Doing business in West Michigan
Money, I’m Home! Gary Ferguson, vice president of business services at Consumers Credit Union, discusses doing business in West Michigan. Whether you’re getting started or looking to expand, Gary has advice and ideas just for you!
00:00 Lynne Jarman-Johnson: Money, I’m home! Hi, welcome in everybody. I’m Lynne Jarman-Johnson with Consumers Credit Union, and we are talking fitness to finance here on our podcast. Thanks so much for being with us. Today, we’ve got a great program for you. It’s all about business and the question for you is, have you ever run a business? Are you thinking about running a business? Well, I’ll tell you the person with all the answers is here. Gary Ferguson is the Vice President of Business Services with Consumers Credit Union. Gary, thanks so much.
00:35 Gary Ferguson: You’re welcome. Thanks, Lynne.
00:36 LJ: Glad to have you here.
00:38 GF: Awesome. Happy to be here.
00:40 LJ: So, tell us a little bit about yourself. How did you get here? Where is your background? You are a guru in business, we’re going to talk about an award you got, you’ve just received. That’ll be cool.
00:50 GF: I’ve been in banking for 30 plus years. Most of that is spent in community banks in upstate New York, up in the Saratoga Springs area. I got my start in a very small bank. At the time, was $42 million in assets and just kind of moved to different regional banks from there. And eventually, found my way to Kalamazoo, Michigan with Consumers Credit Union, which is an awesome experience. And I love it here, and I love the people I work with, and our team is just awesome. We go out of our way to help our business members every day.
01:25 LJ: You started, and it sounds like in community banking, have you been just shocked to see the change in banking in general?
01:34 GF: Yeah. It’s changed a lot over those 30 plus years or decades that I’ve worked in it. And I think where the credit unions are today, nears a little bit more of some of that back when I started, and then they just got buried by the numbers, and very rich in their operations and processes and so forth, where we’re a little bit more hands-on and a softer approach I think in helping our members through both good and bad times.
02:09 LJ: Right. You… We talk about members, and for you, a member is often a business member.
02:16 GF: Absolutely.
02:17 LJ: What’s the small to large, when you think of scopes of businesses that we serve?
02:25 GF: We do have some larger businesses, but we pretty much fall into the traditional small business spectrum which is basically classified as companies that have revenues under $10 million, less than 500 employees. And in our case, a lot of that is even smaller mom-and-pop shops, if you will, that are one and two-person operations and that spears the gamut from all types of businesses.
02:55 LJ: In the long run though, really, a business plan, the portfolio, the partnership that happens with consumers, that’s important no matter what size the business.
03:05 GF: Absolutely. Absolutely. We’re looking for businesses that have a good business plan in play, or a business model, as we look at it. That business model is important to us because we want them to be successful. And as we look at that, we can help come up with solutions to get them to that point if they need that type of assistance.
03:29 LJ: Do businesses often think, “Hey, a credit union?” Are you still hearing that?
03:37 GF: Yes, we do still hear that. Credit unions were born through SEGs or employee-based companies and as…
03:48 LJ: What does that mean?
03:49 GF: It basically meant that a larger company or a manufacturer, for their employees, they would set up at a credit union, and then they would be members of that credit union and serve that specific group. Today that’s evolved more as a community charter-based credit unions and that so we can really serve all types of people that live and work and worship in our communities.
04:14 LJ: So, consumers started Kalamazoo, and the charter now for us is all of lower Michigan.
04:21 GF: Correct.
04:22 LJ: Which is a really big gamut.
04:24 GF: Yes. And that’s opened some doors for us. We’ve now worked with… Have opportunities that we’ve actually closed on up in Traverse City, we’ve done some on the East side of the state so. Of our primary market and presence is in West Michigan and that it’s eventually opening doors in other parts too.
04:43 LJ: You had mentioned that a business plan is really important. What other successful companies… What do they bring to the table on an ongoing basis?
04:53 GF: A lot of them bring a true passion and desire to really love what they do. And a lot of times it’s… And that’s one of the things a lot of folks… A lot of us that are in the business segment gives us an opportunity to learn about their business and understand what they’re trying to accomplish and everything. It’s exciting because everybody does it differently, and that’s really the entrepreneurial spirit and desire out there, to be able to do your own thing. And as we’re out there coming up with solutions, trying to help them, we can engage with them and be very proactive whether it’s deposit needs, lending needs, all types of opportunities. And sometimes, it’s just fun just to learn what they do.
05:45 LJ: What do you think is the… When… On a day-to-day basis, what is the most fun for you?
05:51 GF: My role here at Consumers is really, I look at all types of credits, I get into the weeds a lot of times in the analysis. A lot of times, the things I really enjoy is at that closing segment, finalizing the documentation, working with our business development folks and being excited when they come back, and they’ve actually closed the deal, and we’re now on to the next phase.
06:20 LJ: Yeah. You mentioned seeing that business and action and the passion that comes along with that, how critical is the partnership of a bank or a credit union business lender, or deposits, how important is that relationship?
