Sioux Falls Business and Banking Climate

Part
01
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Part
01

Small Business Owners Demographics

Introduction

A demographic profile of typical small business owners in North Central U.S. has been provided. The demographic data points have been provided for gender, race, income, social/marital status, and age. Where details specific to North Central U.S. were unavailable, an expansion has been done to the U.S. as a whole. More details can be found in the Research Strategy Section.

Sex/Gender

  • In 2012, small business ownership in South Dakota according to gender was as follows:
    • Female- 23.7k firms.
    • Male- 42.3k firms.
  • In 2016, the approximate average number of South Dakota employees per small business based on the owner's gender was as follows:

Race

  • In 2016, the approximate average number of South Dakota employees per small business based on the owner's race was as follows:

Income

For South Dakota:
    • In 2018, the median income for individuals that were self-employed in their incorporated businesses was $51,346. For those self-employed at their unincorporated firms, the median income was $29,099.
    • In 2015, the median income for individuals that were self-employed in their incorporated businesses was $43,594. For those self-employed at their unincorporated firms, the median income was $31,236.

Social/Marital Status

  • Small business owners are usually from traditional households whereby there is a male head who is married with children.
  • Small business owners are more likely to be married compared to the general population by 42%.
  • They are also "25% more likely to have children and 11% more likely to be homeowners."

Age

  • The national average age of small business owners is 50.3 years.
  • Generally, most small business owners are within three to four years of the national average.
  • Small business owners in the insurance and financial professions are the oldest, at 54.1 years. Those in the construction industry are the youngest, at 48.3 years.

Research Strategy

For this research on small business owners demographics, we relied on the most credible sources of information such as the U.S. Small Business Administration and Experian. Due to the limited availability of sources, we had to rely on one source from 2017. However, it provided valuable insights into small businesses in South Dakota. We had to expand to the US as a whole after exhausting all the publicly available information and data specific to Sioux Falls, South Dakota and North Central U.S. Therefore, for social/marital status and age, we have provided data for the U.S. as a whole.
Part
02
of two
Part
02

Small Businesses Overview

Key Takeaways:

  • Banking, Loans, and Insurance products are among the main products offered to small businesses by local banks in Sioux Falls, South Dakota.
  • Checking and Savings accounts are among the most prevalent features of banking products offered to small businesses in the city.
  • Notably, almost all banking products in South Dakota offer online banking options. Insurance and loans products reach clients mainly through offline channels.

Introduction:

  • This report provides insights into how businesses in North Central US are being served by local banks. There was no data on the issues that they're facing. The available information has been provided below, as well as an explanation of the methodology used.

Main Products and Delivery Modes

  • To provide the main products offered by local banks, the research team analyzed the websites of multiple community banks in Sioux Falls, South Dakota. Main was defined as the products offered by several banks. Local banks were defined as those whose operation is solely in Sioux Falls, South Dakota, or those whose operations are not beyond the North Central U.S. region.
  • Notably, almost all banking products in South Dakota offer online banking options. Insurance products reach clients through bank branches and agents. Most banks provide contacts or location information for potential customers of business loans.

Banking Products

  • Local banks offer banking products to small businesses in Sioux Falls, South Dakota. Banking products are mostly offered through checking accounts. This was established after a review of over 10 local banks showed that it was the feature that appeared in all banking products.
  • Also, local banks offer banking services to small businesses through savings accounts. This is the second most prevalent feature.
  • Other ways in which banking products are offered to small businesses include cash management and credit card options. Cash management involves the means through which small businesses can access their accounts and manage their money. These include online banking, e-statements, and wire transfers, among others.

Loans Products

  • Loans products mostly reach small businesses in Sioux Falls, South Dakota through commercial loans. These include term loans, credit lines, and SBA loans. Term loans include loans to finance commercial real estate, equipment, inventory, and equipment loans.
  • Some banks, including Dakota Bank and Central Bank Online, offer "Small Business Administration (SBA) Loans," which is an SBA initiative that guarantees lenders for the cash borrowed by small businesses. SBA loans include export assistance loans and 7(a) loans, which are used for purposes such as equipment purchases, working capital, existing debt refinancing, and revolving funds, among others.
  • Most banks also offer agricultural loans within their business loans products. These may be used for equipment purchases, livestock and land purchases, and refinancing, among others.

Insurance Products

  • Several banks operating in the city, including Bank Midwest and Central Bank Online, offer insurance products. These products usually include commercial insurance and health plans for employees. Commercial products are offered through property, risk, and liability, and crime insurance, among others.

Banking Challenges Faced

  • The research team searched unsuccessfully through media reports and industry-focused resources to provide the main issues/challenges that small businesses have with local banks. The search was also extended to customer review sites such as Bankrate and Yelp, as well as individual social media reviews. However, most customers only highlight their experiences, rather than what small businesses experience.
  • The research team also searched through the reports and websites of banking organizations and authorities in South Dakota. These include the South Dakota Banking Association and South Dakota's regulation divisions. They only provide the issues experienced by banks, especially risk, and consumer-facing information on how to report banking malpractices.
  • The research scope was later expanded to the entire North Central U.S. region, with no success. Therefore, to provide value, the research team has broadened the explanation of the products offered to include descriptions of their key features.

Research Strategy

The research strategy for each section has been provided above. Notably, the research team looked at all the 30-plus banks available in the city and only used the information provided by those that seem to focus on the city and South Dakota. Although the banks do not explicitly mention that they target small businesses, the products provided would be relevant to small businesses since 99% of businesses in South Dakota are small businesses.

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