The Big Lessons of Small Business

Editor's note: This post originally appeared in the June issue of American Banker Magazine.

It's not like I go around telling everyone that I grew up the daughter of a small-business man, but when I do mention it to folks, I often sense that I'm somehow elevated in their eyes (at least temporarily), as though they can deduce now that I must be down to earth, with a strong work ethic and a special understanding of the meaning of personal sacrifice and genuine relationships.

This is partly because as a nation, we tend to overly romanticize the notion of small-business ownership. We all want to cheer for the little guy, for the artisan coffee roaster who dares to compete with Starbucks, for the independent bookseller who somehow outlasted Borders, or even for the community banker who challenges rules that appear to tilt the playing field in favor of the industry's much-maligned fat cats.

But we also afford respect to small-business owners (and their families) perhaps because we know how unromantic it can be to make a living this way—to keep the store open on Saturdays, to watch every expense diminish your income, to have your personal reputation and even your personal credit on the line every working day.

Small-business owners who invite their children into the experience, even in small ways, can impart important lessons that stick for life. Carrie Tolstedt, a senior executive at Wells Fargo, credits her father and his bakery in Nebraska for many of the ideals she brings to work every day overseeing retail, small-business and business banking for the third-largest U.S. bank by deposits. One of her strongest memories from her time spent at the bakery as a kid is of her dad giving her a bottle of Windex and pointing her toward the window on the front door, explaining that this was where customers would form their first impressions. To this day, Tolstedt says, she can't visit a Wells Fargo branch without first giving the glass doors out front the once-over.

My dad's business was in a rough section of Newark, N.J., which taught me a lot about life in a place that was worlds apart from the leafy suburb where we lived. I also learned how to file, how to arrange merchandise on peg boards and how to work a cash register. (As a kid I was sad when the old register—it must have been there from the time my grandfather's cousins started the business in 1931—got replaced by an electronic one that, even to a child's eyes, seemed to have no soul.)

Small business owners can have very different needs depending on their business models and their level of financial sophistication. My dad always kept a credit line for his business, a janitorial supply company with a retail hardware store out front, and he drew from it twice for big remodeling projects. But mainly he was a depositor. The retail operation was a cash business and the wholesale customers sent checks, so what my dad mostly wanted from his bank was a convenient location—preferably one he could walk to quickly without having to take the nearby shortcut known in the neighborhood as "Mugger's Lane."

Other business owners may be more dependent on credit. Or maybe they want more hand-holding when it comes to managing their enterprise's finances. (Several banks are now trying to make themselves a destination for trusted advice to small businesses. This month, we spotlight one such institution, KeyBank, which is rolling out a certification program for its small-business bankers.)

Small business has value for banks as a business line and as a gateway to building fuller relationships with small-business owners. And given America's romance with small business (despite shopping habits that suggest their hearts may lay elsewhere), it certainly can't hurt to be seen out there supporting mom and pop.

Heather Landy is Editor in Chief of American Banker Magazine.