Small Business Clients Research Articles

Small Business Client Satisfaction with Outside Assistance

Outside consultants can improve the standing of small businesses but there are some problems associated with their use. Small business owners may perceive consultants as difficult to find and use, ineffective, or unsatisfactory. The present research is an effort to gain greater insight into the reasons for these beliefs by asking about owners’ experiences with consultants. A survey was mailed to a random selection of 3,000 small businesses in rural Illinois during the summer, 1991. Results suggest that the most effective and satisfying consulting services are those that guide owners to better analyze and problem solve. A theory is identified that accounts for the results and a number of practical insights are provided.

Delivering Customer Satisfaction within the SME Client-Banker Relationship

The UK clearing banks, having significantly improved their customer service reputation in the UK SME (Small and Medium Size Enterprise) sector, may be revising their market position during the current recession. A survey of people starting a new business and bankers reveals that both ownerlmanagers and bankers feel the quality of the customer-bank relationship may have deteriorated. This situation has implications for both the availability of funds for new small business and the future strategies of the UK banks when servicing SME sector clients. A customer management model is proposed as a mechanism for classifying variution in ownerlmanager needs for financial service. The model is used to assess the nature of customer service which a bank may wish to provide to their different types of small business client.

Small Business Consultants: Improving the Delivery of Outside Assistance

A review of the literature was conducted for the period of 1976 through 1989 in an effort to identify the most effective outside services that small business consultants could use to assist their clients. Results of the review showed that small business consultants provide services that are very effective in improving business performance. In addition, small business clients report a high degree of satisfaction with the services received. A theoretical model was then proposed which highlights the importance of providing services that guide small business clients toward better analysis of their operations and better development of their human resources.

Service Quality: Relationships between Banks and their Small Business Clients

The UK clearing banks are aiming to gain a differential advantage by improving the quality of their service. Some of the findings of a research study which explored the determinants of service quality as perceived by a sample of 50 small businesses are reported. Small business′ overall rating of the level of service received from their bank, their reasons for that rating and their assessment of the importance of 55 service factors are described.

Strategic, Administrative, and Operating Problems: The Impact of Outsiders on Small Firm Performance

This study investigates the relationships between the types of “outsider” consulting assistance provided by the Small Business Development Center and subsequent changes in the performance of its established small business clients. According to the results of this study, established small business clients appear to benefit more from administrative and operating assistance than they do from strategic assistance. However, the findings also suggest that outsider assistance is most useful when it includes comprehensive attention to strategic, administrative, and operating problems.

Commercial Lending Officer and Small Business Client Relationships

This article presents the results of an April 1986 mail survey of small business firms in Cuyahoga County, Ohio, concerning the relationship with their commercial bank lending officer. The survey examined loan types and rates, types of collateral,and bank and officer characteristics. Results indicate that 1) secured lines of credit were the most common loan type, 2) the reputation of the bank was the most important characteristic, 3) personal guarantees were the most common collateral type, and forty small businesses rely heavily upon the expertise and support of their commercial lending officers the businesses would seldom change banks for a half percent rate advantage.

ANALYZING THE COST OF DEBT FOR SMALL BUSINESS

SummaryThe available empirical evidence provides mixed views of small businesses' relative bankruptcy risk. The difference between Churchill and Lewis' findings and SBA's and Kirchhoffs' may well lie in the difference in definition of firm “size” used. Risk is not evenly spread; the smallest businesses seem to be less risky than the intermediate size businesses. Yet, Churchill and Lewis' actual loss evidence suggests that small business risk is only marginally greater than for large businesses, the loss rate is still equivalent to less than one half of one percent.The assumptions that lenders will adjust the amount of debt they allow small business clients rather than the interest rate is not rejected by this evidence. In fact, the much higher profitability of the small business department reported by Churchill and Lewis suggests that the bank's loan interest rates are more than high enough to cover loss risk and fixed costs, and borrowers provide profitable deposits. Thus, the logic of my utility theory hypothesis provides a reasonable explanation for the relatively higher debt levels of small firms compared to large firms. But, then the Kirchhoffs' findings cast some doubt on whether small firms actually have higher debt levels. None of these findings justify the 2.75 percent interest rate spread allowed by SBA.

Identifying successful versus unsuccessful loans held by the minority small business clients of an OMBE affiliate

Successful and unsuccessful loans to minority small businessmen are discriminated using applicant demographic and firm characteristic variables available at the time of application for 65 firms in Cleveland, Ohio. The businessmen studied are the clients of an affiliate of the Office of Minority Business Enterprise and represent a unique segment of the small business community, which has proven to be particularly success resistant. A set of demographic and firm variables are identified that are associated with loan success and can be used to construct a profile of preferred loan applicants. The relative importance of the different variables in discriminating between the two groups of loans and their combined explanatory power is reported.