SMEs serve it up to the big banks

The role of the banks in Australia’s small business sector is crucial and will remain so. No single topic generated more discussion at the recent WA Business News SME forum than the big banks, their service, or lack of it, relationships with them and their varying levels of expertise.

Hardly surprisingly; the banks generally came out badly and it seems everybody has a bad bank story.

So what? The bottom line is that they can hardly be avoided.

However, SMEs are waking up and shopping around for the best individual outcome.

And above all, they want to establish a good strong, mutually supportive relationship with a responsible and savvy bank representative; someone who can respond quickly with advice and action.

Icon Business Solutions’ Deborah Pitter said SME business today was more about relationships, because it was as difficult for the banks to differentiate between a potential client company’s products as it was for SMEs to do the same with the various bank products.

“I have a great relationship with my banker, but I tell him the truth. If things aren’t good, I tell him that and I ask him what we can do about it,” she said.

“I have asked for that relationship and I have played them off against each other. And I did that at a time when I had a lot of debt. You have to have the guts to ask for things occasionally. The banks want debt.”

Melissa Romano, of ice-cream franchise Gelatino, said her company opted for the Bendigo Bank, one of the smaller, relatively new, community-based banks for just that reason.

“We ring the branch if we have a problem. I’ve got their number, I know the bank manager and I know every person behind the counter. They know us and we speak face to face if we need to,” she said.

Doust Plumbing Products founder Philip Doust said the major banks had made a major business mistake allowing the smaller banks to get a foothold by turning away low-turnover clients.

On the other side of the coin, Walker’s Candy Co’s hard five-year growth to profitability has left a pragmatic Cassandra Stipanicev with a sour taste regarding her experiences with the banks.

She agreed it came down to the bank individual dealt with.

“But I wouldn’t give you tuppence for a bank ever again. The day I don’t have any more debt will be the best day of my life,” Ms Stipanicev said.

“It’s a little different when you have a lot of assets and are successful, but when you are new and growing, you need a degree of flexibility. There is no room for that. It is very clear cut.”

Relocations West Pty Ltd’s Pauline Pietersen agreed the individual being dealt with was critical.

“And it doesn’t matter if you are dealing with a big corporation or a small one,” she said.

Compendium’s Michael Ratner, who has been in business in WA for 27 years, lamented the lack of service and contact with the banks.

“I am the world’s greatest capitalist. I don’t care if the banks make $10 billion a year, but they were doing it at the expense of service. You can’t talk to your branch these days and are lucky if you have a business manager,” Mr Ratner told the forum.

Some SME owners perceived a fear in many of the banks over making a decision.

“Everybody’s scared, everybody wants to pass it on, no body wants to give a yes or no,” Mr Ratner said.

Gone in 5 founder Tony Westall said there appeared to be a lack of skills and service among the big banks, but added that was not restricted to the banking industry.

“Look around the place at organisations like Telstra and we are not exactly bamboozled by people who are super efficient are we? But I don’t think the banks are any worse than other big organisations.”

Mr Doust, who has been with Westpac for 27 years, said he was tired of the bank bashing.

“I have never had a bank manager lie to me. I have never signed a deal where they have been negligent, as a lot of other professionals have been.

“But then, there is always the chance that they will recall my loan. That’s just business,” he said.