Small Business Lending Up for First Time in 10 Quarters

Small Business Lending Up for First Time in 10 Quarters
Why, When, What and How to Outsource Tasks
4 Startup Founders Discuss How Customer Engagement Has Changed
An Elevator, Escalator and Stairway Pitch: Cartoon

Posted: 22 Mar 2013 02:00 PM PDT

Small business owners received some good news this week as it was reported that lending to them has increased for the first time in 10 quarters.

According to a report at Inc.com, the U.S. Small Business Administration released its quarterly report this week showing the loans to small businesses have increased for the first time in more than two years, a potential sign that some companies are coming out of the economic recession.

Overall, lending to small businesses increased by four-tenths (0.4) of a percent, from $584.1 billion in September last year to $586 billion by the end of 2012. Less restrictive standards for commercial and industrial (C&I) loans led to the increase in lending to small businesses. Commercial real estate (CRE) lending continued to lag, according to data from the Small Business Administration report. Demand for both loans continues to be high, a sign that businesses are recovering from previous economic downturns.

The SBA report notes that loans in all size categories (under $1 million, between $100,000 and $1 million, and under $100,000) all saw increases during the final quarter of last year. Big banks lent more to small businesses than smaller financial institutions and the gains in big bank loans offset the declines realized among smaller banks.

We reported last year on this trend, with bigger financial institutions lending more to small businesses even as loans from smaller banks were approved less often. Big banks have been criticized in the past for not lending to smaller businesses. According to the SBA report:

"Larger institutions of $1 billion or more helped offset the declines in lending by the smaller lending depository institutions. Small business lending by institutions with assets of $50 billion or more followed the general trend and remained unchanged."

Wells Fargo loaned the most money to small businesses last year, according to Inc.com’s data.

The bank loaned $32.8 billion through 664,542 loans. Bank of America ($26.2 billion), JPMorgan Chase ($19.8 billion), American Express Bank ($16.9 billion), U.S. Bank ($13.8), PNC Bank ($9.9 billion), Branch Banking and Trust Co. ($9.1 billion), Citibank ($9.1 billion), Regions Banks ($6.9 billion), and TD Bank ($6 billion) rounded out the top 10 banks lending to small businesses, based on data provided by SNL Financial Services.

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Why, When, What and How to Outsource Tasks

Posted: 22 Mar 2013 11:00 AM PDT

outsource

Is it a good idea for a small business to outsource some tasks?

Contrary to what many small business entrepreneurs think, it is often a great idea to outsource certain tasks to others. But, before you make any decisions to outsource, here are a few things you need to think about.

Why, When, What and How to Outsource Tasks

Why Outsource Tasks?

You may have the talent to do it all. However, if you indeed do it all, it may become difficult to achieve the ultimate objective – to enhance the prospects of your business. While you may be able to handle everything on your own, you may not be able to focus on the more essential elements of the business.

It is possible to streamline your business if you outsource certain tasks to vendors. By doing this, you will be able to concentrate on the core areas of your business. The first step may be a little difficult, however, in the long run it will lead to an increase in efficiency.

Another advantage is the cost-effectiveness of outsourcing. When you decide to outsource specific tasks to others, you need not employ a large number of people or buy or rent office space to accommodate them. This can considerably reduce the burden of overhead and cut business costs.

Advanced technology has made it easier to appoint professionals from any part of the world for specific tasks. The availability of highly skilled freelancers combined with the accessibility of their services enhances the suitability of the option to outsource.

When to Outsource Tasks

For small businesses, outsourcing can be advantageous from the beginning. When you start a business, you need to make sure that you do not lose your focus. In such circumstances, if you have to handle tasks such as attending to calls or bookkeeping, you may not be able to do justice to the more important tasks at hand.

There is no right time for a business to outsource. The way your business works, the staff members you have and the tasks they need to handle daily play a significant role in the decision about when to outsource.

While a very small business can capitalize on the advantages of outsourcing from the very beginning, a medium-sized business may not need to outsource daily tasks considering this option only if they cannot handle new projects on their own. However, this may only be appropriate if appointing a full-time employee is not justified.

If you feel that you are the only one who can manage everything efficiently, but do not find adequate time for the most important tasks of your business, it may be the right time to let go of your complete control over certain tasks and outsource them.

What Tasks to Outsource?

The first thing is to identify the core areas of your business. Any tasks directly associated with these areas must not be in the list of tasks to be outsourced. If the core business areas are outsourced, your clients may not be able to get anything unique from you – a mistake a small business cannot afford to make.

For example, a web design business must refrain from using third-party providers for any tasks related to web designing, the focal point of the business. However, the business can outsource tasks such as payroll management or inventory management to contractors.

