Let’s Get Down to Small Business

Let’s Get Down to Small Business

Tuesday, September 30, 2003

Business Services

Presented By:

Kevin Lytle,Vice President, Strategic Business DevelopmentCUNA Center for Research & Advice

Business ServicesPresented By:

John Hollander,Assistant Vice President, Sales and Strategic RelationshipsCUNA 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

7%

18%

10%

27%

9%

0% 5% 10% 15% 20% 25% 30%

No, but plan to

Yes

From surveyCUNA estimateTowerGroup estimateNA

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

83%

76%

73%

69%

69%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Equipment/furniture loan forbusiness

Commercial mortgage/realestate/rental property loan

New/used vehicle loan forbusiness

Business credit card

Business checking

Definitely wouldSomewhat 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)

Somewhat satisfied44%

Very satisfied35%

Not at all satisfied2%

Not very satisfied18%

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

Report PowerPoint Presentation Video

Order by phone: 800/356-8010, ext. 4157

Order online: http://advice.cuna.org and click on “Reports”

#20583 #23507 #30006

2003/2004 Credit Union Environmental Scan Resources

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

ResourcesSmall 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.comPhone: 888-837-4589