The business Owner Mind

Transcription:

Martin Wise (00:09):

We will roll. Thanks everybody. Great to see you all. And we've got two more sessions right before the line dancing, so here we go. So time is short. We've got 30 minutes for these sessions and so we wanted to try to really pack this panel with value. Its title is around the small business owner's Mind and really the intention is to get into the importance of the fact that all business owners are not the same and therefore how do banks change their service models and go to market approaches to accommodate that fact because time is scarce, we decided to pack the agenda with not just two bankers but with two business owners as well. So Bobby and I will be happy to represent the business owner side of this, but we're also thrilled to have with us Courtney and Kevin who will introduce themselves in a second to make this a really fulsome conversation.

(01:08):

I was relieved earlier to learn that the average probably this is for you too, the average business owner now is apparently 63 years old, which is me in two weeks time. So I'm nice to know that I'm average and we're looking forward to the discussion with you today. What we will do introductions first and then Bobby will run through some, introduce the topic by reviewing a few slides and work he's done on the personas of business owners himself. But I'm Martin Wise, I'm the founder and CEO of Roll Pro. We're a business development and relationship management platform that luckily is being used by half of the top 50 banks in the country now in business banking and a lot of other community and regional banks as well in business banking and commercial banking and wealth. And then to my right and we'll go down Kevin.

Kevin Von Atzigen (01:59):

Yeah, I'm Kevin Von Atzigen, Director of Commercial administration at UMB Bank. And really what that means is I'm more in a strategy and operations role helping the teams, the bankers and leaderships bring their product to life and trying to give them tools and resources to execute that. Awesome.

Courtney Theis (02:19):

My name's Courtney Tyson and I am with Pinnacle Bank here in Nashville, Tennessee, and I'm a Financial Advisor for small to medium sized business owners in our marketplace.

Bobby Martin (02:31):

Hi everyone. My name is Bobby Martin. I'm the founder and CEO of Vertical iq, a provider of industry intelligence to help bankers prepare for meetings with business owners and understand the problems they have and the risks lending to particular industry. Great to be here. Thank you.

Martin Wise (02:49):

Okay. So today as we say, we will focus mostly on the fact that not all business owners are the same, and rather than go into every single sub persona, Bobby, are you going to come here to do this? Sure. Bobby's going to speak to two or three different persona that we've identified before and then we'll turn it over to Courtney and Kevin to explain somewhat of how Pinnacle and UMB take this to market. So green, green is forward.

Bobby Martin (03:19):

Sure. Wonderful. Thank you. So my position right now just for a few minutes is to kind of tee this up, what we're talking about when we're talking about the mind of the small business owner, maybe five, 10 minutes max, and then we'll have plenty of time to speak with the panelists to get their perspective and also your questions. But the big point we want to make here is that not all businesses are the same. Business owners are the same as you know. Let's start with some Barlow research. You all know Barlow research and they're very, very good, very good to the industry because they do a wonderful job of surveying to understand what business owners think about banks and also what they think about financial services. But what you can see here on this slide is a real gap between what business owners really want from their bank around understanding their objectives or being proactive with suggestions, knowledgeable about their industry, and understanding the company's cash flow, which is so important to this. But you can see business owners consider these things very important, but their performance against those, the banker's performance against these that are a little bit lower than they want. So let's dive in to sort of understanding why that's important in the first place. Why is it important to understand the mind of the small business owner? First and foremost is a trusted advisor status that I thought the CEO of business banking at Chase.

(04:48):

Ben did a wonderful job today articulating what small business owners really care about. And you can kind of see just better to understand lending risks as well by understanding who these people are. And then of course a percentage of the income, which the presentation was right after that, it comes from small business. So the better we understand our customers, just like in marketing and sales, the better we can serve them. So today we're going to talk about individually owned businesses for a second family and partnership owns, and then these innovative growth minded entrepreneurs because all three very different in their approaches. Let's start with Main Street, main Street businesses, the ones that are individually owned, these are craftsmen and women. They're passionate about their craft, kind of like the CEO of Chase was talking about. The business is tied to their identity. This is their passion.

(05:51):

They excel at the trade, but not so much at finance, right? Their struggles is that they worry about what will happen to their business when they go away. The business is very dependent on him or her. So what can the bank do to help these business owners with that particular industry? That particular issue, first of all, that has to be earned, but you can see here some of the tips for working with them is try to become more like them. Not fake, but come to where they are. Don't be a stiff banker with a trades person and relate to their industry with an innate curiosity. Not necessarily expertise, but what about these family business partnerships? This is a different dynamic. The business may or may not be larger. A lot of times it is a larger business. It doesn't have to be, but one thing is for sure if it's this type of business, there will be a dynamic between the owners, a dynamic that they care very deeply about.

