory board member at Pond Ventures.

About Carolyn Ockels: Carolyn is the Managing Partner at Emergent Research. Her current research and consulting is focused on economic decentralization, the growth of small business and Gen Y. Carolyn has extensive consulting experience, and prior to Emergent Research managed Cambridge Energy Research’s Asian energy consulting business, led market research in Japan for RCM Capital Managment, and held a variety of domestic and international consulting positions with the economic forecasting and planning consulting firm Data Resources, Inc.

Filed Under Financial Management Insights Tagged With Google, Office Depot, small business, Small Business Lending, Wal-Mart

Mobile Banking: It’s Not a Phase

March 29, 2011 By Banking.com Staff Leave a Comment

Mobile banking innovation continues to move forward as the need for mobile based applications becomes a “must have” for businesses. Whether it is basic banking functionality, such as checking an account balance, or the ability to deposit a check via remote capture, mobile banking apps are enhancing the customer’s everyday banking experience.

A recent Barlow Research report noted that 43 percent of middle market companies and 45 percent of small businesses are interested in mobile banking. Barlow noted, “interest in mobile jumped considerably over the past year in the middle market segment (up 10 percent from 33 percent).”

Companies including Wells Fargo, Fiserv and Intuit, among others, are all standing behind mobile banking as a valuable channel for reaching customers. Barlow Research spoke with Nadilee Russell, SVP Business Solutions at Intuit Financial Services who said, “Business people, regardless of company size, are constantly on the go so they want tools to help them manage time-sensitive cash, payment and fraud prevention decisions from wherever they are, whenever…Staying connected is a key reason the mobile channel shows tremendous growth potential and may surpass online as the primary way some customers interact with their bank.”

Does your FI offer mobile banking? Have you seen higher adoption of mobile banking applications in the last year? Let us know in the comments section below.

Filed Under For Financial Institutions Tagged With Intuit, mobile, mobile banking, small business

Ask And Ye Shall Receive

March 3, 2011 By Gene Marks Leave a Comment

Ask And Ye Shall Receive

As a business owner, I was never one for asking for a lower price…until I found myself getting lower prices by asking.

Your better customers know that the reality of doing business today is this: everyone’s got a price. If someone told me to shed my clothes and go streaking across Lincoln Financial Field on a January Sunday I’d turn up my nose and sniff: “Hmmph, exactly what kind of a sick, depraved animal do you think I am?”

But suppose I was offered a million bucks to do that (and saw the cash)? Depravity…here I come!

So just watch me rationalize. “Welllll,” I’d think aloud. “It’s only for a few minutes, isn’t it? And it’s not like I’d be on national TV, right? And I’d only potentially serve a few months in prison at most. And even my wife agrees that it’s really, REALLY not a big deal at all (if you get my drift).

It may not be the same topic, but this rationalization is shared by most other salespeople when asked to lower their price. The point is….everyone has a price. As a banker and advisor to your customers you should remind them that they should always be pushing for the lowest price possible by asking, asking, asking.

For example, you’re meeting at your customer’s offices and just at that moment he’s in the middle of trying to purchase a bunch of raw materials he needs to process for a big order coming in. He’s complaining to you because his supplier’s price is too high. As his banker, it’s in your best interest that he makes the best deal possible too! So give him some advice. Tell him to ask for a lower price. Because, guess what? The supplier wants the business as much as your customer needs the materials. We all need more business. Whatever’s being asked is usually just the opening bid. Tell him that chances are the price can come down a bit. Multiply that bit times lots of pounds (or whatever the units are) over a period of time and this adds up.

Another story: My wife (who also happens to be the world’s best negotiator) got two bids to have our living room floors re-done. And of course the higher bid came from the company she liked better. Did she pay it? I think you know the answer. She just said she couldn’t. She needed a lower price. At least something comparable to the other company. She just…asked. And her favored contractor conceded.

Your customer needs to be reminded that he should always be asking for the lower price. Why? Because that’s what his customers are doing to him every day, aren’t they? I find it incredulous, shocking, outrageous and downright insulting when, after clearly stating our hourly fee, a client asks for it to be lowered. How dare they! And of course…I usually lower it. Why? You know why. I want the work. I don’t want my competitor to get the business. I’d probably throw in a personal car wash to get the business. Don’t look at me that way. You’re no different!

Encourage customers not to be afraid to ask for a discount. No one expects to negotiate a treaty with North Korea or haggle like an experienced merchant in a Turkish bazaar. But not paying top price is what being a profitable business owner is all about. Tell him: Just because you can afford the price doesn’t mean you have to pay the price.

Ask. You will receive.

By Gene Marks

Filed Under Financial Management Insights Tagged With business owners, customer service, Gene Marks, small business

How Much Did Your Customers Lose Today?

February 10, 2011 By Gene Marks 1 Comment

How Much Did Your Customers Lose Today?

Psst! Want to help your customers make an extra $5,000 – $10,000 next year?

It’s easy. It’s common sense. So naturally I rarely see business owners doing this. But if your customers are in the service, manufacturing or distribution business they could be letting some significant dollars slip away.

Here’s what you can tell them to do:

Take out their payroll register from last year (and try not to let them get to upset when they’re reminded how much they’re overpaying some people). Add up all the hours spent last year by production and service employees.

Next, take out last year’s tax returns (and also try not to let them get too upset over how they’re overpaying) and add up all the overhead expenses incurred last year, like utilities, maintenance, office expenses, etc.

Now, have them divide the overhead expenses by hours to come up with an overhead rate per hour.

Finally: tell your customer to create a little spreadsheet. Have an admin person in their office find out the materials cost used and the time spent for each job that shipped the day before. This is not a tough assignment as long as the admin person knows how to use a phone. Have that person enter this information plus the selling price and shipping cost on a pre-designed spreadsheet that includes the overhead rate per hour. Let the spreadsheet calculate profit.

Tell your customer to get a copy of that spreadsheet every single day! Every….single….day! And start getting surprised.

Some jobs (or products, or classes, or services, or projects) that they thought were making money didn’t make as much. Other jobs may have been more profitable than they estimated. And many probably came in line with what they expected.

Now your customer can make some adjustments. Yell at some people. Stamp their feet. Throw something at a wall. Go back to their customers and re-quote future orders. Find new customers who would take more profitable jobs.

It’s not perfect. The numbers probably aren’t exact. But it’s going to be pretty close. And it’s also not a six figure job costing system that some consultants would recommend.

Your customers may find themselves getting reacquainted with their production people and their customers. They may be relieved to get rid of those customers that they always suspected were unprofitable. You may find themselves taking advantage of some vendors that for years were taking advantage of them.

How did I come up with a $5,000-$10,000 savings? I figure if a company bills out half a million or a million a year, and they increase their job profits by just 1%…well there’s your answer.