Perhaps it is because I helped my husband start a side business seven years ago that ignited his career transition and resulted in working with the likes of Robin Williams and Beau Bridges. Or maybe it’s because I started my own side business that has me speaking around the country on the topic of motherhood and management. Or maybe it’s the latest survey from the Kauffman Index of Entrepreneurial Activity that reports over half a million businesses are started each MONTH in the United States.
Whatever the cause, I think that small businesses, especially small side businesses are a great opportunity for credit unions.
I also think the launch of Square will cause credit unions to see more of their members starting side businesses. And we will see our members who have side businesses doing more business.
In case you haven’t heard the buzz about Square – here is a quick background:
Square is the company founded by Jack Dorsey, the guy behind Twitter. Square was free, easy to sign up for and allowed me to charge anyone’s credit card by simply swiping their card through a one inch device that I connected to my iPhone. Square takes out 2.75% of the payment before depositing it into my credit union account each evening. The person whose credit card I am swiping signs with their finger on my phone and they get a receipt emailed to them.
I learned early on that there were two things that helped me sell more books at book events
2. The ability to accept plastic as a form of payment
Clearly, this post isn’t about wine.
It’s about the ability to accept plastic as a form of payment. Since my social circle is full of people with small side businesses and I often speak to groups with names like “Women Business Owners” and “Women’s Network of Entrepreneurs”, I know how much this free and easy device has helped the side business owner.
As credit unions, is this new device something we should be worrying about? I don’t think so.
First off, if you are like most credit unions who offer business services, merchant services don’t make up a great part of your portfolio. Of our 575 business accounts, only 12 have merchant services.
Secondly, as Square grows, I predict that you will see more of your members starting “side businesses” because payment becomes so much easier. I also think you’ll see more of your DBA members doing better business. This can be a great thing for your credit union.
Square could actually help you grow your loan portfolio….
Consider capitalizing on the launch of Square to build your business. You could do so, by using this approach:
1. Hold a class for your members that covers the following:
a. The tax benefits to a home business
b. An overview of how to set up an appropriate checking account for your business
c. A tutorial on Square
d. A discussion of “Side Business Loans”
During this half day session, invite in an accountant to discuss what business expenses are tax deductible and how to go about properly documenting them.
Have your best credit union account opening person describe your best checking account that can be used for business purposes.
Take an hour to walk people through Square. Teach them how to upload a photo, how to track customers, and how to use some of the more complex features of the tool.
Then talk to them about using consumer loans – Home Equity Lines or personal loans – for business purposes. Many people don’t realize that they have these options for their side businesses. Explain how easy it is to apply and how reasonable the terms are.
Many of our members are supplementing their regular income with side projects and I think the introduction of Square will make this even more prevalent. I also think that Square will set the stage for members upgrading to your credit union’s merchant services. I’ve used Square for two months and I found myself looking longingly at the flight attendant’s card swiper when I was on a flight last week. Square is great, but it’s kind of flimsy. I actually started to think that the sturdiness of a traditional card swiper might be worth the cost.
At any rate, my advice to you is to learn about Square and use it to your credit union’s advantage. Use the buzz about Square to get prospective members through your door. Holding a class like this has the potential to get you more new members, more loans and possibly more merchant service accounts.
Shari Storm is Senior Vice President and Chief Marketing Officer of Verity Federal Credit Union and is the author of the book “Motherhood is the New MBA”, available here.
The business I helped my husband start- www.drummondmedia.com
Kaufman report- http://www.kauffman.org/newsroom/despite-recession-us-entrepreneurial-activity-rate-rises-in-2009.aspx
Prior post on Side Business Lending by Rob Rutkowski:
Side Business Lending(TM)