If you’ve ever worked in a small business without clear policies, you know that what starts as disorganization can end up as a crisis before you know it. Imagine going to a restaurant with no menu.
The waiter comes to your table and says “what can I get you?” You order the Filet Mignon, your spouse orders Kung Pao Chicken, and your kids want pizza and tacos respectively. It’s not sustainable for businesses to offer endless services, but it is reasonable for the restaurant to cook your filet just how you like it. By having clear policies (a menu) this restaurant can find wiggle room in which to better serve their clientele.
The financial crisis of 2008 brought light to the fact that banks all over the country had been loaning money to unqualified borrowers, in other words, their menu was wide open. This broad-strokes lending caused the most catastrophic financial crisis so far in our lifetime. Then, once the “too big to fail” banks had been bailed out by the government, they got cold feet when it came to lending. Their broad strokes methodology swung them from one side of the pendulum to the other and the American borrowers suffered.
As we continue to recover from the COVID pandemic, banks have the opportunity to drop their broad strokes lending policies and work with their customers on a case by case basis. Some of the country’s largest banks have created systems that no longer allow them this level of specificity. However, community banks and small businesses are perfectly poised to meet their borrowers and customers where they are.
Every business sets policies, it’s a matter of efficiency. Often those policies are based on industry standards. But as you know, there is nothing standard about your business or the needs of your clients. When you run a community bank you know your clients and your community well enough to make educated decisions about when and to whom you lend money. Broad stroke policies work sometimes, but certainly not all of the time.
If COVID has demonstrated anything to me as the leader of a community bank, it’s that we play a much more significant role in our community than I might have thought. Our clients and community members depend on us to provide them the financial resources they need to make it through good times and bad. At my bank, just like at your favorite restaurant, we have a menu of services we offer. Without these policies, we’d be lost. But, when it comes to our relationships with our tried and true customers, we like to loosen our grip just a little bit in the name of customer service.
Many of your policies keep you organized and safe as a business, but do you know which of your policies are keeping you from better serving your customers?
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