(06:53):

There's a hundred percent chance now. You can't just come in on the first meeting with a small business owner has a partnership or a family owned business and start talking about their intimate business. But if you get to that point, you have really earned yourself as a trusted advisor. So you should ask, your bank should ask itself, how do we get to that point? And these 50:50 partnerships are particularly complex. 51:49 aren't quite as bad, but when it's 50:50 it's very difficult to make decisions. Sometimes decisions do not get made, but if a bank can get involved in that complexity and help solve problems, they can really earn that status of being a complete bank to that customer. Let's talk just for a second about the innovative growth bonded entrepreneurs. These people, they actually are trying to change the world. A lot of times it can be a little more risky, it'll have some form of innovation with it, but they have growth in mind.

(07:52):

So if they have growth in mind, that would be an early question. You ask yourself, what are your plans for your business in terms of growth? Are you trying to change the world? Are you creating a lifestyle type company? Right? And more importantly, when they're going through this process of starting these businesses, it'll come across as if they don't know what they're doing because they don't, don't necessarily throw them out, is not a good opportunity for your bank because that is the formula and a lot of these businesses do become very successful and therefore very important customers of the bank. And then of course you don't want to take lending risks with these companies necessarily. I mean beyond 99% repayment, however, they don't expect that you can help them raise capital other ways. So it's the same thing too, just helping them grow, focusing on capital, focusing on the things they care about, helping them find customers are absolutely key. So these three genres sort of tease this up to where we're heading as a panel so that we have a conversation about how your bank and banks in general relate to these different types of businesses and business owners.

Martin Wise (09:17):

Thanks Bobby, Great. One more. Thanks. Yeah, I think the other slide that Ben put up this morning from Chase when he was talking about the importance of engaging with business owners, it was the slide that said only the lonely. And I don't think Bobby and I are necessarily lonely kinds of people. We have a good support network, we've been a good support network to each other, frankly. But I think it does reinforce the notion of how in business banking, there's an enormous opportunity for a banker to just step in and fill some of that space that a business owner is looking to fill with ideas and just general support. It doesn't have to be terribly like nuclear science, but they're looking for help and just someone to be interested in the business that they're building. So I think let's move to Courtney and Kevin and as we've prepared for this panel, it's just fascinating, two different banks, two different initiatives in terms of how you engage with business owners and how you think about these different personas to engage with them differently. Courtney, if you can, you're the local gal, so you can go first.

Courtney Theis (10:35):

Well, I think from Pinnacle's standpoint, we all have the same products. We all have the same type of loans and deposits, if you will. And one of the ways that we differentiate from our competitors is we offer a program for our business owners, whether they are a client of ours or not, to come in and engage in an eight week series of what we call a mastermind group. Mastermind series. And the mastermind is built upon the book of E-Myth by Michael Gerber. And we go through an eight week series with about 15 business owners at a time. None of the industries match. We're not looking for specific industries, just small businesses only, and go through on how to help them build a world-class company from start to end. And it sets it up a lot like if you were buying a franchise to have the policies and the procedures in place, even if you'll never be a franchise or sell the business as a franchise, that you have all of the different policies and procedures as a small to medium sized business to be able to make your business run efficiently.

(11:54):

And it also connects the 15 business owners in the group because it is very lonely. And we are in the middle of the 2.0 right now. So there's a starter series that's a 1.0 that kind of sets the baseline for everything. And then the 2.0 is actually putting everything in place, a business plan, marketing, social media, anything and everything related to your business. And one of the things when I told the group that I was going to speak at the American Bankers Small Business Conference was what would you want to tell other bankers across the nation? And one of the first things that they said was, it is a lonely world as a small business owner, and it is. So connecting them with potentially 15 other small businesses in the market, they are creating their own alumni association and having different individuals in the community that they can bounce ideas off of. We do not talk about the bank in this series at all. We're not there to sell the bank, but organically we get a lot of business out of this series from the first series to the second series. And it is just a way for us to do something much different than what our competitors are doing. And it also goes on to do other types of books or lunch and learn breakfast with your banker series with the business owners in our local communities.

Martin Wise (13:31):

That's great, Courtney, and help the audience to understand a bit more as well. In terms of the geographic way in which this is organized, is this around just a particular branch? Is it around a cluster of branches? What's the right scale to operate a program like this mastermind program?