06:38 GF: That relationship is huge. The business owner needs somebody that’s going to understand their business, what their needs are. A lot of times, businesses… We’ll see a mismatch of their products and services. I always look at the added scenario, “Well, I need a line of credit. I need a line of credit.” Yeah, I mean you may not need a line of credit, there may be some other type of vehicles in that that would serve you much better and appropriately. So, it’s… You want to be able to work with a banker, or financial institution that can sit down with you, understand what you’re going through and try to keep you on track to where you want to be.
07:25 LJ: When someone comes in and they say, “I want to start a business,” there are very specific things that you look for. And I ran a business for 21 years and I remember, the one thing that I always just assumed if you ran a business, there wasn’t any personal attached to it, but really, your livelihood is you.
07:44 GF: Yes, you’re all in. And as we look for… If it’s a startup, we’re looking for a well-designed, well-articulated business plan. Have they done the market research, have they really crunched the numbers? And it doesn’t mean that they’re crunching them by themselves. I would encourage them to do it with a CPA, they need to have professionals in their court to help them develop that plan and solutions. Everybody has a great idea, it’s just how do you get there? And it isn’t coming to the financial institution or bank and borrowing a 100%. You’ve got to have some, what we call, skin in the game, as well. So, it’s important that you save those pennies, come up with some of your own resources, because you’re going to need that down the road. It’s going to be some bumps in there and you’ve got to be… You want to have the tenacity to be in for the long haul and be successful.
08:49 LJ: It must be, for you, so worthwhile to see the success. Especially, if there were bumps and you literally got to help somebody over that. And all of a sudden, wow, they can see how that planning and that tenacity mattered.
09:09 LJ: Yeah, absolutely. And that’s one of the rewarding parts of the job, especially… As I drive around our community and everything I see, ‘because I have several business development folks out there. I know all the deals that we’ve done out there and it’s so refreshing and reassuring to go around and say, “They’re a member, they’re a member. We’ve helped them. I’ve got a mortgage on that place,” but it’s just a lot… It’s very exciting.
09:37 LJ: When you hear the word “member,” that might be surprising to a business professional out in the community because what is a member?
09:47 GF: You have invested stake in this organization. [chuckle] Just like a traditional bank, they would have stockholders, we don’t have stockholders, we have members. And them, they, as with your share account, you have ownership and the membership in this organization, and you have invested interest as much as we do to be… You want us to be successful as we become… As you’re successful as a business, that helps us be successful and it just keeps going round and round.
10:14 LJ: When you’re looking at businesses, can businesses grow too fast?
10:19 GF: Absolutely, they can outstrip what their earnings a little bit. A lot of times, you’ll see them put the cart before the horse. The one thing that I’ll look at is, how much debt are they really… Are they carrying? That isn’t always a solution. And what… As you look at that, at what point do I need to restructure? Maybe not restructure, but I need to take a look at that. I’d say, the best time to grow is when your cash flow is supporting the additional expansion. Whether that’s a bigger building, additional equipment, you just got another contract to do more business with somebody; those are all the things that helps you grow and expand. They’re going to too, build up the cash reserves. Doesn’t mean you want to borrow for all that. And as I look at business, the best… Those that can survive tough times are the ones that have, I would say, cash stock pile or reserves, if you will. That’s important because there are going to be some bumps in a row, economically or otherwise, and the best way to survive that is having some cash around.
11:43 LJ: Did you see, I don’t… Where were you in the late 2000s when all of a sudden, the screech came to so many, not only personally, the housing market. And then, of course, business has to be hit by that. That’s when you’re talking about really planning ahead, just in case.
12:09 GF: Yes, yeah, absolutely. It just… Some of that’s common, it always does from time to time and you want to be able to have the staying power through that cycle ’cause you know it’s going to get better, there’s light at the end of the tunnel and cash enables you to do that, as well as your banker can help you work through some of those situations. And times will get better.
12:35 LJ: I think, one of the things that you really focused on that I think is a little bit unique is that relationship of knowing that business partner and sometimes, having to tell someone it’s what they might not want to hear.
12:53 GF: Yeah, those are the tough conversations. And we’ve had those same conversations with members here at the credit union or prospects that we call on from time to time, that this isn’t the right time to do that. And because of that advice, they come back in another year, or two years, and we revisit that and say, “Yeah, you did what we recommended and everything. You’re ready now.”
13:22 LJ: That must be just like, Wow.
13:24 GF: Yeah, it is, that’s awesome. And then you just see that grow from there, it’s awesome.
13:29 LJ: What do you… When you’re looking at the different types of businesses that come in the door, are you just amazed at how many different ideas are out there of… That people in our community, just are coming up with?
13:45 GF: The sky is the limit, really [chuckle]
13:48 LJ: Absolutely.
13:50 GF: It’s just amazing.
13:52 LJ: And you have taken the time to be that listening ear.
13:57 GF: Yeah, I always view myself as a good listener. It’s funny you mentioned that, about all the different businesses. A lot of times, I think, “Why couldn’t I think of that?
14:07 LJ: Gary Ferguson, he is the vice president of business services and he is delightful on our podcast, we’re going to be talking with him later on about growth in the industry. And I’m also going to tell you a little bit about why you’re kind of like the number one business banking in the country. I understand, Gary. [chuckle] Congrats, thank you so much for being with us today.
14:31 LJ: Thank you, thank you. Thanks, Lynne.