Author: webmin

Having the right contacts is crucial in the business realm, and in banking, it’s one of the most important assets you can have. From the bankers’ standpoint, the more they put themselves out in the community, the more people they’re going to meet — and the better their chances are of converting acquaintances into customers.

As a businessperson, it’s important to be visible to the banker. So it stands to reason that if the banker is active in the community, a good way to stay on that banker’s radar screen is also to be involved in civic and social activities. This will pay off in many other ways; it’s likely that you will meet potential customers or other professionals who can boost your business.

Lesson No. 1 – See and Be Seen

Ron: It’s not who you know, it’s who knows you. In other words, I might not know a certain banker, but if I’m out in the community doing things, the banker might know who I am and would want to get my business.
Greg: That’s how I met you — you didn’t know me, but I knew who you were. From a banker’s standpoint, I want to be out in the community, meeting people. Then if you need to borrow money, you’re going to think of me, and I will probably know who you are. That’s going to help move the banking relationship forward.
Ron: Okay, so once you know who someone is, what kinds of things do you want to know about the customer?

Greg: I want to know that you’re confident, that you’re experienced in what you do and that your credit report is clean. I want to know that you’re a person of your word. It’s also a big
plus for me if you’re active in the community. I’m a firm believer that your rent to society is your community service. So, if I see somebody being a troop leader, they are out there paying their rent to society. That factors into my decision.

Ron: That first meeting is really important. I call it a leg sniff because you’re sizing each other up. At that point, it’s less about how many widgets you’re going to produce and how much profit that’s going to make, and more about your character and how they feel about you. Bankers all have their own little hot spot and their own little things that help them determine on the leg sniff whether they like you or not. I cannot emphasize enough the importance of preparing for this meeting, and being buttoned up on the presentation. I always tell people they should send the presentation at least two days before the meeting. The banker isn’t interested in hearing a presentation about a bunch of boring (but necessary) stuff. The meeting will be much more productive if he’s had time to review the materials, including a personal financial statement and a printout of a tri-bureau credit report (which will speak indirectly to your character, and keeps him from wondering or running a report, adding to your inquiries). You do monitor your credit report at least quarterly, right, including scores? But if you aren’t buttoned up and ready to discuss the material, you may lose all credibility. Bankers have an uncanny knack to go right to the one aspect of the presentation where you are weakest. You should consider presenting it to a knowledgeable friend, or present it to a bank you don’t expect to do business with, and after you get your teeth in your throat with a strong “No,” you will be ready for a banker you like and think you are most likely to do business with.
Greg: I always love a customer who knows their stuff, and having the presentation in advance lets me know they are serious, and doesn’t want to waste either of our time.
Ron: After they’ve created that relationship, customers need to be seen in the bank. You don’t even have to speak to the banker; they just need to see you.

Most people won’t start looking for a banker until they need money, which is a lot like looking for a spouse when you decide you’re ready to start a family. Finding the banker who is right for you takes a lot more time and planning than most people realize, and it’s something that should be done long before you think you’re going to need one.

Banking isn’t an event that happens spontaneously; rather, it’s a process that needs to be approached carefully and strategically. The first, and probably most important, step is to create a relationship that opens the door for the banking process. Greg advises doing all of your banking in person so that you can get to know more of the people at the bank. Ron adds that this is perhaps impractical for many business owners, but you do have to

know your banker and the staff. Make sure that when feasible, you don’t use the drive through for deposits, go in. Stop and say hi at least once monthly, perhaps while cashing a check.
But before you do that, you’ll need to

spend some time researching the banks that are accessible to you and finding out which ones would best meet your needs. In Ron’s book, Green Weenies and Due Diligence, it’s called a “beauty contest.” It means you’re going to size up the competition and see which one looks the best to you. But don’t worry — this doesn’t mean that you’ll have to see your banker in a swimsuit competition.
Lesson No. 1 – Looking for the Right Banker

Greg:  Banks are like doctors. They specialize in different things. If your hand hurts, you’re not going to go to a heart doctor. If you v Getting to Yes With Your Banker v 36
have a brain tumor, you see a neurosurgeon. Banks are the same way. If you’re a businessperson, you need to find a business bank, not a consumer bank. For example, you don’t want to go to a credit union if you’re looking for a business loan, because they specialize in consumers.

