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Financial Services for Small Businesses in the U.S.


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Small business is hot. There are nearly 26 million small businesses (companies with 500 employees or fewer) in the United States and more small business births every day. With over $9 trillion in revenues and over $2 trillion in assets, financial services for small businesses in the U.S. are rich in opportunities. Small businesses produce anywhere from $300 billion to over $350 billion in financial service and product revenues annually, including $120 billion to $200 billion in banking revenues and $137 billion in insurance premiums. Beyond credit, payments, cash management, payroll processing, treasury services and trade finance, small business owners have a wide variety of personal banking needs that represent a tremendous opportunity for financial services providers. Commercial banks, community banks, credit unions, credit card companies, insurance companies’ equipment leasing companies, brokerages and financial advisors all look to gain traction in this highly competitive market.

But the market is highly fragmented by size, type, ownership characteristics, industry and geography. It is a churning market where half the owners of established businesses may retire in the next decade, and where 10% of all small businesses close each year only to be replaced by a slightly bigger crop of new entrants. Moreover, the rising generations of Gen X and Gen Y entrepreneurs have different needs and expectations than their Boomer counterparts. It is also a highly personal market where 74% have no employees, 87% of employer firms have fewer than five employees and the owners’ personal finances are often aligned with the business’s finances.

Financial Services for Small Businesses in the U.S. focuses on the size and segmentation of those 26 million U.S. small businesses. It looks at the characteristics of small business owners examining segment by segment their use of financial products and services, attitudes and unmet needs. Competitive profiles of the major players -- card companies, banks and non-bank entities -- provide insight into their strategies, recent activity and future plans, while data from Simmons Market Research Bureau paints a picture of small business owner attitudes and use of financial products. The report also looks at products and services initiatives and examines advertising, marketing and channel strategies.

Report Methodology
The information in Financial Services for Small Businesses in the U.S. is based on both primary and secondary research. Primary research involved extensive in-depth interviews with industry, marketing and public relations executives within the banking, retail and credit card markets and consultants to the industry, including American Express, MasterCard, Visa, JPMorganChase, PNC Bank, Advanta, Commerce, and Wells Fargo. It also includes interviews with experts at Financial Institutions Consulting, OxxFord Information Technologies, ShareBuilder and Strategic Planning & Marketing (UK). Secondary research entailed data gathering from relevant trade, business, and government sources, including company literature, analyst presentations, annual reports and 10(k) filings, and white papers. Permission was also graciously granted to Packaged Facts to use data from BusinessWeek Research Services, Financial Institutions Consulting, MarketStance, Oxxford Information Technologies, Retail Bank International, ShareBuilder and Synovate. Consumer data was obtained from Simmons Market Research Bureau’s Fall 2006 National Consumer Study. Media spending data was obtained from TNS Media Intelligence.

About the Author
An expert in primary research, Té Revesz is the principal of Revesz International and Kentera Associates. She has conducted thousands of in-depth interviews with business, political and labor experts around the world. She was featured in Super Searchers Go to the Source as one of the U.S.’s top primary researchers. Prior to founding Kentera Associates, Té headed the Healthcare and Industrial Practices of FIND/SVP’s Strategic Consulting and Research Group and was its International Practice Coordinator. She was also a Director of FIND’s Signia Partners division. Before joining FIND, Té served at Business International as Director of North American Publications, Editor-In-Chief of its global newsletter, and helped create BI’s global risk assessment product. She also worked at Prudential-Bache’s financial planning group and at Citibank’s Washington Representative Office.

What You’ll Get in this Report
Financial Services for Small Businesses in the U.S. makes important predictions and recommendations regarding the future of this market, and pinpoints ways current and prospective players can capitalize on current trends and spearhead new ones. No other market research report provides both the comprehensive analysis and extensive data that The U.S. Small Business Market for Financial Services offers.

Plus, you’ll benefit from extensive data, presented in easy-to-read and practical charts, tables and graphs.


