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As more credit unions open their doors to small business owners, it becomes critical for credit union employees to familiarize themselves with the challenges these entrepreneurs face. There is always more than enough to do in a thriving small business and many times there are not large numbers of employees to deal with those needs. That’s why successful credit unions wisely look for ways to develop close advisory relationships with small business owners. Working with the business owner as a member of his team is a good fit. As the businesses have needs for both financial capital and advice on financial services, the credit union has both the cash and the staff expertise to suggest appropriate financial services. The areas of business services and trust services are new additions to many larger credit unions’ service portfolio. Their acceptance by credit union members who run their own business has been both rapid and with enthusiasm. When commercial lenders and credit union trust officers, for instance, serve as business consultants and wealth and estate advisors, their roles become close and complimentary in serving the overall needs of the business owner. The typical small business owner has expertise in sales, engineering or other technical needs. It has been our experience only a few will have financial management expertise on staff. Early on, many owners manage their businesses based on the amount of cash in the check book. Their advisors, if they have any, are usually an accountant, perhaps an attorney who is on retainer and – more recently – a credit union relationship manager, who in some quarters might be called a commercial loan officer. At this early stage, how to preserve wealth is not a major consideration. One thing many owners forget to develop is contingency plans for threats to their business operations. They have spent unlimited energy and time just keeping the business on track and have not really given much thought to having a Plan B – a safety net under critical operations and staff and to think ahead about their own exit from day-to-day operations. The Small Business Administration in Indiana recently reported that in a six month period some 60 Indiana businesses needed disaster loans to enable them to continue operations. A Gallup survey showed that companies with more than one owner have a one in three chance that one will suffer a disability. Time magazine quoted the Family Financial Institute’s report that in the next five years, 39% of small businesses will experience a change in leadership due to retirement or the semi-retirement of an owner and interestingly, fewer than one of every three family businesses survive a second generation with only about 10% surviving to the third generation. As the business grows, the owner and his lender of choice turn their attention on methods to finance additional equipment or plant expansions. An important step is taken when the commercial officer realizes the business member not only needs to make money, but also should maximize efforts to do some financial planning. At this point, if not sooner, your credit union trust officer should be brought on to the team. A wise team of owner, lending officer and trust officer will want to include prudent estate planning as a key consideration in every update of the business plan. Things like buy/sell agreements, key man insurance, business continuation plans and management succession plans are several important issues which will help increase a successful owner’s peace of mind. A good trust officer with a planning background, will bring these ideas to the table and help work through them so everyone has a clear understanding of possible eventualities. From the credit union’s perspective there are many opportunities for synergy and teamwork between business service representatives and those in wealth planning services. When working together, both want to avoid any personal competitive motivations and make certain the best interests of the credit union client are always paramount. Trust services personnel see small business owners as a prime market for what trust services can provide. This group of clients usually has a large segment of affluent families with wealth to protect and transfer. The trust department can also assist with establishing benefits and retirement plans. A mature business owner may be facing retirement, business succession and estate planning issues all in the same transaction as he, or she, steps away from the business. In order for business service employees and trust department staff to work well together, they first need to know and become conversant in each other’s world. Trust between the two entities is critical. One thing we do in our shop is joint calling. When an annual credit line is up for renewal there is an opportunity to introduce another officer of the credit union, for example. Trust officers spend a lot of time with attorneys and CPAs who work with business clients who need to know about the business lending abilities of the credit union. The trust officer often becomes the one who can introduce the business lenders to these key centers of influence. At FORUM Credit Union we purposely designed the location of the business lending and trust and investment departments so they are in proximity to each other. The head of FORUM 1st Services, which includes the trust function, also sits on the business loan committee, where he can encourage teamwork and cross referrals. The buy-in by staff to the concept that by working together the member is better served has been excellent. Our every day experiences are convincing us that a trusted advisory team who focuses on an individual business client’s needs is a valuable asset. Their services to that business owner can provide the time, objectivity and expertise to allow the owner to keep the business going. The bottom line of such an arrangement? It is a great way to establish a broad and deep service relationship with a business member that benefits all the stakeholders.

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