Wonder, Blunder Thunder, Plunder ; The Emerging SEG Opportunity: Many Business Owners Don't Just Want To Know What The Credit Union Can Do For Employees--They Want To Know What It Can Do For Them

photo, Michael Hales

Perhaps the biggest change in demands upon credit unions by business owners no longer has to do with what the CU can do for the employees, but what the CU can do for the small-and medium-sized business.

Michael Hales, senior executive vice president and director of member business services for Counter Intelligence Associates, San Juan Capistrano, Calif., told The Credit Union Journal's SEG & Business Development Conference that that an enormous market of small businesses is not just being ignored by banks, it's being pushed away. Hales told the meeting he knows what business owners want, and what bankers don't want credit union managers to know.

He also reviewed for conference attendees a plan for a credit union to launch a member business services culture in just 60 days.

Why bother with small businesses, Hales asked conference attendees? Because, he said, there are 26 million small businesses in the United States, and that number is growing at more than 1,000 per day. More importantly, approximately 10% (260,000) change financial institutions annually, and most change because they feel they are not getting services they want from their banks.

"Banks ignore these small businesses on purpose because it is not profitable for them to serve," said Hales.

While many credit unions initially think of lending when it comes to small businesses, it is checking and deposit account relationships that account for 70% or more of the profitability associated with member business services. Hales said the average balance of a small business checking account is $69,450.

"About 90% of small businesses use checking accounts, 46% need cash management, 64% use credit products, and 22% need MMDA-CD- savings accounts," he said.

The Wonder Years

Businesses change, Hales said, and their needs evolve as they go through four life-cycle stages. The first stage is the start-up phase, which Hales refers to as, "The Wonder Years." The first three years is the critical period, he noted. The typical life of a small business that survives the first six to eight years is 25 years. In this stage, businesses need capital or equity financing and business planning. "They don't have business cards, all they have is an idea," Hales said.

CUs need to look for creative ways to...