The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Grow Baby, Grow!

On April 14th, 2014, posted in: Uncategorized by

pile of pennies growing a plant

I’m a big proponent of growth and tell everyone as such. Lo and behold, somebody asked me these questions the other day: “Why grow the business?” “How much growth?” “When is enough enough… or worse yet, when is it too much?”

Built into the business model of a credit union is the charge to be a “not-for-profit” cooperative. Two thoughts emerge from this charge:

  1. We are to return as much of our earnings as we possibly can to our members for their benefit — after all, they are our stakeholders (we don’t have shareholders).
  2. By the very definition of “cooperative,” we are about inclusion. Webster’s Dictionary defines “cooperative” as those “engaged in a joint economic activity.” Webster also states, “an enterprise owned jointly by those who use its facilities or services.” The operative root word in both definitions is “joint.”

Credit unions are not chartered to be a closed club. We are not chartered to be a sole proprietorship. In fact, we are a quasi-public-private entity. The federal government guarantees that deposits have the full faith and protection of the U.S. government. I don’t think you can take U.S. government support and resources and use them for the benefit of just a few. By default, public backing does not allow you to be a private club.

Would McDonald’s exist today if Ray Kroc was only interested in his first store being successful? Would Wal-Mart exist today if Sam Walton stuck to just one or two stores? Chances are that neither would be a viable business today if a myopic, limiting viewpoint of growth was allowed to prevail. The path to success is littered with failed small businesses who chose not to grow to meet the demands of an ever-growing, dynamically changing marketplace.

I think my short answer to “why grow” is:

  1. It is our mission and charter
  2. We’re not a private club
  3. Why slow down the progress of something that is proven to work?

I think my short answer to “How much growth?”, i.e. “How big do we want to be?” is:

  1. As long as it is a benefit to the members
  2. As long as it has “scalability” long term
  3. As long as the marketplace demand exceeds the costs of growth ( i.e. supply)

When is “enough enough” or better yet, “too much?” When there is no longer ROI (return on investment) or ROE (return on equity) to justify doing more. We are not-for-profit. Giveback is important. We must be prudent, but accepting less in ROI/ROE isn’t what our business model is designed to do. We give back through continued growth.

What’s the alternative? You don’t want this guy running the credit union, do you? : “I pledge to help the credit union to become stagnant. We will do nothing to serve the members beyond what we’re doing today. We will give the staff a raise every year, and because we’ll lose the good ones (because there is no opportunity to advance), we’ll save money. Service will suffer under this plan, but the good news is that members will close their accounts and will stagnate faster.” Seems silly, don’t you think?

Grow baby, grow! “Leave it better than you found it,” is what my dad used to say. Yep, I get it.

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