Business Friendly

A California community bank embraces local entrepreneurs by offering financial literacy programs specifically for small businesses

By Audrey Wright-Cipriano

Individuals don’t open businesses expecting to fail, yet a staggering number do. According to the Small Business Administration’s Office of Advocacy, approximately half of all new business ventures fail during their first five years of operation. Inexperience, poor location and weak inventory oversight are all reasons new businesses fail to thrive, but many experts point to deficiencies in business owners’ basic financial management skills as the most common underlying reason why many small businesses don’t make it.

However, Bank of the Sierra in Porterville, Calif., is undertaking a special financial literacy effort designed to substantially improve the survival odds of its local small businesses. “In these challenging economic times, small-business owners and would-be entrepreneurs are hungry for information that can help them improve their businesses and protect their assets,” says Bank of the Sierra Vice President and Community Reinvestment Officer Cyndi Carmichael, who oversees the bank’s financial literacy programs.

Carmichael says the strongest skills set of most small-business owners often doesn’t involve financial management. “People start businesses for all sorts of reasons, and rarely is a love of business management at the top of the list,” she says. Many simply want to be their own boss and work for themselves, while others may love selling or making a certain product or performing a service. Most entrepreneurs are passionate, thoughtful and strongly believe their product or service will fulfill a real need in the marketplace.

Yet a large number of entrepreneurs have no real grasp of how much money they will need for both their businesses and personal lives. Many companies start with too little money and too often find themselves in a negative cash-flow situation from which they never recover.

A solution provider

As the community reinvestment officer for Bank of the Sierra, Carmichael looks for ways that the $1.4 billion-asset community bank can assist the communities it serves through focused local lending efforts and a broad range of community reinvestment activities. To date, the bank, which operates 26 retail locations, has partnered with local schools, the United Way and even Native American tribes to bring financial education programs to underserved populations.

When small-business customers began asking for meaningful resources to help their businesses grow and thrive, Bank of the Sierra looked for and found a turnkey solution offered through the FDIC and SBA’s Money Smart for Small Business Alliance. “The bank has partnered with [the] FDIC before on consumer- and youth-focused financial literacy programs, so we knew the program would be easy to use and understand,” Carmichael says.

The complimentary educational program Money Smart for Small Businesses is an instructor-led program designed to help educate new or existing small-business owners. Money Smart for Small Businesses includes 10 training modules covering tax planning and reporting, banking services available for small businesses and several units that discuss financial management.

Carmichael says Bank of the Sierra plans to leverage existing partnerships to roll out the program at one location in each of its assessment areas later this year and that its financial literacy program for small businesses will be advertised and offered to customers and nonbank customers alike.

“Our entire bank is very supportive of providing financial tools and education to the small businesses in the communities we serve,” she says. endmark

Audrey Wright-Cipriano is ICBA director of marketing and brand strategy.