CONSIDER COMMUNITY

Even though the community bank presence in local communities have been declining since 1984 from 17,401 to 6,146 in 2013, their contribution to small business operations still makes and impact in the communities they serve. (The Statistical Protal, n.d.) WHY THE DECLINE? Stricter regulations due to the housing crisis almost ten years ago, shift in demand and interest rates initiated the spiral. Many community banks have changed faces several times, “but the profitability of those remaining has recovered closer to pre-crisis levels than it has for larger banks. And, perhaps most important, community banks’ share of the market for small business loans—the lifeblood of community banking—remains robust and vastly disproportionate to their size.” (Community Banking, 2016)

WHAT MAKES THE DIFFERENCE? People! People bank with people and not buildings. Most banks have similar products and rates, but it the teller, customer service representative and bankers who are constant fixtures even when the name changes that make the difference. Community Banking in the 21st Century 2016 National Survey “…offers insight into the close relationships that community bankers cultivate with these borrowers, to whom they lent $340 billion last year, an amount that, while slightly lower than in previous years, was nevertheless higher than the amount extended by their larger counterparts.” (Community Banking, 2016)

WHY COMMUNITY? Community Bankers are our friends and neighbors. The personal attention with face-to-face interactions all allow for long-term relationships to be maintained and consistent not wavering with a .25 discount on a loan. “Unlike the large banks, community banks have usually been seen as a friend to the entrepreneur.” (Rogers, 2014, pg.180) Many of the larger banks offer an order taking style of service. Even though you can sit down with a personal. Lending decisions are made from a centralized loan office at head-quarters which is hundreds of miles from small town USA. Depending on loan size, community lenders can decision loans at the branch and have answers within 24-48 hours. The community banker knows their customers and the customer capacity outside of the ratios.

They work with you where you are andnot from an electronic application. “Close relationships between businesses and banks also are suggested by the frequency with which community bankers meet with, provide advice to or otherwise monitor small business borrowers.” (Community Banking, 2016) The frequency of the meeting may vary from quarterly to annually, but the premise is based on the needs of the customer.

I support community banks because I used to be a part of this financial sector. It brought me joy to accommodate a customer’s needs or offer an alternative solution. Community banks are from a trusted friend for entrepreneurs. Start building your relationship today.

Resoures

Community Banking. (2016, September 28). Retrieved from Community Banking: https://www.communitybanking.org/~/media/files/communitybanking/2016/cb21cpublication_2016.pdf?la=en

Rogers, S. (2014). Entrepreneurial Finance Finance and Business Strategies for the Serious Entrepreneur. New York: McGraw Hill.

The Statistical Protal. (n.d.). Retrieved from Statistica: https://www.statista.com/statistics/318034/community-banks-number-usa/

Bank on You

The life-line for creating a successful start-up entails securing capital. Be it your money or someone else’s, the financing of your big idea or dream translates into cash flow-in and out. Maybe you have been saving for this new venture or you are enlisting financial support from venture capitalists or angel investors. Another alternative funding source could derive from a financial institution. Any external funding support will require that you prove your ability to be trusted in order for risk to be taken by others. You can risk your own money at your expense, but when you enlist the help of others, your dream becomes their expense or profit.

You, the entrepreneur are the key factor for debt or equity financing. What makes an entrepreneur attractive for risk? “Ideally, investors prefer people who have both entrepreneurial and specific industry experience.” (Rogers and Makonnen, 2014, pg. 2) Investors are more comfortable with those who have the know–how to make it work. It is similar to applying for a job. The employer may require a certain degree level and years of experience or the years of experience in lieu of the degree. They want to see a proven track record of success.

Investors rate entrepreneurs with an A, B, or C depending on experience. The table above taken shows how these ratings are determined. An A rating is given to a person who has “…experience as an owner or even an employee of an entrepreneurial firm and also experience in the industry that the company will compete in.” A B rated entrepreneur has “…experience either in entrepreneurship or in industry, but not both.” (pg. 2) The C rating, which is least desirable, with no entrepreneurial or industry experience, sends a red-flag to investors. No history in business says that you are still a dreamer.

RATING                                                       EXPEREINCE                                                   A                                                                      Entrepreneurship and industry            B                                                                      Entrepreneurship or industry                  C                                                                      No entrepreneurship or industry Table

1-1 (pg. 2)

Position yourself for favorable outcomes. The life of your business depends on your expertise. A race car only experiences the checkered flag because of the driver’s practice, perfection, and pursuit. Even though a race car only has a seat for one, the help of the pit crew (management team) creates a winning situation for everyone. But it is you, the driver, which everyone is banking on to come across the finish line first. Bank on you to make the business successful and others will bank on you too.

RESOURCE

Rogers, S., & Makonnen, R. (2014). Entrepreneurial finance: finance and business strategies for the serious entrepreneur. New York, NY: McGraw-Hill.