Login Signup
Verified Document

Small Business - Banking Start-Up Term Paper

Related Topics:
Loan Banking Intel Corporation Money And Banking
Open Document Cite Document

Ultimately, these authors cautiously conclude that "There is a positive (although small) and significant relationship between the level of SBA-guaranteed lending in a local banking market and future per capita income growth." Cocheo (2006) posits small business lending at a number of banks in California, as in other states, constitutes "big" business. Stephen H. Wacknitz, president, CEO, and chairman of Temecula Valley Bancorp, a small bank located in Temecula, California, with just over $1 billion during 2005, which finished as the 16th-largest Small Business Administration lender in the U.S. during 2005, contends, "Much of the business comes down to people." (Ibid.) a big part of the banking equation in regard to small businesses, Wacknitz stresses, consistes of customer service quality. In addition, "hiiring and training people who can navigate the often complex SBA process makes that service better for borrowers." (Cocheo, 2006) a not too often noted "perk" small businesses contribute, according to Fuller (2003), is that they provide employment for individuals in society and also an alternative career choice for owners. "They are needed by citizens-as-consumers who demand customer service and choice that requires niche-oriented suppliers." (Ibid.) Whether he/she chooses to be an artisan, innovator, specialist, entrepreneur or family business owner, individuals may utilize small businesses as vehicles for their entrepreneurial activities in an economic context. (Fuller, 2003) Fuller (2003) presents the following questions and answers to relate concerns an individual may want to know about the future of small business. How important to society are personal relationships in business transactions? Small business is personal. It is the result of personal relationships between stake holders. In a landscape where personal relationships take precedence over regulated contracts, small business will thrive.

How important to society is the personal commitment of business owners to the solution of its customers' problems and needs? Personal commitment transcends economic constraints. In a landscape where both buyer and seller recognise each other's real needs, the small business will thrive. Large businesses cannot do that.

For how long will consumers crave the brand rather than the personality of the individuals that create the service? The brand is the soul of corporate business. In a society that adopts the human spirit as the manifestation of good, rather than iconic symbols of constructed value, small business, as an embodiment of human spirit will thrive.

How important to society is the individual's personal control on their work and careers? An entrepreneurial approach is to commit to a socio-economic goal, in whatever landscape supports that commitment. Small businesses and small enterprises are often the result of that commitment.

Who will invest their savings directly in the activities of people they know, rather than in market valued institutional funds? Institutional funds can only operate with large sums, as so much is in the hands of so few. The small business will thrive in a landscape where the purpose of the use of money takes precedence over the financial return from the use of power.

Will societal regulation allow us the freedom to decide our own work and enable us to exchange our efforts in flexible ways? Unregulated economies lead to crime and monopoly, so forms of 'regulated freedom' are necessary.

When will monopolistic power be seen as the unwanted outcome of individual greed? Diversity is a natural hedge against risk, economic mono-cultures are a high risk for humanity. Small business landscapes are diverse. (Fuller, 2003)

Financial Management

Along with stressing that smaller, community banks can increase profits by reducing operating cost, Valentine (2007) also emphasizes the value of ensuring customers' are met. "Few things are easy," she notes, "but it's clear from the success of several small and midsize banks that cash management -- and winning customers -- is worth the effort." (Valentine, 2007)

According to Jeff Dick, president and CEO of a Herndon, Virginia-based bank, because they offer customers extras, their bank successfully competes with the biggest and the best banks in the metro D.C. off area. Their sophisticated services include an automated escrow management, image-based lockbox, and remote deposit capture, along with traditional cash management services, including wire transfers and the capability to download banking transactions into accounting software. Bulk check deposit ATMs, another new tool being incorporated banking, permits consumers or businesses to simultaneously deposit up to 50 checks without having to fill out the deposit envelopes. Some pertinent advantages for small business owners include real-time access to deposited funds, after-hours convenience, and an accompanying imaged receipt of the checks customer deposits. (Valentine, 2007)

Currently, "fraud costs the...

