In order to succeed, small business owners devote a substantial amount of time, effort and funds to their companies. The question is, while these owners are busy meeting the needs of customers, who's meeting their needs?
Small businesses are America's backbone. According to the U.S. Small Business Administration, 54% of all sales within the U.S. are from the country's 28 million small businesses. As these companies are focused on customer service, purchasing inventory, hiring staff and building infrastructure, they often are forced to do so without the tools needed to support and manage their financial health.
Because small businesses tend to be deeply ingrained in their local environment, credit unions are especially well-positioned to be their financial partners. The two often share a deep connection with their local neighborhoods as well as a commitment to giving back to the community. In fact, credit unions can increase their community impact by supporting small businesses and enabling them to stimulate local growth. As a bonus, small businesses have the potential to evolve into larger companies that are likely to remain loyal to their financial partners.
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There is a misconception among credit unions that small business owners are not willing to pay for banking services. However, according to a study conducted by Aite Group, this isn't necessarily the case. Small business owners often are willing to invest in banking as long as they see value in the services.
Historically, most financial institutions' small business offerings have been simply a "dumbed down" version of their commercial offering. This forces small business members to choose between conducting their business on a personal account or use the services meant for larger corporations – neither of which meet their needs. To correct this problem and better serve this traditionally underserved segment, credit unions should provide functionality and offerings that are designed specifically with small business owners in mind.
Know Your Small Business Members
When deciding what offerings will be relevant, it's important for credit unions to understand their small business members' banking needs. Consider this segment's lifestyle and how those preferences can impact their banking needs. For example, how do they want to bank? Where do they want to bank? And, who is banking?
How do they want to bank? Small business owners are notoriously on the go, so the short answer is: However they can! Credit unions should ensure their small business banking platforms transition seamlessly across smartphones, tablets and laptops alike. Make it easy for them to quickly access their accounts anywhere, from any device.
Where do they want to bank? Small business owners understand loyalty. Chances are, if a credit union has served them faithfully on the retail side and can meet their company's needs, it can win their business. Credit unions should sweeten the deal and make it beneficial to own multiple accounts by offering a consistent user interface and the ability to easily toggle between retail and small business accounts. This enhances security and eliminates the need for a small business owner to have to login repeatedly as he or she moves between personal and business accounts.
Who is banking? Small business owners may have multiple employees that need to access various functions and information within the company's accounts. However, typically an owner will want to limit what details can be viewed by each employee, as well as the types of transactions and dollar thresholds they are permitted to perform. In order to properly establish and manage who has access to what accounts, services and other details, credit unions should provide entitlement options within their small business digital banking offerings that allow the small business owner to securely create customizable permissions.
Planning for the Financial Future
One of the biggest challenges owners face when managing their businesses is organizing and analyzing their finances. Often, small business owners try to keep track of this data by using everything from multiple spreadsheets to filing systems that may include piles of receipts. Instead, credit unions should help their business members digitize, streamline and make sense of this information by providing digestible reports that can easily translate into actionable insights.
The data is already there – it just has to be properly organized. By providing functionality that automatically categorizes transactions, credit unions can present detailed reports and information to small business members on where their money is being spent. This allows the small business owner to better understand their expenses, and plan budgets and allocate resources accordingly. This categorized data can also be valuable in determining if the business member could benefit from additional relevant offerings.
Another invaluable service credit unions can provide their business members with is predictive cash flow. By using automated engines to analyze past behavior and trends, credit unions can predict what cash flow will look like in the future – and provide that information in customizable views for the small business owner. Such functionality is instrumental to small businesses looking to plan for their next quarter or year, as the most common reason for their failure is the inability to properly handle their cash flow.
By providing small businesses with digital offerings built specifically for them, credit unions can bolster the businesses in their communities while strengthening their relationships with this important segment of members.
Jeff Marshall is Chief Technology Officer for D3 Banking. He can be reached at 303-800-9685 or [email protected].
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