  • Introduction and Executive Summary
    • Introduction and Definition of Small Business
      • Study Scope
      • Report Methodology
    • The Market
      • Table Small Businesses in the United States, 1992-2005
      • Table U.S. Small Business Receipts, 1997 and 2002 ($ billion)
      • Segmenting Small Businesses: Ownership Characteristics
      • Sizing the Market for Financial Services
      • International Small Business Market for Financial Services
    • The Small Business Owner: Demographics, Viewpoints and Buying Habits
      • Small Business Owners: Involvement, Function and Work Habits
        • Table Is the Business the Owner's Primary Source of Income?
      • Small Business Owners' Concerns
      • Buying and Selecting Financial Services
      • Small Business Use of Financial Products and Services
        • Table Financial Products Used by Small Businesses, 1998 vs. 2003
      • Small Business Owners Flock to Online Banking
      • Segmenting Small Business Owners
        • Table Business Ownership, by Age, 2002
      • What the Simmons Data Reveal About Card Companies and Big Banks Success with Small Business Owners and Execs
        • Table Credit Cards Owned or Used by SBOEs
    • Government and Small Business Finance
      • Small Business Administration Loan Guarantees and Other SBA Financial Products and Service.
      • Export Import Bank Small Business Programs
    • The Competitive Arena
      • Credit Card Companies
      • American Express OPEN(R) for Small Business for Two Decades
      • MasterCard Worldwide: Data Mining for Areas of Opportunity
      • Visa: Meeting the Small Business Owner's Rational and Emotional Needs
      • The Darwinian World of Small Business Banking
      • JP Morgan Chase
      • Wells Fargo: Small Business is Big Business
      • Advanta: Small Business All the Time
      • Commerce Bank Woos Small Business with a WOW Service Strategy
      • PNC
      • Community Banks: We Run Circles Around the Biggies
      • Credit Unions
    • Overview of Other Financial Services Players
      • Marketing Initiatives and Emerging Products and Services
      • Products and Services Approaches and Initiatives
      • Small Business, Computers and Financial Services
      • Helping Small Businesses Manage Their Time and Finances
    • Advertising, Marketing and Channels
      • Direct Mail
      • Media Spending
      • Event Marketing and Networking: Real and Virtual
    • Going Forward: Challenges and Opportunities
      • Challenges for Financial Institutions
      • Tectonic Shifts
      • Will the Credit Crunch Hit Small Business?
      • Wealth Management and Succession Planning: a Huge Opportunity
  • The Market
    • About the Survey of Small Business Finances
      • Table Breakout of 2003 SSBF Sample by Size of Firm, 2003
      • The U.S. Small Business Universe
        • Table Small Businesses in the United States, 1992-2005
        • Table U.S. Small Business Receipts, 1997 and 2002 ($ billion)
        • Table U.S. Small Business Employment and Payrolls, 2004
        • Table Births, Deaths and Bankruptcies of Employer Firms, 1992-2005
        • Table Quarterly Business Bankruptcy Filings, Q1 and Q2, 2005-2007
      • Segmenting Small Businesses: Ownership Characteristics
        • Table Business Ownership by Gender, 2002
        • Table Business Ownership by Hispanic or Latino Origin, and Race, 2002
        • Table Employer Firm Establishments in the U.S., by Industry, 2002
        • Table Non-Employer Establishments in the U.S., by Industry, 2005
      • Sizing the Market for Financial Services
        • Table All Lines Commercial/Property Premiums for Enterprises with Fewer than 500 Employees, 2006
        • Table Small Business Banking Market Segments
        • Table U.S. Small Business Financial Services, a $270 Billion Market, 2005
        • Table Financial Services Used by Small Businesses, by Size of Firm, 1998 and 2003 (%)
        • Table Financial Services Used by Small Businesses, by Industry (%)
        • Table Financial Services Used by Small Businesses, by Organization Form and Years Under Current Ownership (%)
        • Table Business Loans, June 2003-June 2005, by Loan Size
        • Table Share of Small Business Loans, Total Business Loans and Total Assets, by Asset Size of ending Institution, 2003-2005 (%)
        • Table Small Business Debit and Credit Card Spending vs. Total Small Business Spending on
        • Table Financial Management Services Used by Small Businesses, by Size of Firm
        • Table Financial Management Services Used by Small Businesses, by Industry
        • Table Small Business Pension, Profit Sharing and Stock-ownership, 1997-2007
        • Table Small Business Contributions to Retirement Plans, 1998
        • Table Small Business Contributions to Company-Sponsored Retirement Plans, 2002-2006
