Tag Archive for 'banks'

The Blasingame Translator for Small Businesses and Banks

Once upon a time, a storm caused two ships to sink in the same area. All on board were lost at sea, save one from each ship, and those poor souls were alive only because they swam to a small island nearby.

As luck would have it, the two men hauled themselves up on the beach at the same time and within sight of each other. But survivor’s elation soon became pensive as they realized that each spoke a language unknown to the other

Immediately both men had the same unspoken thought, “I don’t know this man or the language he speaks, but if we’re going to survive, we have to find a way to communicate and work together.”

In many ways, this tale actually plays out every day. But instead of on the high seas, our story takes place in the marketplace. And instead of mythical shipwreck survivors, our real life players are small business owners and bankers.

Like the survivors in the first story, the excitement of the latter-day castaways about their future prospects turns pensive when they both realize that: 1) they need each other in order to be successful; and 2) they don’t speak each other’s language very well, if at all.

With so much common interest and so little mutual understanding, can these two create a successful survival story? Absolutely, but only if they have the Blasingame Official Translator for Bankers & Small Business Owners. Here are a few examples of how the Blasingame Translator works.

For small businesses to understand banker, they must:
1. Identify their banker as a success partner and their business’ best friend.
2. Stay close to their banker when things are going well, and even closer when things aren’t going so well. 3. Believe that an uninformed banker is a scared banker, and a scared banker cannot, and will not, behave like a partner.
4. Pay attention to what motivates and impresses a banker, like attention to detail.
5. Understand pertinent bank rules and regulations, so you don’t ask for something that can’t be done. 6. Reward banker loyalty with small business loyalty.

For bankers to speak small business, they must:
1. Understand Blasingame’s 1st Law of Small Business: Starting a small business is easy, operating a successful one is not.
2. Understand Blasingame’s 2nd Law of Small Business: It’s redundant to say, “undercapitalized small business.”
3. Understand Blasingame’s 3rd Law of Small Business: A small business is not a little big business.
4. Explain bank rules and regulations, and recommend services and products.
5. In the credit scoring process, always find a way to give small business owners credit for character, past performance and best efforts.
6. Reward small business loyalty with banker loyalty.

Write this on a rock … To avoid becoming marketplace castaways, small business owners and bankers must speak each other’s language.

The Small Bank–Small Business Cascade

America is exceptional for many reasons, not the least of which is the way our pioneer DNA morphed into entrepreneurship. But all DNA has to be nourished, and the food of entrepreneurship is capital.

As America’s pioneers claimed Manifest Destiny they simultaneously created businesses and markets, which were funded at first by sweat, blood and personal capital of the pioneer/entrepreneurs themselves. As businesses and markets grew, additional capital was needed, which was provided by another American invention: locally owned banks. Today we call them independent community banks (ICB).

There are a number of reasons America became the world economic leader. But no factor was more important than the financial, legal, regulatory and trust environment that fostered relationships between ICBs and small businesses. These two Main Street sectors formed a symbiosis that simply does not exist anywhere else on planet Earth. Indeed, without this symbiotic relationship, the twin pillars of the American Dream – home and business ownership – would not have been possible, nor would the financial foundation of American exceptionalism.

Alas, this unique relationship may be in peril. But not because of anything the two primary partners have done.

The financial crisis of 2008 shined a bright light on the behavior of large financial institutions, which had become too complex to regulate, too big to manage and, according to the government, too big to fail. But as the federal government and regulators attacked this crisis, ICBs are becoming collateral damage as the new regulatory regime does not differentiate enough between big banks and small ones.

It’s troubling enough to learn that existing ICBs are finding it difficult to manage under the new regulatory pressures, but that’s not the worst of it. Prior to 2008, when an ICB closed or was acquired by a larger bank, the marketplace would produce a new ICB to fill the newly vacated relationship-banking niche. But the following stats foretell an alarming trend.

According to the Independent Community Bankers of America (ICBA), there are 1,119 fewer ICBs today than in 2007. Only 96 new ICBs were chartered from 2008 to 2010, and since 2011, there have been no new ICB charters. Not one in 18 months! And if industry experts are correct, the net number of ICBs will continue to drop, ultimately to a dangerous level.

There are many causes of this alarming trend, but presently the biggest offender are the one-size-fits-all “solutions” being imposed by overreacting politicians, overreaching regulations and overzealous regulators.

In nature, when one member of a symbiotic relationship is diminished, the other is usually harmed too. Fewer independent community banks will result in a weakened small business sector. I call this trend The Small Bank–Small Business Cascade, and it must be stopped.

Small businesses are not only the backbone of the U.S. economy, they’re also the seedlings of future big businesses and the personification of the American Dream.

America, beware The Small Bank–Small Business Cascade.

#####

I’ve talked with Mike Menzies, President of Easton Bank & Trust in Easton, Maryland about the dwindling number of independent community banks in the U.S. and the impact on small businesses. Click on one of the links below to download or listen.

The symbiosis of small banks and small businesses

Why fewer community banks is not good for small business

Check out more great SBA content HERE!




Warning: fsockopen() [function.fsockopen]: php_network_getaddresses: getaddrinfo failed: Temporary failure in name resolution in /var/www/wordpress/wp-includes/class-snoopy.php on line 1142

Warning: fsockopen() [function.fsockopen]: unable to connect to twitter.com:80 (Unknown error) in /var/www/wordpress/wp-includes/class-snoopy.php on line 1142