I used to get teased by my managers, bankers, lawyers, and CPAs about how long I would drag my feet on new technologies. They complained that we were among the last businesses to buy a fax machine (OK, I am dating myself a bit here) and PC work stations. Everybody else had voice mail and e-mail long before we did, so they claimed. But a new study released by the NFIB shows I am not alone in my conservative approach to new technology (access the report via this page at NFIB’s site).
Bank web sites with lots of bells and whistles may appeal to some, but they are just window-dressing as far as the nation’s small-business owners are concerned. Only half do any Internet banking, according to a NFIB National Small-Business Poll. The study found that over the past three years, slightly more than half–54 percent–found technology at their principal bank increasingly helpful. But more than one-third asserted that technology had no impact on them at all, and 11 percent complained that technology is getting in the way. Now those are my kind of people!
So what matters most to small business owners? A convenient location is the most important bank characteristic for conducting their firm’s banking business (62%), followed by a bank whose personnel know the owner and the business (57%), and a reliable source of credit (57%). Who needs fancy technology when you have a banker nearby who knows you and your business and is ready to loan you money when you need it?
One of the biggest complaints small-business owners lodge against banks is staff turnover. Only half of those surveyed have been served by the same account manager over the past three years. Twenty percent said they had two, 13 percent had three, and 7 percent report having no manager at all to help them. This is not a new problem. It really accelerated back when banks were deregulated in the 1980s. You would think banks would have solved this problem by now.
The NFIB survey found that small-business owners are generally happy with their banks and they are slowly moving toward electronic banking that will bring greater efficiencies and lower relative costs over the longer term. The key word here is slowly. We eventually got that fax machine, but not until the prices came down and I was convinced that it would actually help our business perform better.
Maybe we are not really Luddites. We are just prudent when it comes to our money.
Dr Jeff Cornwall
Co-founder of The Entrepreneurial Mind, serial entrepreneur and professor of entrepreneurship.
Hahaha, I like this one, Cornwall.
Because I understand what you are saying. I am very much a technology enthusiast, however, I tend to agree with the small business owners who still like to see faces at their banks when they do business.
It reminds me of a story that I feel is relevant. I once took an online class, and because of an emergency situation, I missed the deadline to take the online final. I quickly emailed the professor to explain, however, he politely replied, “I don’t know you from Jack. I have no concept of your integrity or character. There is no way for me to know if this ’emergency’ actually occurred and because of the nature of this class I will not re-open the exam for you to take. Sorry. You fail.”
It is the only course I have failed in my entire life.
I understood his point. There was no reason for me to expect any favors based upon the kind of person that I am. To him, I was an email address or a student account number.
There will be situations that arise in any startup business where it will be extremely important for your banker to know you, to have a “good feeling” about you and your integrity. And possibly, grant you a few favors.
(I retook the class an received a 98%)
Amen…Just because you have a new hammer it doesn’t make everything a nail. Too often large corporations waste millions of dollars investing in new technology that may improve efficiency. However, it may not improve effectiveness. I have witnessed this several times in the information technology field. The new flashy system has several features, but the core 80% of users only utilize 20% of the system functionality. Many of these companies would have been better off to stick with the older, less flashy system.
In the end, large corporations may have the budget for these types of expenditures, but small businesses must wait for new technology to prove itself.