Owning and operating a business in the United States is a complicated pursuit. Business owners, both large and small, require assistance from a bevy of experts in other fields, such as lawyers, contractors and financial advisors.
Spectrem’s unique look into the world of business owners reflects the needs these people have in terms of the institutions they use to operate the financial aspects of their business.
In the study Serving Business Owners, Spectrem surveyed owners of businesses of all sizes to determine which financial institutions garner the most business from the world of business, and what these business owners demand of their financial providers.
“Business owners very often use different firms for business and personal needs, and they do so because their demands on the business side are different and specifically focused on the bottom line,’’ said Spectrem president George H. Walper Jr. “Firms can attract business from business owners if they address the needs they demand and expect. This research indicates what business owners are looking for from their financial providers.”
Most Business Owners do use more than one financial institution to handle the company’s money management needs. According to the study, 94 percent use a bank, 86 percent use an insurance company, and (perhaps surprisingly) 83 percent use a charge card company for business services. Only 36 percent of Business Owners use a financial planning company.
The list of services Business Owners want from their financial provider starts with the most basic, but oddly, it is not a universal request. Only 78 percent of Business Owners consider the banking services of checking and savings accounts as vital, perhaps believing that any firm can provide those primary services.
The next most significant need as identified by Business Owners is credit. Most Business Owners use credit to pay for upgrades in their workplace, or to provide cash for large outlays when the business atmosphere changes.
After those two seemingly ordinary requests of Business Owners, the rest of the list gets more specific. For instance, 63 percent of Business Owners consider cash management products to be vital. These products allow the business to be more liquid, but makes investment use of the funds when they are not being used for purchases.
A discussion with a Business Owner client can determine just how much they want their cash on hand to be actively invested and how often that cash might be needed down the line. Proper and efficient management of the cash on hand would take that thought process off the mind of the Business Owner, and would probably be appreciated.
More than 70 percent of Business Owners offer a retirement plan to employees. It’s a nice way to show support for an employee and consideration for their future, but operating a retirement plan is a complicated and time-consuming process. More than 60 percent of Business Owners consider it important for their financial provider to assist them with their retirement plan for employees.
Next on the list of important services, according to Serving Business Owners, is tax planning and advice, and investment management services. Assuming a Business Owner wants their financial planner to be a one-stop shop for services, tax planning and investment management will be critical. Otherwise, Business Owners will be required to choose one financial provider for banking services, one for accounting services and another for investment services. While that might be recommended in some cases, many Business Owners would prefer to be able to handle all aspects of the financial side of their business with one firm, if the firm offers all the services they need.
Top Takeaways for Advisors
Advisors and financial providers wishing to attract Business Owners can do so by providing all the services a businessman or businesswoman needs to run their operation. Another possibility is to be aligned with another firm that might be better suited to provide some specific financial need, such as accounting or tax planning.
For Business Owners, capital is key, and while they have so many other pressures in their business life (employee retention, the competition, non-financial service providers), it would be nice for them to have a financial provider or advisor to whom they could hand over a majority of their financial concerns. Business Owners also tend to be some of the most attentive clients advisors have; they keep an eye on what is happening with their money. Providing satisfaction in one area of an investment relationship could lead to business in the other areas stated above.
©2017 Spectrem Group