Even as credit eases in the financial markets, small businesses are still finding it difficult to fund their operations. Unlike larger corporations, the typical small business lacks the clout and size needed to command sufficient attention from its bank. Many small businesses do not have a dedicated banking relationship manager as banks tend to focus on medium to large private business customers instead.
However it would be a mistake for big banks to neglect the small business in favour of bigger customers with large borrowing capacities. Large companies often start off as small businesses and an enterprise that has been supported by its bank since it was small is a loyal customer, not easily bought by another bank. These are the customers that the banks need for operational sustainability and who create true goodwill value for them.
The small business would certainly benefit from a banking contact through which they would be able to access the attention and facilities they need to grow. They need someone at their bank who understands the system and why their business is different, then structure lending facilities and debt covenants accordingly. Banks who neglect their small and medium sized business customers do so at their own detriment, for these are the businesses that represent the most growth and potential to the banks’ own earnings.
Banks and small businesses working together is a concept that should be the basis for all banking arrangements.Strategic vision and patience is required to identify and nurture promising small businesses, with the aim of growing these customers into larger businesses with in-depth financial needs. A bank with a longer term view would be prepared to forgo a small portion of today’s profit in favour of building a strong, loyal customer base for the future.
Banks should provide advice on Savings accounts, Current accounts, small business loans and even accounting services to small businesses if they want t help grow these into larger business. Sadly it is independent sites such as savings.co.uk who spend their time developing this information structure, no wonder their latest adverts state: We Know Savings. Banks need to get on the ball.
However not all is doom and gloom. There are banks in both side of the pond that really work hard to develop small businesses (our list of a few is below).
Resources:
Tips on picking the right business bank for you.
American Small Business Banking Services
UK Small Business Banking Services
- http://www.business.hsbc.co.uk/1/2/paid/bca/bus-bank-acc/start-up
- http://www.lloydstsbbusiness.com/
- http://www.natwest.com/business.ashx