Courtney Theis (13:48):

So we do it early in the morning because a lot of times business owners, once they start their day and get going, they can obviously they're going to choose their business over going to a book club or a mastermind class. So we do it at eight o'clock in the morning at our office. We have a learning center, so each one of our offices has a large learning center that will hold up to about 25 people. And so we have that early in the morning, eight to nine 30, and we have it purposely in our facilities because then they come in and experience our culture. So it is at our office early in the morning, hour and a half.

Martin Wise (14:29):

That's great. That's great. I'm sure we'll follow that up a little bit more in a minute. But Kevin, from the UMB perspective, how do you think about these business personas and how are you engaging people that way?

Kevin Von Atzigen (14:40):

So our personas are probably broken up a little bit easier just in traditional business segments. UMB has been around for 110 years and out of that we have really made a name for ourself in the middle market space. But over the last 15, 20 years is when our business banking team really started to build and grow. And even in the last three years is when we've added now small business. So I think the way we've thought about those personas is it's started out from a network of relationships. That's really what how UMB grows is very organic through that. But then we identified that you can't always infinitely grow that way, therefore you need an approach. And that's where you break apart the business banking groups, which are a million to 25. And then small business is everything under there. I think what sets UMB apart a little bit and the program that Pinnacle does is absolutely amazing.

(15:34):

We take a more one-on-one approach. We try to still instill in the bankers to be knowledgeable to care about the business of the customers that they're serving and to actually make an impact on a personal level to get to know them back to the personas, this is everything these people are doing or living their life through their business. And so just like you make a new friend, well it happens to be that sometimes these business owners are actually dual personality, right? There's the individual themself and then there's the individual that runs the business. And just being really careful and purposeful in those engagements is what we try to instill in our bankers.

Martin Wise (16:12):

That's a great comment. These are complex relationships as well, right? Because there's the business owner, the person, and there's the business owner, the business, and we see, I know Bobby and I have talked about this before with respect to our own businesses, the more and more interested bankers to, it's talked about a lot, but I think in this environment with interest margins being compressed and looking for fees and so on, the importance of the wealth business or the wealth relationship as a piece of the puzzle, it was interesting to hear that, hear Brian from Comerica upstairs, speaking to that dynamic and the importance of embracing both the personal and the business side of a business owner. Kevin, maybe to come back to you and then we'll go to Courtney. How do you embrace the opportunity to handle both sides of a relationship or do you stay away from that complexity?

Kevin Von Atzigen (17:10):

Well, my background comes from just getting in there and figuring out what needs to be done. But to scale that and an organization, it requires a lot of internal relationship management. So we make sure that every team has a dedicated treasury officer that they can go to private bankers, private wealth officers, and we take that team sales approach whenever we are going, even on a initial call, we'll make sure, alright, how much information do we know about this particular prospect? Who else needs to be involved? Or who do I need to consult before I go to make sure whenever I do have that conversation that it's meaningful? And back to the point of we're not out there just looking to sell, we are being curious to uncover needs that banks don't often offer. And that's where I think the personal part comes into play as well is being able to connect them to your network or other relationships within your network, perhaps the private banker you work with. And just as much as we try to be outbound and engage, we're really trying to make sure that our teams are in sync so that way when we come out to market, it resonates.

Martin Wise (18:18):

I think it's back to that thing that Ben was saying upstairs as well, that small business owners in general don't necessarily know what products and services they even need. So the value of this sort of team approach that you're talking about is that it engages a conversation that some opportunity may just come out of and maybe tucked away for the future too. Courtney, again, from how does your model look to bridge that kind of wealth and business banking kind of intersection?

Courtney Theis (18:48):

So we really don't have the silos that a lot of banks do have, and we welcome the fact to be able to do both sides, the small business and the personal with the client all at once. But just as Kevin had said, it takes a little while to get to that point. Once, you know, can't just sit down with a customer first shot and say, these are the five things that you need. Getting to know the client, getting to know the client's business. It's all about them at that point and trying to decipher exactly what they need for their family, but also for their business and working with our entire team, I'm the quarterback of my clients and then I will navigate from there. Do we need to pull mortgage in? Do we need to pull the wealth advisory group in? Who do we need to pull in to be on our team with this specific client?

Martin Wise (19:46):

Bobby, what about from either your own personal experience or the experience of working with other vertical IQ clients? What have you seen as good practices here of working with these different types of business persona?

