Why Should Bankers Partner with Small Businesses?

by Beth Goldstein

With a lackluster economy continuing to discourage small businesses from hiring and taking risks to grow their companies, bankers have a vested interest in supporting their small business customers. Few small businesses have the cash flow, in-house expertise or human capital required to expand through long rough patches in the economy, so they must rely on support from the greater business community, including their banking partner.

Having worked with thousands of entrepreneurs in the past 20+ years, I have discovered that it’s simply not enough to work hard. Small business owners have to work smart and perform key growth activities that impact their business’s success. What are those growth activities that make a real impact? My newest book, Lucky By Design: Navigating Your Path to Success, focuses on this very topic. In a study of entrepreneurs from around the world, I discovered that business owners who considered themselves to be lucky in business were 2 to 3 times more heavily engaged in specific business growth activities than entrepreneurs who thought luck had no impact on their business. These key success activities, or levers as I refer to them in the book, include: market research, business planning, product development and sales expansion. I found clear evidence that there are ways you can design your own luck (no four leaf clovers or horseshoes required). Perseverance, a great attitude and confidence are important ingredients. However it’s essential to be prepared for inevitable encounters with growth opportunities because a business owner’s ability to recognize these lucky breaks is significantly hampered without a solid roadmap (business plan) and the financial resources required to seize these opportunities.

It is in a banker’s best interest to partner with their small business customers to help them create a Lucky Roadmap. What should you be looking for?

Begin by identifying your small business customer’s growth needs. What challenges do they face and what opportunities do they have to grow?  Next, work with them to determine the following:

  1. Do they have a plan in place to help them leverage growth?
  2. Are they focused on sales expansion and do they have the tools and the human capital required?
  3. Are they conducting market research to better identify the needs of their prospects and customers?
  4. Are they growing their service or product offer?
  5. What are their strengths and weaknesses as an organization? What are they really effective at and where do they need additional support? What skills and expertise are missing that will make it difficult to deliver the benefits that their customers and prospects desire?
  6. Do they understand the external marketplace and are continually assessing how their competitors are positioning their companies’ benefits and value proposition? Are they targeting specific markets that are similar or quite different than their current customer mix? Are there changes in the industry (e.g. regulations, economic factors) that impact their growth potential?
  7. Have they clearly defined their unique value proposition – how they differentiate their deliverable so that it resonates with customers as a ‘need’ to have versus ‘nice’ to have product or service?

Once you have a clear understanding of your small business customers’ competitive advantage, you will be in a solid position to determine what additional support they need to grow their business. This knowledge will help you work with them to determine which products and services to expand and which to cutback or drop entirely since their value doesn’t align with their customers’ needs. It will also help them determine which target markets to approach, how to approach them and if they need to make changes to their team to deliver on their brand promise. These are the essential elements of designing a lucky business roadmap that will provide you with a solid return on your investment in their company.

Beth Goldstein is an author, educator at Boston University and founder of Marketing Edge Consulting Group.

 

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