More savings are additionally realized as n addition, the cost of processing a deposit envelope transaction made through a regular ATM is reportedly $1.70, while it only cost $.40 to complete a bulk deposit ATM.
Sweep Account a sweep account is defined as: "A bank account that, at the close of each business day, automatically transfers amounts that exceeds (or falls short of) a certain level into a higher-interest earning account." ("Sweep Account," 2007) a bank's computers analyze a the customer's use of checkable deposits and then "sweeps" designated amounts into money market deposit accounts. This helps the customer receive the greatest amount of interest, while it also utilizes the minimum amount of personal intervention. Initially, sweep accounts were created to avert an old government regulation that prohibits banks from paying interest on commercial checking accounts. In his study, Scott (2006) "presents empirical evidence on the role loan officers play in facilitating small firm access to commercial bank loans." He notes that when and a bank's loan officers use soft information to influence their lending decisions not traditionally made on the basis of hard information then, loan officers' frequent turnover should be related to adverse effect on credit availability. Scott (2006) conducted surveys of U.S. small businesses, also members of the National Federation of Independent Business (NFIB), utilizing data from 1995 and 2001, to determine the role loan officers exert on small firm credit availability. One survey variable, a report of account manager turnover, served as a proxy for soft information production. Account manager turnover and proxies for hard information (e.g., banking relationship length), in conjunction with control variable "for firm risk characteristics (size, years in business) and market structure (merger activity, market size, and deposit concentration)," (Ibid.) were used to explain loan application outcome at commercial banks. Using data from the 1995 and 2001 Credit, Banks, and Small Business Surveys conducted by the NFIB, Scott (2006) collected data/information related to credit market experiences of a random sample of the NFIB's 600,000 members. During the 1995 survey, Scott (2006) initially mailed 18,000 questionnaires. For the second mailing, 3,642 completed questionnaires were available, a contributing to a 20% response rate after the second mailing period. For the 2001 survey, Scott (2006) mailed questionnaires to 12,500 firms. Responses retrieved from this an effort totaled 2,223 after two mailings; constituting an 18% response rate. From findings analyzed in his study effort, Scott (2006) conclude: "loan approvals based only on hard information could limit their [these firm's] ability to obtain credit. Soft information obtained by the loan officer is likely to increase credit availability, but there are instances where it may not (for example, the officer learns about internal control problems at the firm) and result in decreased credit availability." (Ibid.) Scott (2006) stresses that the relationship banking links with the loan officer's production of soft information as it does with the bank's accumulation of hard information. For small business owners, as well as branch managers, these results indicate:

clear understanding is mandatory of the costs and benefits of relationship banking.

For small firms, particularly those with few tangible assets and a short operating history

Not all community banks choose to be, or even could be, relationship lenders. (Scott, 2006)

Owners of small businesses with obscure information, according to Scott (2006), may benefit more doing business with banks which have a history of stability in loan officers and local decision-making. The earlier a small business chooses a locally owned, community bank that focuses on relationship lending; the better. The length of time a small business conducts business with a bank also relates to credit decisions.

Marketing

When a bank markets services/products to their current customers the, to avoid wasting time and help ensure results match desired goals, David Meer, partner, Marakon Associates, New York City posits: "It's almost always useful to know...which attitudes matter most to buying decisions among existing customers. (Bielski, 2006)

Free Checking Cocheo (2004) advises bankers to reconsider and we at just the way they market deposits. " There's a war going on out there in the deposit business," he quotes Sherief Meleis, managing director at Novantas, the New York City-based consultancy, to warn. Robert P. Niehaus, executive vice-president, retail business lines Fifth Third Bank which opened its 1,000th branch in 2004, addresses the question: "Why do deposits remain so…

