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Small Business Marketing Strategy

November 17, 2010

By Larry W. Martin


I attended a national banking conference in Fort Worth on Monday and Tuesday of this week-yee hah.!  The conference focused on how to serve the banking needs of the small business market-small business customers are for profit firms with annual sales of $5 million or less.  I came away from the conference with some strategic observations and conclusions and thought I would share them with you.


  • Competition will increase-Conference attendees and presenters were large national banking firms, super regional banks and strategically focused community banks.  I found this intriguing since the market of small businesses has historically been the bastion of community banks, but here you had large national banks and super regional's touting their efforts to business model approaches to this market plus others in the audience anxious to learn how to do the same thing.  Why you ask, it is very profitable (when not in a downturn, like now).  There is good and bad news in this attendance composition.  The bad news is that competition will increase in the small business market.  The good news is that those community banks that successfully design and execute a small business strategy will be attractive acquisition targets.
  • Business as usual will not work-Community banks that have traditionally focused on small businesses for loans and deposits should expect in a much tougher competitive landscape as we emerge from this recession.  For community banks to compete effectively in this sector, they will need to adopt more strategic approaches.  The degree of adoption will depend on their competitor set, if large banks it will need to be more sophisticated than if other community banks are their only competitors.  The strategic approaches will include factually understanding the wants and needs of small business customers, product lines to fill their financial service needs expressed and to deepen the relationship with the bank, and having relationship managers in place with the knowledge and ability to earn the position of trusted business advisor to small businesses.  Not something you plan on the back of a napkin at dinner and something that takes three to five years to accomplish.
  • CRE concentrated banks will have a bigger challenge-Community banks who have a heavy CRE concentration for the past decade or so and who want to have a more diversified C&I approach will also have to become more strategic, as described above, in order to become successful in this market and to achieve their diversification objectives.  There challenge is not only to move from a CRE focused bank to a more diversified bank requiring significant changes in culture, loan policy, lending approaches, and customer focus.  This requires a comprehensive and effective strategic business plan to accomplish. 

Bank Strategies LLC looks forward to meeting with banks interested in sharpening their approach to small business banking to discuss the strategic considerations critical to serving small businesses.

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