Marketing Financial Services to Small Businesses - US - March 2012
Small businesses are a critical part of the U.S. economy, accounting for 50% or more of total employment in the U.S., according to the Small Business Administration. With these businesses having been hard hit by the challenging economic environment over the last several years, many are struggling to find ways to thrive or even simply to survive. These decision makers are looking for ways to manage cash flow, fund startups, or cover unexpected expenses, which is creating opportunities for financial institutions, card issuers and other lending sources.
This report examines key issues facing the financial industry as it relates to the small business market, including:
- The small business market is large and diverse, as such they do not constitute a homogeneous segment; therefore, marketing to small business owners requires targeting a number of unique small business segments.
- Over $400 billion is spent annually on financial services by small business. Mintel’s research shows that as a segment, small business owners look beyond just the lowest-cost providers, they are also looking for the high value alternative.
- The recession had an impact on the landscape of small businesses from 2006 to 2008 and the number of small business employers shrank. Because of the challenging economic conditions in those years, some employers simply could not afford to cover payroll. At the same time, a good number of non-employer firms came into being when people found themselves unemployed and decided to go it alone.
- While small businesses have widely adopted merchant services, they remain concerned about the added costs of using cards to accept payments. Small businesses are also heavy users of credit cards to pay their own bills, cover cash flow, and even to expand. Over 50% of small businesses use cards for day to day expenses—some by choice and some out of necessity.
- All businesses have a fiduciary responsibility to ensure that consumer payment information is secure, and this is a priority for many small businesses. There are a number of emerging technologies which allow for quick funds transfer and safe transactions. These technologies will likely make convenient access to a bank branch much less critical over the longer term.
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