Continue Reading...
Sources used in this document:
References

Authority, purpose and scope. (2002). EXTENSIONS of CREDIT by FEDERAL RESERVE BANKS (REGULATION a). Retrieved November 10, 2007, at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=57016e116171461106934124459aa8aa&rgn=div5&view=text&node=1-2:2.0.1.1.1&idno=12#12:2.0.1.1.1.0.1.1 http://www.questia.com/PM.qst?a=o&d=108945401

Bannock, G. (2005). The Economics and Management of Small Business: An International Perspective. New York: Routledge. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=108945415

Bielski, L. (2006). On the Hunt for the Meaningful Segment: With a Deluge of Customer Information to Choose from, Bankers Struggle to See Their Customers in More Refined, Specific Ways. ABA Banking Journal, 98(9), 45+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5017258794

Brew, J. (2007). Taxes: The Forgotten Piece of Bank Profits Investigating Two Overlooked Strategies Could Put You on Your Way to Cutting Taxes by Half. Got Your Attention?. ABA Banking Journal, 99(5), 22+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5020964964
Business Services from WSFS." (2007). 2007 Wilmington Savings Fund Society. Retrieved November 10, 2007, at http://www.wsfsbank.com/BusinessServices.asp http://www.questia.com/PM.qst?a=o&d=5002441754
Cocheo, S. (2004). If You Build it, They Will Learn: Constructed from Scratch, First National Bank of Colorado's Corporate University Produces Results Far beyond Expectations. ABA Banking Journal, 96(2), 22+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5002441754
Cocheo, S. (2004). Turning a "Liability" into an Asset: As Market Rates Head Back Up, Banks Readjust Their Deposit Marketing. A Look at Changing Tactics in the Retail, Business, and Municipal Deposit Markets. ABA Banking Journal, 96(9), 34+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5007221122
Cocheo, S. (2006). Small Business Is Big for California SBA Specialist. ABA Banking Journal, 98(10), 28+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5017594196
Cocheo, S., Stucki, D., Harris, K., Kirk, a., & Salazar, F. (2003). Being Good Is Just the Beginning. ABA Banking Journal, 95(6), 35+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001948889
Craig, B.R., Jackson, W.E., & Thomson, J.B. (2007). Small Firm Finance, Credit Rationing and the Impact of SBA-Guaranteed Lending on Local Economic Growth. Journal of Small Business Management, 45(1), 116+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5019677935
Fuller, T. (2003). If You Wanted to Know the Future of Small Business What Questions Would You Ask?. Futures, 35(4), 305+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001916328
Geurden, W. (2003). Making Customer Care the Route to Higher Profits. ABA Banking Journal, 95(11), 104. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5002039982
Gray, C.L. (2000). What Does it Take to Become a CFO?. Journal of Accountancy, 190(6), 47. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001150801
FEDERAL RESERVE ACT." (2007, February 16). Retrieved November 5, 2007, at http://www.federalreserve.gov/GeneralInfo/fract/sect01.htm
Federal Reserve Banks. (2003). Federal Reserve Act. Retrieved November 10, 2007, at http://www.federalreserve.gov/GeneralInfo/fract/sect04.htm
Kaiser Federal Bank. (2007). Retrieved November 5, 2007, from: http://www.kaiserfederal.biz / http://www.questia.com/PM.qst?a=o&d=5020964960
Mcvicker, E.D. (2007). How to Win the War for Talent. ABA Banking Journal, 99(5), 20. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5020964960
On Being Relevant, and Real-Time. (2007). ABA Banking Journal, 99(2), 58. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5019704125
O'Neill, D.T. (2003). Mind Your Own Business: Why Your Mother's Advice Won't Work in Cyberspace. ABA Banking Journal, 95(1), 45. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5000610002
Pass the Aspirin." (2004). ABA Banking Journal, 96(7), 30+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5006458784
Patterson, a.B. (2003). ABA's Issues Blueprint. ABA Banking Journal, 95(2), 14. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5000633580
Scott, J.A. (2006). Loan Officer Turnover and Credit Availability for Small Firms. Journal of Small Business Management, 44(4), 544+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5017476589
Simmons, H.H. (2005). Regulation: How Much Does it Cost You?. ABA Banking Journal, 97(12), 14. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5012168121
Streeter, B. (2003). Target: Small Business; How Seven Community Banks Cater to This Key Market. ABA Banking Journal, 95(3), 14+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001693657
Sweep Account." (2007). Retrieved November 10, 2007, at http://www.answers.com/topic/sweep-account?cat=technology http://www.questia.com/PM.qst?a=o&d=5001958821
Telberg, R. (2003). Mom-and-Pop Shops: Here Are 15 Tips on How CPAs Can Best Serve and Engage Small Business Clients. Journal of Accountancy, 196(1), 49+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001958821
Valentine, L. (2006). Remote Deposit Capture Hot Just Got Hotter: Contrary to What You May Have Heard, the Corporate Market for This Product Is Not All Locked Up -- and the Small Business Sector Is Largely Untapped. ABA Banking Journal, 98(3), 30+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5014310258
Valentine, L. (2007). Good Times Roll Again for Cash Management; Higher Rates, Low-Cost Technology and Remote Deposit Capture Spur Growth, Especially among Small and Midsize Players. ABA Banking Journal, 99(7), 32+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5021810276
Cite this Document:
Copy Bibliography Citation

