Strategic financial advice for SMEs. Business and private.
Entrepreneurs want one thing above all: for their business to flourish. Achieving this takes precedence over many other things such as building up private wealth, but also questions of pension provision and succession. Andreas Gerber and Andreas Arni from Credit Suisse talk about how the bank provides strategic support for companies while keeping sight of what's important.
Credit Suisse has positioned itself as the "Bank for Entrepreneurs" for some time now. Was that not always the case?
Andreas Gerber: Credit Suisse was founded in the year 1856 by Alfred Escher, one of the greatest entrepreneurs of his time. Entrepreneurship has therefore always been part of our bank's DNA. However, what we now call Bank for Entrepreneurs goes much further. A company owner is always a private individual as well. With our Bank for Entrepreneurs strategy, we are taking a holistic approach to supporting entrepreneurs.
Andreas Arni: This means that in addition to typical SME solutions such as financing, leasing, payment transactions or internationalization, we also cover all topics that affect business and private matters at the same time: building up company and private assets, retirement provision, optimizing the tax situation, succession management. In the past, internal barriers within the bank prevented such a holistic approach. These barriers no longer exist.
Do you have a clear example of the holistic approach?
Gerber: Succession management is a good way to illustrate it. Let's say a business owner decides to pass the company on to his daughter. Before doing so, he wants to release part of the company's assets to keep for himself. So his daughter, as the new majority shareholder, will need financing to acquire the equities. We cover this with the corporate client business. Her father receives a certain amount that is paid out and helps his daughter to finance the equities through retainage. So this has automatically taken us to the private level. He receives the money. What does he do with it now? How does he approach his pension provision? How can he optimize his taxes – for the company and for himself privately?
Arni: Previously, the business owner would have been advised separately by a corporate client advisor and a private client advisor from the bank, and these two probably would not have communicated with each other. The advisory strategy was based on the bank's internal structure and in many banks that is still the case today. Credit Suisse recognized the disadvantages of such a model and changed it several years ago – with success. Our strategy is now based on the overall needs of the client.
Gerber: It is about having a dialogue on an equal footing. We want to understand the entrepreneur and the challenges they face. Only then can we bring the right solution to the table in every situation, be it for the company's requirements or for any private wealth requirements.
What does the bank's changed internal strategy look like?
Arni: We all sit very closely together and look after many business owners as a team, with someone from the corporate client area and someone from the private client area. The departments are very fluid and the advisors responsible communicate closely with each other. Our clients appreciate this and it is why we often become the SME's strategic partner. The SME then also benefits from a host of value-added services.
In which phase of a company does holistic banking support ideally start?
Arni: It varies a lot. In theory, it should begin when the company is founded, but smaller companies sometimes have very manageable requirements at the start: payment transactions, credit card, an account – that's all they need. But as soon as the SME grows and becomes profitable, the question of private financial planning also arises.
Gerber: It's important to bear in mind that most owners are not liquid. Profits are often invested again immediately. But often, we see managers who don't have time to give it much thought, since the day-to-day business takes precedence.
Arni: It is very worthwhile to review one's own asset strategy from time to time and go over the options with an expert. It's a kind of risk assessment in relation to oneself, the family, and the company.
What are the most important points about that risk?
Gerber: In addition to well-organized succession management, they are certainly tax matters and retirement provision. Entrepreneurs like to keep their pension capital in the company. That is understandable, but the risk cannot be explained away. Every business involves risks that are not always predictable. The entrepreneur must be aware of this and check whether there are other pension solutions that are not subject to the same risk cycles as his company.
Arni: That is an important point. At the end of 2018, Credit Suisse launched a new 1e pension solution for SMEs , which enables business owners to set up independent employee benefits insurance. Also with regard to tax optimization, it can be worth pursuing a long-term strategy and not leaving all funds in the company.
You previously mentioned additional services that your clients enjoy. What did you mean by that?
Gerber: Take our network, for example. As a regional bank that also operates internationally, we have a significant network that can be very helpful for many companies. One of the best examples is the Swiss Venture Club (SVC), with which we award entrepreneurs for their achievement every two years in seven regions of Switzerland in front of a big audience and with substantial media coverage. In Zurich alone, we have 2,500 guests at the Prix SVC, including investors. The network is used and valuable.
Arni: We also maintain a very active entrepreneur community through which entrepreneurs of SMEs can meet. There are specialist events, social events, people visit other companies, tell their stories, receive feedback, make new contacts.
Gerber: To my knowledge, we are also the only bank that also does something for the Boards of Directors. At what we call the Chairman's Table, we regularly give SME Boards of Directors the opportunity to discuss their experiences.
Are there also networks for start-ups?
Arni: Absolutely. We organize fundraising events for young founders to which experienced entrepreneurs are also invited. These experienced entrepreneurs provide not only funding, but also their know-how, for example by sitting on the Board of Directors and sharing their networks. The events are in high demand.
Gerber: It is a real win-win situation. The start-up receives financing and know-how, and the entrepreneurs have the opportunity to invest in something they believe in.
We also support start-ups with our involvement in the TOP 100 Swiss Startup Award, which is where 100 of the most promising start-ups that are less than five years old are recognized.
Do you provide other network opportunities for entrepreneurs?
Arni: We still haven't mentioned an important internal platform, which is our company exchange. Sometimes we have clients with no successor. Our client advisors can search for a match for them on the platform.
Gerber: Changes in framework conditions require agility, adaptability, and client orientation. If the entrepreneur acts strategically in good time, the company can survive for many generations. Credit Suisse, founded by Alfred Escher, is the best example of this.