The common tasks that small businesses may choose to outsource include the following:

Repetitive tasks: Data entry is a good example of a highly repetitive task. While you may use your in-house staff for this, it may be a better idea to outsource this and employ the in-house staff for more useful work.
Specialized tasks: IT support can be the right example of this type of task. While you may need IT support for your network, you may not need to appoint a full-time employee for this purpose. In such a situation, a contractor may be ideal for this specialized work.
Expert tasks: Financial analyst is a good example of a position requiring a high level of expertise, but that you can still easily outsource. It may be difficult for a small business to pay for highly-skilled executives. However, you can appoint a financial analyst on a contractual basis at a much lower cost.

How to Outsource Tasks

After you have decided when and what to outsource, the next job is to find the right partner. The best way to do this is to get recommendations from your business associates and contacts. You may also find a number of contractors from online platforms dedicated to connecting businesses with outsourcing partners.

Finding the right partner is all about understanding whether your requirements correspond to their specializations. After you have selected a contractor to outsource to, the next task is to draft a contract to specify every detail of the outsourced tasks.

The best way to ensure that the partnership works out is to be clear about everything. Because you are the one providing instructions, you may be the one to blame in case of any misunderstanding. To ensure proper communication between your business and your outsourcing partner, it is best not to leave anything to assumptions.

Keep in mind that the contractors you appoint may need some time to adjust to your work processes. Also, keep away from micromanagement as it may hinder your outsourcing efforts.

The entire idea of outsourcing is to save time – and focus on the core aspects of your business.

Outsourcing Photo via Shutterstock

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4 Startup Founders Discuss How Customer Engagement Has Changed

Posted: 22 Mar 2013 08:00 AM PDT

It takes a great deal of time, effort, passion and commitment to create successful businesses today. Recently I had the pleasure of hosting Social Biz Atlanta 2013 where four company founders of inbound marketing and CRM startups discussed how customer engagement has changed in the past 5 years with the rise of social media. They shared a number of their experiences and insights leading them to create successful businesses, which eventually were sold for a combined total of $250 million – and led them to begin the process all over again with new startups.

Kyle Porter, Founder of SalesLoft leads this Q&A with T.A. McCann, Founder of Gist (acquired by RIM), Jon Ferrarra, Founder of Nimble, and David Cummings, Co-founder of Pardot. Below is an edited transcript of their on-stage conversation. You can see a video of the whole session at the bottom of this post.

* * * * *

customer engagement Kyle Porter: T.A., from your first businesses and your early entrepreneurship to now, how have customer expectations changed? How has your understanding of customer expectations changed in the market place?

T.A. McCann: One is on the customer experience side. People's tolerance for a product that doesn't work ordoesn't look like it works very well is small and getting smaller. So you have to hook them very quickly into some sort of value before they'll make a choice to move on to something.

Second, the engagement models. When we started Gist in 2008, Twitter was just starting to happen. The engagement model, certainly from customer engagement and supportive engagement, we wouldn't have thought about that at all. How a big portion of our engagement, both in terms of marketing and support, happens on primarily Twitter, followed closely by Facebook and Linkedin.

Twitter, I think, is the most interesting part of that change over the last few years.

Kyle Porter: Jon, when you all built Nimble, how did you account for the way that the customer wants to react? How big a role did that play in the products creation?

Jon Ferrara: One of the things that I learned early on when I first got into sales, is that sales people don't work in a vacuum. They work as part of a larger team and everybody on that team is part of that conversation. I think that in today's market place, it is more critical than ever.

What is going on is that the whole customer journey and experience is radically shifting where customers are doing their own homework. They are making their own buying decisions. Then they are starting to yell back at companies on every channel they want to, whatever department they want, and they expect an authentic and relevant response in a timely fashion from that department.

Most companies aren't prepared for that.

Kyle Porter: David, your business is known for its culture. Can you share some anecdotes about Pardot? How does this air of transparency, openness and personality come out in your messaging and your branding, and in customer relations?

David Cummings: We were really struggling with how to differentiate ourselves from the main competitors in the market. After going through that for about 6 or 12 months, we realized that the market at the time, this was back in 2007/2008, was very much traditional enterprise software.

Pricing wasn't published, two year contracts were common place and salespeople were pushy. It was just a very traditional enterprise software model. We said, “What happens if we flip this on its head? What if we made our pricing totally transparent? What if we had all month to month, no contracts at all? What if we take all of our knowledge base, all of our on-board materials, even our forum, and make it totally public online? What if we really put everything out there?”

One of the things that we would frequently say internally is, “The best form of sales for us is to educate our customers.”

The best form of sales is really education, knowing that if we educate them as well as we could, providing everything that they needed in a self service manner, at the end of the day they would have a better customer experience.

Kyle Porter: T.A., I have heard you talk a bit about the early days of Gist. How you would set up weekly events where you would have customers come to your office, and you just engage deeply with them.

