MADISON, Wis. — Mazuma Credit Union wanted to gauge how many baby boomers were seriously considering starting their own businesses.
The $333 million credit union recently completed a two-month pilot to help aspiring entrepreneurs evaluate the market worthiness of their business. Mazuma is one of four credit unions participating in the "What's the Big Idea" challenge, a project put together by one of the Filene Research Institute's i3 innovation teams. Respondents were given feedback, advice and suggestions to help refine their plans and create successful new ventures. If the team determined that the business venture had legs, the winning respondent would receive a $3,000 marketing package, including logo and stationery design and printing.
The pilot, which ran between Jan. 14 and March 31, yielded some key results. Although only nine entries were submitted (all from baby boomers–those born between 1946 and 1964), 78 new deposit accounts totaling $2.5 million were opened and $1.23 million in loans were approved.
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With relatively no marketing outside of a mention on its Website, the $1.3 billion Wright-Patt CU Inc. was able to bring in 27 entries in the first couple of weeks of the pilot, said Lisa Renner, CEO of CU Holding Company, a subsidiary of Mazuma and one of the members of the Filene i3 team that created the What's the Big Idea project. While the pilot started on March 4 and officially ends on April 15, early numbers showed 47 new deposit accounts opened.
The $4.1 billion America First CU and the $4.8 billion Alliant CU are getting ready to launch their pilots. Alliant will use the data as a factor in deciding whether to move forward with a full rollout of business services.
So, what does Mazuma and Wright-Patt's pilot data mean? Honing in on a target market is one of the keys to wooing baby boomers, or as Renner coins them "Boomer-preneurs." The positioning on a Website is critical as is how the challenge is promoted. Renner said Wright-Patt heavily promoted the package, but Mazuma did not.
"The biggest pain point was the need to get it right the first time," Renner told attendees at a March 25 CUES Webinar titled "Boomers Bring Big Business to Credit Unions." "People over 50 may not have the option of going back into the workforce if their business fails. [The question is] what can credit unions do and best position themselves to make sure we're helping members get it right the first time."
The growing trend of baby boomers starting their own businesses is being fueled by a lack of corporate loyalty, use of sites like eBay and Amazon.com, which allows users to sell their wares online, and the fact that consumers are living longer, Renner said. As for financing their businesses, Boomer-preneurs tend to use their own assets and personal loans, including home equity and Small Business Administration loans. They shy away from credit cards as a financing tool and often go into business with partners.
"Business owners don't want to deal with the financing, managing taxes and the payroll," Renner said. "There are opportunities here for credit unions that come from these pain points."
Based on research, Renner said business owners want simple checking accounts–no fees or minimum balances–check and debit cards and prefer those that mimic their consumer checking accounts. They also favor robust online payments services, streamlined payroll and accounting services, and assistance with human resources and benefits.
"Rather than think of the doom and gloom of a slowing market for credit unions, focus on the baby boomer market," Renner suggested. "Credit unions have a lion's share of the market. There's absolutely no doubt about it that [baby boomers] have influence in shaping business."
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