SMBs are stuck in a banking problem that they need help solving

03/16/21 / by Kyle Bazzy

Autobooks' Co-founder and CEO Steve Robert joined Tearsheet's Zack Miller to discuss how SMBs are stuck in a banking problem.

It’s really hard running a small business — owners have to wear many hats. Frequently, they’re taking care of sales, operations, customer service and finance all at the same time. You know the expression around kids — that it takes a village to raise them? Well, for a small business, it takes an ecosystem to support it. And that ecosystem should involve its bank.

That’s because the most important thing to an SMB is cashflow. If cash is king, cashflow is the oxygen SMBs breathe. Without it, they struggle to survive. Banks play a key role here.

Steve Robert, Autobooks: I think the opportunity to help small and micro businesses is managing cashflow. We do a lot of work around cash flow. We’ve got a team that has really gone deep into this category, and we employ a framework called Jobs to be Done. So, we really get at the root of the pain? What is the problem small businesses are trying to solve?

Helping them get paid, compress sales cycles, and offer more convenient payment options were significant problems. Many small businesses are not yet comfortable using modern technology. They feel neglected by banks, which typically serve retail customers or corporate banking clients more effectively.

Steve Robert, Autobooks: What we kept coming back to time and time again was cashflow. Now, SMBs don’t use that term per se. But the idea of helping them get paid, helping them compress sales cycles, helping them offer more convenient ways to accept payment was still very much a problem.

There’s a huge segment of the population that are second-generation family businesses still relying on the cab of their pickup truck as the office for the day. They’re dependent on cash and checks, looking for ways to bring money into their accounts.

This presents an opportunity to reimagine the services that small businesses need.

Steve Robert, Autobooks: Finding their way out of this jam requires helping small businesses with their cash flow needs. Historically, small businesses have not been given the tools they need from financial institutions. As a result, banks have often overlooked the importance of personal service in favor of geographic scale.

However, the consumerization trend has pushed expectations higher.

Steve Robert, Autobooks: People expect better service from their providers, and small businesses want more help from their banks. Recently, the COVID-19 pandemic accelerated digital transformations in banks, which had a mixed impact on SMBs.

Steve Robert, Autobooks: The last year saw dramatic changes in the banking landscape. Those banks already investing in digital capabilities were better positioned to meet small business needs during the crisis.

Small businesses increasingly need tools like online invoicing and digital payment solutions.

Steve Robert, Autobooks: We have observed that accepting online payments and providing services like digital invoicing are crucial for small businesses. Enhanced capabilities not only improve customer satisfaction but also help SMBs better manage their cash flow by getting paid quickly.

Banks that embrace these needs will be better positioned for the future.

Steve Robert, Autobooks: Digital banks and challenger banks have started to address these cash flow requirements effectively. They leverage technology that many traditional banks are still catching up on.

For example, TD Bank has implemented accounting tools that integrate with their checking accounts, marking a significant move in helping small business customers.

Steve Robert, Autobooks: As we continue to evolve, financial institutions must ensure they offer services that address the fragmented needs of small business customers. Creating an integrated, seamless banking experience will be a major competitive advantage.

In summary, the ability for SMBs to accept online payments directly impacts their overall business health. By improving their digital capabilities, banks can greatly assist small businesses in achieving financial sustainability and growth.