You need to look at what your needs are and what that bank provides. Don’t try to fool a banker, they’ve seen it all, and know it when they see all hat and no cattle.
You also need to look at whether you need a big national chain or a local bank. If you have 100 locations, maybe it’s important for you to have a chain that can serve you in a lot of locations. But if you have a single location, maybe you would be better off with a local bank. You need a bank where you can go in, state your case and have the person across the table be able to make a decision. And if it’s for your business, you need to make sure that it’s a business bank. You have to find a bank that does what you do.

Ron: Personally, I think that all banks are greedy. Any bank that you call up and say, “I want to finance a car” or “I want to finance some equipment or get a loan for my company” — they’ll all say yes. I don’t think everyone knows whether a bank is a consumer bank or a business bank, so how do people find out?

Greg: You should be able to find that on the bank’s web site. Most banks’ web sites will tell you what the bank does. They’ll have some catchy lines and slogans that don’t really say anything; you have to go through all that and make sure that the bank can do what you need it to be able to do.
Ron:

Once you’ve found the bank you want to do business with, how do you choose whom in the bank to talk to? All of the people on the lower floor of the bank are called “relationship bankers,” which is a b.s. term, but it impresses people. Anyone who walks in or calls the bank without knowing who they are going to meet is going to be paired with a “relationship banker.” All that means is that he or she is going to be dealing with someone at a very low level, who is very young, has a very low loan-lending limit and makes decisions based on very black-and-white numbers.

If you ask most people what their greatest business need is, they’ll answer “money.” Whether that business has been around for a few years, is a start-up venture or is still a plan written on a scrap of paper, many entrepreneurs believe that the only thing holding them back is a bigger supply of money.

That’s probably the furthest thing from the truth. If you give a struggling business more money, chances are good that all it’s going to do is lose more money. Why? Because that business hasn’t figured out what its true business issues are. The owner hasn’t taken the time to address the genuine problems facing his or her business — so more money is only going to feed those problems.

The truth is, there is plenty of money in the world today. Banks are sitting on money, investors are sitting on money and individuals are sitting on money, all waiting for the right opportunity to put that money to work. And while there are millions of ideas for businesses out there, very few people can take those ideas, connect them with the money and turn them into successful ventures.

Lesson No. 1: Know What You Need – And Why You Need It.

Greg: As a banker, I constantly see people who think all they need is more money. For example, I had a prospect who came into the bank who owned an ice cream store. He and his buddy had gone into business together and each of them had put in $100,000, and now they’re both broke and don’t know what to do. They were delinquent on payroll, owed back taxes and had no business plan. A business plan needs to be clearly articulated, to include directions how one will reach their vision. Dreams don’t have directions.

What he did have was a big pile of receipts — a pretty good sign that he didn’t know where he had been or where he was going. He was completely blind. He thought they had a competitive advantage with this ice cream they were selling, but he hadn’t even thought about how many scoops of ice cream he had to sell just to pay to finish out his building! If you can’t put your competitive advantage into numbers, is it really a competitive advantage?

You have to know how much money you need now. You have to know why you need it. And you have to know how much you’re going to need going forward.

Ron: So, he hadn’t figured out what his metrics were? Metrics are the numerical measurements of performance for a business. The simplest might be sales per month, but many more are needed to understand your business, such as more complex ones like average client acquisition cost. (For more information on client acquisition cost, visit Ron’s web site and blog, www.MrMissionPossible.com.) Money was the last thing he needed! He needed to find out how he got that tax lien — and what he was going to do differently if they ran short of money.

In [my book] Green Weenies, we had a question: “How big is the hole and how are we going to fill it?” In other words, how big is the deficit, and what plan can we devise to erase it? It’s an estimate of how much sales or income you’ll need to solve the problem. A lot of people just don’t spend enough time — especially when they’re in trouble and even when they’re just starting out — trying to understand how big the hole is and how they are going to fill it.

Greg: That’s a good point. I asked this prospect, “How much money are you going to lose every month?” and he said, “I don’t know that we do lose money every month.” He had no idea what his financial statements said.

Ron: Customers who are heading to the bank looking for a loan need to look over their financial statements and meet with their accountant to make sure they understand what all the numbers