Bobby Martin (19:58):

It works. When I was a banker in the nineties, I was a calling officer and we were calling one of our big customers and he was sitting in the front seat. I remember where he was, and my boss asked him, what makes this competitor of ours, Sam Catlett was his name, what makes him such a good banker? And his response was that he's smart and ask good questions. So the question is, how does the bank, your bank lean into that? How do you have bankers who are come across as smart and ask good questions? What does that look like to your bank and how do you train around that? What tools do you provide to make them smart? And what does smart really mean? Because that's a pretty loaded thing. So y'all may have advice about that. What makes your banker smart? You go see a doctor, they have a trusted advice. I see my doctor once a year for 20 minutes, right? Dr. Sadicki, he is my his doctor too. My

Martin Wise (21:06):

Colleague, I thought you were going to say he's in the room. Oh, well he's in the room.

Bobby Martin (21:11):

But Dr. Sadicki, I think about him often because he's my trusted advisor. He's all things wealth. He spends 20 or 30 minutes with me a year at the most. He's smart and he asks good questions. Well, what does that look? Because he gives me great advice. How does the bank become Dr. Icky? Now he doesn't spend an hour preparing for his meeting with me, but he does spend 10 minutes probably and looks at the charts and the nurse gathers all the information and all that. So that's what I would say. And you all may have advice on how you make your banker smart and ask good questions. You can do that. It solves a lot of things we've been talking about at the show in general.

Kevin Von Atzigen (21:51):

Well, one of the ways that I think is through tools, resources, educations, software, but really without them being proactive and engaging, then all that knowledge actually can't even be used. So that's one of the biggest things that I try to encourage is that the banker's outreach not just for product opportunities or for topics like fraud, operations management, bring insight that banker that your clients or prospects are not getting on a daily basis because we have an infinite amount of intelligence that passes between our bankers just through conversation. And if you can connect those dots and then bring that as a little aha moment that really moves the needle, it also goes back down to just connecting them to the resources that you have to your network. This is kind of a weird story, but there's nothing that I'm more proud of than the time that a client actually reached out to me, not for a business banking deal or a loan or a deposit.

(22:50):

It's like, Hey, can you get me access to concert tickets for this show coming up? Just something out of the norm. And that told me that I'm top of mind as a resource regardless of what it is financial or business sense there. And I'll end it with this because as you have a knowledge base and that you are being proactive, you're throwing a lot at people and there's so much information out there. So what I really try to encourage any banker that I talk with on a one-to-one basis and then the resources that I put together for our entire teams are making them make sense of all the information. Don't throw out a multitude of options, but help the client or prospect come to their own conclusion and empowered him to make that decision.

Martin Wise (23:36):

That's a great point. Megan's got the microphone at the back. We've got five minutes to take any questions. I've got a couple of others, but I'm sure the crowd have some too. So here we go.

Bobby Martin (23:49):

Okay, well, I want to talk about Dr. Siddiqui.

(23:55):

If you get older, Dr. Siddiqui is going to want to see you more often, and I think that's true for everybody here. That's making small business lending decisions, having those relationships with your customers as they get older and approach that average age of 63. Not only does Dr. Siddiqui want to see you, he wants to see your son or daughter who's going to be taking over the family business, right? And the complexity becomes more intense. So thoughts on how to make that transition as we're talking about personas. You've got the average 63-year-old owner and then you have the younger person that's going to be coming and making that. I think that's a great generation gap.

Martin Wise (24:45):

I mean, I was at Merrill Lynch for 20 years before I founded Roll Pro and we were talking about generational transfers of wealth 20 years ago, and now it's happening and it's very real, as you say. And so yeah, this notion of, I don't have Dr. Siddiqui, but I have somebody else who's good too. How does generational transfer come into a business bank? It's a wealth management discussion, but how does it impinge upon the business banking conversation? I mean, Courtney.

Courtney Theis (25:16):

I think being proactive and not reactive most of the time with your clients to make sure that they understand exactly what you do. We're not just there to do loans and deposits that we are your advisor as well. Let's talk through this. Introduce me to your son that's going to be taking over the company, especially if the son is not played a day-to-Day role in the company. And it's kind of coming in on the back end to make sure that everybody in the company that you know, the family, the kids, the grandparents, I mean honestly, that's how you build your book of business is by knowing the family and it's working really smarter, not harder by gaining those relationships internally with the business, the business owner and their families.

Martin Wise (26:07):

Kevin, what about you?