Related Documents

Essay
Small Business Strategy Small Business Marketing Strategy
Words: 1550 Length: 5 Document Type: Essay

Small Business Strategy Small Business Marketing Strategy A television commercials business The small business will be termed as a television commercials business. The business involves marketing of products and services that include television gadgets, programs, hardware, software, and services related with television services. The small business will start operations as a small entrepreneur that accommodates and sells small and support gadgets that are related to television services in town. The objective of the

Read More
Essay
Small Business the Owner of a Small
Words: 2153 Length: 6 Document Type: Essay

Small Business The owner of a small business in today's world is troubled by so many problems as well as is encountered by many opportunities on a daily basis. When one has to run a company, no matter how big or small it might be, one needs to have the ability of looking outside the business for the solutions of the problems, for better ideas and for the best practices for

Read More
Essay
Small Business Is an Essential
Words: 2003 Length: 8 Document Type: Term Paper

Venture capital is the money that businesses get from investors to start or continue a business. Ironically the advantages of a business plan are also correlated with some of the disadvantages of a business plan. For instance, a book entitled Under the Radar: Starting Your Net Business without Venture Capital, Venture capitalists often find that many business plans are too optimistic (Kling 2001). The book asserts that, Trying to obtain venture

Read More
Essay
Small Business Idea
Words: 1292 Length: 4 Document Type: Essay

Small Business Idea When starting a new company, there are a number of different forms the business can take. It is important to understand the differences between the forms, including their advantages and disadvantages. The main forms for a new small business are sole proprietorship, partnership, C-corporation and S-corporation. The small business that is being considered is a gourmet food truck that will sell the finest Southern barbeque. The truck will

Read More
Essay
Small Business Software Review the
Words: 2916 Length: 10 Document Type: Research Proposal

Sage, who has seen how costly application customization can be, has created a series of template-based charts of accounts, with the last count indicating they had over 70 of Charts of Accounts that could be quickly used by customers to customize for their business. Sage has also seen that inordinate customization of software can lead to a lack of adoption; hence their motivation for creating a library that can

Read More
Essay
Small Business Management in Regards to the Landscaping Business
Words: 1220 Length: 3 Document Type: Term Paper

Small business management principles are important considerations in relation to a landscaping or gardening business. Like other small businesses, an owner or manager of a landscaping business must have a clear understanding of entrepreneurialism, business plans, legal aspects of business in the United States, finance, and pricing. An understanding of these concepts can help the landscaping business owner overcome many of the potential setbacks of small business, and help them

Read More

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now