T.A. McCann: I am really a product kind of guy. I am an engineer. But I really enjoy the direct interaction with the customer.

When I first built Gist I just thought it was for sales people, so I would invite them on Wednesday nights to come to the office, one or two of them. I would spend the first 10 minutes trying to understand what they do. I would learn about new things, whose blogs they read, what technology they use. The next 10 minutes I would show them my very below average version of my product, and get their feedback. The last 10 minutes of their interaction, I would try to share with them a bunch of other solutions I knew that might solve their problem, contact management, CRM, etc.

I did that every Wednesday night for 18 months. So as the team went from me to three, to six, to 12, to 15, the whole team would participate in that. We would stay late after that and drink beer and eat pizza and work late into the night.

Kyle Porter: Jon, your tool actually helps people engage with their customers. What have you learned and what spurred you towards the creation of Nimble?

Jon Ferrara: I am going to tell you a little story about a small company called IBM that does that on a daily basis.

I want you all to go out and search on your Twitter stream, #SocialBizIBM. What you will see is worldwide. There are customer-facing business people at IBM who are, on a daily basis, educating and engaging the constituency out there in the social river.

What that does is build their personal brand. By building their personal brand, they are building a company brand. Today IBM, within two years, has become a thought leader in social business by empowering their customer phase in line-level business people to build their personal brand and thereby build the company brand.

This is the kind of engagement that can truly scale a company and a brand. The problem is when you are doing that, there is no context to the conversation. Basically, you all live in Twitter, Facebook, Linkedin, Pinterest, Instagram, Foursquare and Google+. Then you try to manage it with HootSuite or TweetDeck. But none of those conversations are tied back to who you are talking about, the customer/prospect/contacts that your company does business with.

That is what we are trying to solve with Nimble.

Kyle Porter: David, what are some ideas for ways to tactically get that message out and connect with people that are your audience and that you’re looking to build a community with?

David Cummings: I am a big fan of inbound marketing, or content marketing. If you look at JobChangeAlerts, it's an app that ties into your Linkedin account. It will alert you whenever anybody in your Linkedin network changes jobs, which as a salesperson, is a compelling event with which to reach out and say, “Congrats on your new job.” As well as to stay on top of mine.

Tools in the market combined with content marketing, combined with many applications — many being really tiny special purpose apps that help people solve problems — I think that's the future of marketing.

Kyle Porter: T.A., where is all of this heading? What are we going to see in the next couple of years?

T.A. McCann: I would argue that most companies, even the most sophisticated ones, don't yet have a holistic understanding of the user. It is quite difficult. Every now and again you can stitch together a couple of pieces. Somebody read this blog post, retweeted and then bought my product. Even that is sometimes pretty difficult. Let alone they bought my product and they told three other people about it and they told seven other people.

We will get there sometime soon. But that is quite challenging. So I think that is one component of it.

I think it’s this deeper understanding and profiling of people. If you look at it, all of you probably have an email list, right? But can you stack rank that email list based on Klout score, like who is actually influential? Can you stack rank that list on who has some influence to your brand or products? Could you combine those two things together and say who has the real relevance and influence? Who likes my “things,” and how do I make sure to send them a tee shirt?

Jon Ferrara: I think it is all still too complex and hard. I think that all of us, as business professionals, know what we should do. I think as human beings we know what we should do. Do we all eat right? Do we all exercise right? No.

I think that to be a business professional today is hard. I think that every day you wake up and you look at your inbox and you start digging out of that hole in the sand. It never, ever, ever is empty. It continually fills up.

I think that the future is not one monolithic company and product that is going to do all of that for us, like Microsoft Office. I think we all use the best of the breed little pieces and we put them altogether.

So I think that all of these software companies that are emerging today with these open API's are going to be able to allow you, as a customer, to tie the products together those that best suit you.

Editor’s Note: This interview is a partial transcript of a panel discussion at the Social Biz Atlanta Conference in February 2013. The full video session is below.

This interview is part of our One on One series of conversations with some of the most thought-provoking entrepreneurs, authors and experts in business today. This interview has been edited for publication. To hear audio of the full interview, click the right arrow on the gray player below. You can also see more interviews in our interview series.

The post 4 Startup Founders Discuss How Customer Engagement Has Changed appeared first on Small Business Trends.

An Elevator, Escalator and Stairway Pitch: Cartoon

Posted: 22 Mar 2013 05:00 AM PDT

business cartoon

I remember attending some sort of sales seminar where we had to craft an elevator pitch. You know, a short summary of who you are, what you do and why it’s the best thing since sliced bread.

I know a lot of people worked really hard on distilling something great from pages and pages of material. But I’ve always been choosier about my words anyway. So it came fairly easily to me.

If those other folks had to craft additional pitches like in this elevator pitch cartoon, I think they’d still be at that seminar.

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