        • Table Per Company and Per Employee Cost of All Company-Sponsored, Retirement Plans, 1998
        • Table Per Company and Per Employee Cost of Company-Sponsored Defined Benefit Retirement Plans, 1998
        • Table Per Company and Per Employee Cost of Company-Sponsored, Defined Contribution Retirement Plans, 1998
        • Table Market Size Estimate of 401(k) Plan Potential
      • Choosing Financial Services Suppliers
        • Table Types of Depository and Non-depository Institutions Supplying Financial Services and Financial Management Services to Small Businesses
        • Table Small Business Depository Institutions, 2003
        • Table Small Businesses' Use of Selected Non-depository Institutions, 2003
        • Table Small Business Use of Suppliers of Financial Services, by Selected Service, All Suppliers and Depository Institutions, 2003
        • Table Small Business Use of Selected Suppliers of Financial Services by Selected Service, Non-Depository Institutions, 2003
      • International Small Business Market for Financial Services
        • Table Consumer, Small Business and Corporate Credit Card and Ticket Spending, 2006
  • The Small Business Owner: Demographics, Viewpoints and Buying Habits
    • About the Surveys of Small Business Finances and Small Business Owners
      • Table Breakout of 2003 SSBF Sample, by Size of Firm (%)
      • About the Simmons Data
        • Table Overview of Occupation Classifications: Self-employed or Management /Business & Financial Operations or Proprietor (SE-M/BFO/P)
      • About the Kauffman Index: A Nation of Entrepreneurs
      • Small Business Owners: Involvement, Function and Work Habits
        • Table Is the Business the Owner's Primary Source of Income?
        • Table Average Number of Hours Spent Managing or Working in the Business and Business Interest, 2002
        • Table Hours Worked by Small Business Owners with Full-Time Businesses
        • Table Small Business Owners and Their Primary Function in the Business
      • Small Business Owners' Concerns
        • Table Sources of Small Business Finance, 1998 vs. 2003
        • Table Typical Funding Sources, 2007
      • Buying and Selecting Financial Services
        • Table Personal Involvement in Business Purchasing Decisions during the Last 12 Months, by Amount
        • Table Business Owner or Executive Personally Involved in Business Purchase Decision, Last 12 Months
      • Small Business Use of Financial Products and Services
        • Table Financial Products Used by Small Businesses, 1998 vs. 2003
        • Table Financial Management Services Used by Small Businesses, 1998 vs. 2003
        • Table Business Owners' and Executives' Use of Commercial Bank Services
        • Table Business Owners' and Executives' Use of Savings Bank and Credit Union Services
        • Table How Small Business Proprietors & Executives Pay Their Bills
      • Small Business Owners Flock to Online Banking
        • Table Small Business Owners' Use of Computers and Financial Services, 1998 vs. 2003
      • Segmenting Small Business Owners
      • Minority and Immigrant Business Owners
        • Table Financial Services Used by Small Businesses, by Race, Ethnicity or Gender, 2003
        • Table Financial Management Services Used by Small Businesses, by Race, Ethnicity or Gender, 2003
        • Table Non-Traditional Financial Management Services Used by Small Businesses, by Race or Ethnicity, 2003
        • Table Immigrant Entrepreneurs: Foreign-born vs. Native-born Self-Employed Business Owners- Non Agricultural Industries1,2 (1994-2003)
      • Women-Owned Businesses
        • Table Women as Majority Owners, 1997 and 2006
        • Table Sales of 51% Women-Owned Firms, 1997 and 2006
        • Table Top States for Women's Majority-owned (51% or more) Businesses
      • Women Business Owners vs. Male Business Owners
        • Table Financial Services Used by Small Businesses, by Gender, 2003
        • Table Financial Management Services Used by Small Businesses, by Gender, 2003
        • Table Non-Traditional Financial Management Services Used by Small Businesses, by Gender, 2003
      • Educational Background
        • Table Business Ownership, by Educational Background, 2002
      • Veteran Status
        • Table Veterans as Small Business Owners, 2002
      • Age, Transition, Succession and Opportunity
        • Table Business Ownership, by Age, 2002
      • What the Simmons Data Reveal About Card Companies and Big Banks Success with Small Business Owners and Execs
        • Table Primary Bank Used by the Self-employed and by| Business Owners and Executives Use (12 Months Preceding October 2006)
        • Table Credit Cards Owned or Used by SBOEs
        • Table American Express Owned or Used by SBOEs
        • Table MasterCards Owned or Used by SBOEs
        • Table Visa Credit Cards Owned or Used by SBOEs
