How can the banking and credit union industries help small businesses survive an economic down turn?
Financial institutions need to stay cognizant of how much these businesses contribute to the economy. As larger companies suffer a decrease in sales and revenue, smaller businesses also find themselves with a decrease in customers in their stores. Many of these smaller companies rely a second mortgage or equity loans for funding. The customers that are still seeking products or services from these small businesses are spending much less as they are holding onto their pennies in order to survive themselves.
Recently, lenders have been tightening their belts; therefore enforcing stricter standards for lending to small businesses. However, many community banks and credit unions have steered clear of the high risk securities and can help a great deal of these businesses survive by offering unique and customized financing programs.
Some financial institutions are developing creative methods that help small businesses during this crunch. For instance, Power Financial Credit Union of South Florida is partnering with Staples to offer a Small Business Makeover Challenge. This contest awards the lucky winner a free evaluation of their business’ marketing program and financial standing as well as a $1,000 Staples gift card.
According to Allan M. Prindle, President and CEO of the credit union, the institution’s main focus has always been to provide excellent financial services to the local business community.
“We’re creating this Small Business Makeover Challenge as a vehicle to not only promote our wide array of financial products and services to businesses, but also to give one local business the chance to receive complimentary professional services to jumpstart their 2009 business plans,” stated Prindle. “Our goals and objectives as a financial institution are all about advancing the financial interests of our members, and this contest demonstrates how small business owners can apply good financial planning and budgeting strategies to help achieve success.”
During this trying time, the financial industry should offer encouragement to these businesses to revise their business plans to coincide with the changes needed in their practices. Some businesses may need to refocus on a different market; for example, home improvement rather than home building.
Further, banks and credit unions should be aware of other resources that assist small businesses such as Small Business Development Centers (SBDC) and Service Corps of Retired Executives (SCORE). These types of organizations offer free or nominal cost counseling and training to small businesses. As institutions develop relationships with other sources, they can partner together to help strengthen these major contributors to our economy.
Another tactic that never gets old is the process of small businesses working on increasing relationships with customers, other businesses, and employees. Through this practice a small business can even find that there may also be the possibility for growth.
Although it is difficult, it is not impossible for your small businesses clients to pull through down turns in the economy. Here are some common sense tips that will help your clients ride out the storm and continue to thrive.
First, they can start with strengthening their relationships with current customers. Business owners should be pro-active now more than ever in finding out what their customers’ needs are and doing whatever they can to meet them. It is important to be sensitive to the tough times that may be affecting their clients.
Building a strong rapport can help business owners stay on top of how these clients are really doing and how they are dealing with the down turn. If small business owners can be helpful to their clients, this in turn will likely benefit the business as well.
Further, some small business owners will find it beneficial to offer additional discounts as they trim their costs. Many times innovative thinking is needed in order to come up with new and different ideas. The additional discounts along with any customized services that are possible will also assist the business’s customers in making it through tough times.
Another method of building relationships is for small businesses to collaborate with other small businesses. Business owners can leverage their core competencies or specializations by joining together rather than trying to make it through the economic down turn alone. Small businesses may wish to offer special promotions on their products and services in a cohesive manner with other small businesses.
Overall, during a tough economic swing it is essential that small business owners do not remain status quo. They must change their thinking in order to adjust to the times and remain in the game. Financial institutions need to change their thinking as well and be a source of knowledge and support to keep this key part of our economy growing.
