Term Paper on "Small Business Banking Start Up"

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Figure 1: Mind Map Utilized During Brainstorming Process

Figure 2: High, Average and Ideal Attrition Rates Noted in 2003 29

Figure 3: Comparison of Tax Rates 30

SMALL Business BANKING START-UP

INTRODUCTION

Always ask the question,

What are we trying to do?'"

Questioning Considerations

What does the researcher expect to accomplish in developing this capstone paper relating factors involved in the start-up of a small business banking venture? This researcher contends that answering this question requires the same process a financial manager or bank officer could implement to arrive at the answer to the question featured in the introductory quote:

What are we trying to do?" This question, albeit, could indicate more than one meaning, as the question qualifies as one a bank officer could ask the small business' current or prospective customer. Another slant, however, implies the question constitutes one a bank needs to answer when starting up a small business banking venture. In answering a question similar to the introductory one, What does this capstone paper plan to do?, regarding this researcher's expectation for the development of this paper, this researcher purports the goal for this study effort to be to present a thorough review, from a branch manager's standpoint in terms of Financial Accounting, on the feasibility of a start-up of a small business banking venture. Steps to complete this project included extensive research, appropriate analyses of findings and ultimately the presentation of conclusions based on determinations regarding findings from research.

Considerations for this study effort include:

Probable Costs Incurred to Implement Various Programs

Financial Impact

Marketing, e.g., Feasible Products; Customers' Needs and demands; Marketing Strategies; Marketing Avenues

Regulations and Compliance

Human Resources

Research Questions

What components constitute incorporating a small business banking program at a small community bank, e.g. costs; financial impact regulations; human resources?

What marketing strategies are needed?

Will the venture benefit the bank? If so, how?

Researched Considerations

Researched sources retrieved and analyzed during the creation of this paper included more than 25 resources, conveying components connected to the startup of a small business banking venture. Considerations included the examination of costs to implement various programs and the ensuing financial impact for the bank. Other factors for focus consisted of determining potential marketing components to incorporate for the startup of a small business banking venture required identifying what products/services are feasible to introduce; what small business customers demand; how bank plans to market the small business banking program. For the Regulation and Compliance segment of this study, this researcher also investigated contemporary rules and how best to implement them. To develop the human resources' section, this researcher further explored information revealing required manpower, it, training, etc. Better Informed People

Better informed people make better decisions," the motto utilized by Kaiser Federal Bank, also serves as a lead and primary proposition for this paper. Relating information to those in positions to determine what to do, whether they are customers; bank officials; students; etc., after before and after they determine what they are trying to do, this researcher purports, empowers them to make good, better, and/or best decisions.

Consequently, this researcher determined to relate relevant information, based on credible research to empower those in positions to make decisions regarding small business banking ventures, with particular focus on Kaiser Federal Bank.

The following table (1) depicts information related on Kaiser Federal Bank's web site:

Organization Name:

Kaiser Federal Bank

PO Box 6107

City, Zip:

Covina, 91722

State:

CA

Country:

USA

President:

Kay Hoveland

Web Sites(s):

http://www.kaiserfederal.com

Table 1: Kaiser Federal Bank Information

The following figure (1) reflects a mind map this researcher utilized during the "brainstorming" process in creating this capstone paper.

Figure 1: Mind Map Utilized During Brainstorming Process

During the creation of this capstone paper, focusing on the field of banking, this researcher expanded upon knowledge gained during completion of artifact courses. Financial Management, Marketing, Regulation and Compliance, and Human Resources, pertinent focuses points covered in previous classes; also constitute research guidelines this researcher utilized to present information linked to the startup of small business banking ventures. The need for this particular study focus originally evolved as this researcher noted the limited amount of community banking services available for small businesses. As noted earlier, Kaiser Federal Bank provides the framework for discussion of related issues.

As the scope of this project encompassed the community banking sector, the following artifact courses complemented this researcher's quest to gain more extensive knowledge:

Name of Class or Course:

What researcher learned that merited inclusion into current capstone creation

Background

Small Business

The term "small business," according to Bannock (2005, p. 1) may not constitute a major issue in the economic realm, albeit, "the essential point is that 'small' is a relative, not an absolute concept and where the line is drawn in the continuum of businesses from 'momma and poppa' shops to General Motors is inevitably arbitrary." (Ibid.) "The Committee of Inquiry on Small Firms, chaired by the late John Bolton (BOLTON 1971) identified three characteristics in its economic definition of a small firm:" (Bannock, 2005, p. 1) small market share, that is not large enough to influence national prices or quantities. (Even though a village shop may be the only one, its prices cannot get too far out of line from those of major national retailers in the nearest town, even though people will pay something for local convenience.)

Managed in a personalised way: the owners actively participate in all aspects of the business, unlike in a large firm where the shareholders and management are usually almost entirely separate.

Independence or the exercise of ultimate management responsibility. A small subsidiary of a large firm which has a head office to report to does not share this characteristic.

These three characteristics are to be found in the vast majority of all businesses (and, therefore, most businesses are small) but the economic definition is of no use for statistical purposes since business statistics are not classified in terms of market share, owner-management and independence. For this and other reasons, small firms are usually defined in terms of numbers employed. (Bannock, 2005, p. 1)

The European Commission and a number of member states, including the UK, define SMEs as those with fewer than 250 employees. For statistical purposes and other reasons, such as simplicity and clarification, governments generally designate one definition for, "sectoral or asset- or turnover-based definitions for specific policy purposes." Other countries' thresholds for statistical purposes include:

The United States designates 499 employees as the overall brink for a business to transform from being considered a small firm to a large one.

Japan utilizes a variety of thresholds, which include 299 employees for manufacturing; 99 employees for wholesale distribution; 49 employees for retail distribution and other services. (Bannock, 2005, p.2)

Interests stimulating support for research focusing on small businesses and Kaiser Federal Bank of not only include personal studies, but also observations revealing ____, and personal communications with at the time of his research, Telberg (2003) reports the safest and riskiest small businesses, based on percentage of profitable sole proprietorship businesses per category, include those depicted in the following two tables.

Table 1: Comparisons of Safest Small Business (BizStats.com, cited by Telberg, 2003)

Rank

Type of business

Industry

Percentage with profits

Percentage with losses

Surveying and mapping except geophysical)

Services

Optometrist

Health Care

Dentists

Health Care

CPAs

Services

Bus Drivers

Transportation

Special Trade Contractors

Construction

Mental Health Practitioners and Social therapists

Health Care

Physicians (Except Mental

Health Specialists)

Health Care

Taxi and Limousine Service

Providers

Transportation

Residential Builders

Construction

Rank

Type of business

Industry

Percentage with profits

Percentage with losses

Hunting and trapping except geophysical)

Hunting/Trapping

Scenic and sightseeing transport

Transportation

Animal production including pet breeding

Computer and Manufacturing and can

Electronic Products

Commodity Contracts brokerage

Finance/Insurance

Nonmetallic Mineral Mining

Mining… READ MORE