        • Table Non-Bank Credit Cards Owned or Used by SBOEs
        • Table SBOEs' Use of Credit Monitoring Services
        • Table The Portion of Credit Card Balance Small Business Proprietors Always Pay
  • Government and Small Business Finance
    • Small Business Administration Loan Guarantees and Other SBA Financial Products and Service.
      • Table Number of SBA Loans Approved (FY2002-2007)*
      • Table Value of SBA Loans (FY2002-2007)*
      • Export Import Bank Small Business Programs
      • The Internal Revenue Service Wants Small Businesses to Pay Taxes Electronically
      • Legislation to Watch
  • The Competitive Arena
    • Credit Card Companies
      • American Express OPEN(R) for Small Business for Two Decades
      • MasterCard Worldwide: Data Mining for Areas of Opportunity
      • Visa: Meeting the Small Business Owner's Rational and Emotional Needs
      • Discover: Competing with Customer Service
      • The Darwinian World of Small Business Banking
        • Table Small Business Lending (Originations), 1997-2006
        • Table Loans to Firms with Revenues of $1 Million or Less,* 1997-2006
        • Table Top 10 U.S. Bank Players by Small Business Loans
      • It's a Bank Eat Bank World
      • JP Morgan Chase
        • Table Chase Small Business Lending, 2004-2006
      • Wells Fargo: Small Business is Big Business
        • Table Avg. Daily Core Sales,1999-2006
        • Table Wells Fargo Diverse Business Services - Program to Date
      • Advanta: Small Business All the Time
      • Commerce Bank Woos Small Business with a "WOW" Service Strategy
        • Table Commerce's Wow the Customer Model
        • Table Commerce Store Growth
      • PNC
      • Community Banks: We Run Circles Around the Biggies
      • Segment or Niche Players
      • Credit Unions
    • Overview of Other Financial Services Players
      • GE Money-Small Business Solution
        • Table GE Money's Target Verticals
      • Fidelity Investments
      • Merrill Lynch to Team with Thrifts and Smaller Banks
      • ShareBuilder 401(k)
      • MetLife
      • AIG
  • Marketing Initiatives and Emerging Products and Services
    • Products and Services Approaches and Initiatives
      • Small Business, Computers and Financial Services
        • Table Use of Computers to Obtain Financial Services Among Small Businesses, 1998 vs. 2003
        • Table Use of Computers to Obtain Financial Services Among Small Business, By Size of Firm, 1998 vs. 2003
        • Table Use of Computers to Obtain Financial Services Among Small Business, by Industry, 1998 vs. 2003
      • Helping Small Businesses Manage Their Time and Finances
      • Small Business Lending Approaches
      • Small Business Credit Cards
      • Capturing Small Business's B-to-B Spend
      • A Flight of New Small Business Airline Cards
      • Stretching the Small Business Owner's Dollar
      • Focusing on Women
      • Retirement Products for Small Businesses
      • Scoring Small Business Risk
      • Wealth Management
      • Cross-industry Partners: Non-financial Service Companies Partner with Financial Services Companies
      • International Small Business Product Offerings
  • Advertising, Marketing and Channels
    • Direct Mail
      • Table Small Business Credit Card Solicitations Mailed to US Households; 2003 vss 2007
      • Table Direct Mail Trends in Credit Card Offers Sent to Small Businesses, by Purpose of Mailing, Q2-2006 to Q2-2007
      • Table Direct Mail Trends in Credit Card Offers Sent to Small Businesses, by Type of Card, Q2-2006 to Q2-2007
      • Table Direct Mail Trends in Insurance Offers Sent to Small Businesses, by Purpose of Mailing
      • Table Direct Mail Trends in Insurance Offers Sent to Small Businesses, by Insurance Category
      • Media Spending
        • Table Credit Card Company Media Spend on Cards Directed at Small Businesses (January-December 2006)
        • Table Bank Media Spend on Small Businesses (January-December 2006)1
        • Table Bank Media Spend on Small Businesses (2004- 2006)
      • Internet Advertising
      • Event Marketing and Networking: Real and Virtual
      • Social Networking: From Portal to Resource Center to Network
      • Marketing via Small Business Research
      • Alternate Channels -- Experiential and Grass Roots Marketing
      • Individual Initiatives
        • Table Examples PNC's TV and Radio Ads
  • Going Forward: Challenges, Opportunities and Best Practices
    • Challenges for Financial Institutions
      • Tectonic Shifts
      • Will the Credit Crunch Hit Small Business?
      • Wealth Management and Succession Planning: a Huge Opportunity
        • Table Small Business Owners' Wealth by Type (2008)
        • Table Distribution of Small Business Owner Wealth by Range
      • Best practices

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