'Green sprouts' garner interest

September 21, 2009
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Necessity is the mother of invention, noted Greek philosopher Plato, and it is apparently also the impetus for laid-off workers to take a stab at running their own businesses.

While statistics lag and credit remains tricky, local bankers said that they perceive an increase in the number of small businesses among their customers.

“I actually think it’s growing, because we’re seeing some very skilled and knowledgeable employees who are displaced from a job who would really like to stay in this area because they like West Michigan,” said Jill Walcott, senior vice president, retail banking, for Holland-based Macatawa Bank.

The recession-born entrepreneurs are relying on their expertise or perhaps turning a hobby into a money-making proposition. “They are looking for that second career,” Walcott added.

Tim Doyle, Fifth Third Bank’s senior vice president for business banking for the West Michigan region, echoed that observation.

“We are seeing, definitely, an uptick in people inquiring on what programs, what products, inquiring about the SBA (Small Business Administration) programs specifically, in starting a new business, that is correct,” Doyle said.

“I don’t have any specific numbers or percentages over last year, but inquiries have definitely increased over the last 18 months. I’m confident there is some correlation with the unemployment rates — that people are definitely looking to find their niche and start their businesses.”

According to the federal SBA, the Grand Rapids-Wyoming Metropolitan Statistical Area in 2006 had 15,978 businesses, and 12,629 of them, or 79 percent, employed fewer than 20 people each.

The number of those small businesses that weathered the recession or were created since it hit with a vengeance in the fourth quarter of 2008 is not yet available.

A report, “The Small Business Economy,” delivered this year by the Office of Advocacy to President Barack Obama, indicated that 2008 was a tough year for small businesses. The credit freeze was “devastating” for small companies as well as the economy overall, the report stated.  However, the report downplayed the ability of a recession to prompt more people to open their own businesses.

“Conventional wisdom has suggested that self-employment would tend to rise during an economic downturn, in part because of ‘necessity entrepreneurship,’ but self-employment does not seem to be swayed much by cyclical changes,” the report stated.

Still, ignore Fifth Third is implementing a plan to hire 28 new small business bankers and spread them in its banking centers on the western side of the Lower Peninsula, Doyle said. It’s similar to an approach being taken in five of Fifth Third’s affiliates, he said.

“What we found is the majority of our small business banking customers use our local financial centers more frequently as opposed to working with one of our traditional business banking officers,” Doyle said. “So embedding these small business bankers within the financial centers really helps align, from a customer service level, the needs of that segment. This is a new tack to drive engagement with that small business customer.”

The bank is in the process of hiring to fill those slots, which are new jobs, he said. The new small business bankers will undergo training in serving Fifth Third business customers with less than $3 million in annual sales, he said.

They will deal not only with deposit accounts, merchant and treasury management services, but also will handle loans, Doyle explained.

“All too often, the smaller business banking customers feel their needs are not being met by the traditional business banking groups,” Doyle said. “We felt that tailor-making a job family that focused specifically on that $3 million in sales customer and less would provide huge opportunities for the customers as well as the organization.”

He said the specialists will be located in branches that can easily serve customers from a five- to six-branch area. Otherwise, small business customers have had to travel to Grand Rapids, he said.

“In an environment where we hear about layoffs and downsizing, the fact that again, organizationally, we see opportunity in this segment, kind of is a testament to the potential opportunity we see,” Doyle said.

At Macatawa Bank, Walcott said the array of business services is, from time to time, complemented with some basic education in starting a business, and a little hand-holding.

“Sometimes we have to help someone from the education standpoint,” she said, such as providing resources to help write a business plan or think through best- and worst-case scenarios.

“Sitting down and talking about it helps,” Walcott added. “The last thing we want is to not have someone be successful.”

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