Kevin Von Atzigen (26:09):

Well, I think for what UMB does is we do pride ourselves on being strategic and long-term outlook. So succession planning is always a conversation that we coach our bankers to have, and I think it's a sensitive subject because you're sitting there trying to win business. But what we're saying is, well, what about when you are no longer alive? And that's a scary subject to bring up, but we do find that there's a lot of comfort when you approach it that way. And that opens those doors to the other introductions. And I see the divide on generations actually external and internal. You have your senior bankers and your junior bankers, and there's kind of a crossover there where the senior bankers have opportunities to introduce those younger bankers to more people within that organization. And so it seems a little bit backwards that you'd want multiple bankers on a deal, but there is always a primary relationship manager. And then if you have somebody that connects generationally with a different group, then why not make that an opportunity to deepen the relationship further?

Martin Wise (27:18):

Bobby, this is going, this is a circular thing. You and I have been on client visits before where people recently have been asking us how do I find use vertical iq and Rail Pro to find funeral directors and churches because they're cash rich industries for deposits. We're going around here. There was another question here.

Audience Member 1 (27:37):

Yeah, thank you. I've been hearing the stories about bankers having great programs, reaching to the customers, offering multiple solutions, but the fight is that 80% of small businesses within the United States die within the first year because they don't know how to manage the money. They don't have access to the money, which tells me pretty much you're reaching to the 20%. So there's a great opportunity out there. What is being done for that People, for that 80% that are pretty much under filth mode. They don't go to the bank. They are in remote location. They don't want to show up to the bank, but still need help. What do you guys plan to do? What are you guys are doing?

Courtney Theis (28:19):

I think that from my standpoint, I never tell anybody, no, if I'm going to decline their loan, I'm going to decline their loan. But it's not a no. It's here what you need to get there. This is how your cashflow looks, or this is how your organization looks, this is how your tax returns look. It's all about educating them on what the next step is for them to get from not being able to get lending to being able to get lending, but also having multiple resources that you can use as well. And there's no shame in referring them to another bank or another banker if it's not something that your bank specializes in. And there's no shame in saying no because a lot of times I think the small business owners are not getting the advice that they deserve from their bank or their banker, that you have to take time to understand really what that business is about.

(29:20):

And a couple of weeks ago, I had a client to say the very first, and this was a prospect at the time, the very first time I met you, you took four pages of notes. And finally he asked me, he's like, what were you writing down? And I was like, there's no way I'm going to remember all of this. I'm just going to be really honest with you, but everything about your business, your family, everything that you mentioned, because I'm never going to be able to give you the best advice if I'm not putting this together for you individually as a small business owner because no two businesses look the same. So I think that we've got to be able to educate them on what their company looks like and what their company may or may not need before we can continue to lend to them also, but also make sure that they understand maybe the missing the holes in their company that are not working right now. It's okay to educate them. I hope that answered that

Audience Member 1 (30:14):

Partially, to be honest.

Bobby Martin (30:16):

Their program answers it in a way. It's a great answer. I mean, what else can the bank do?

Audience Member 1 (30:20):

Do is the key to that. But remember, they don't show up to you. They don't let you know that they're there today. They might not be in a bad position, but you as a data owner understand you can do analysis and predict that they're heading towards the ditch, right? Because you can tell the numbers, good analysis, there's bad, but they don't know that yet.

Courtney Theis (30:42):

So there's nobody in my portfolio that I don't know. So that's the banker's fault. If they don't know who that client is, that goes on that banker for not knowing who's in their portfolio. Good answer. And being able to call on them. So even if they can't come in the bank to see me, I also have a phone, I also have a computer, and I also have full capability to do Zoom that if it's not convenient for them to come into the bank, then we'll figure it out. But there's nobody in my portfolio that I've not met with.

Bobby Martin (31:11):

How many Companies your Portfolio, if you don't mind me asking

Courtney Theis (31:13):

I would probably say I'm close to a thousand at this point.

Bobby Martin (31:16):

A Thousand. Wow.

Audience Member 1 (31:18):

See, that's the problem because they are a company of one or two. They're too busy to be doing accounting, sales, all this stuff.

Courtney Theis (31:26):

So then they're going to fail if they're too busy to do, that've got to take time.

Martin Wise (31:30):

All right. We can definitely take this offline, but Megan, were you waving to say Yeah. Right. Okay. Well, thanks very much, everybody. Again, I think the two couple of things about the conversation, the importance of engaging with business owners because they are all different. But also I think we heard with Comerica upstairs and now we've heard with both Pinnacle and UMB in two different ways, how to leverage bank resources to, whether it be the relationships themselves or your premises and your network to bring business owners together and help to address some of this need for loneliness and network. So thank you. Thank you all for your time.