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The Care and Feeding of Your Local Banker
How to Keep the Credit Flowing
By Bill Barrett, Studio One
That Product is Money
Banks are not public utilities. They are profit-making businesses with a product to sell or rent. That product is money. Don't let all the marble and columns and leather chairs and solemn atmosphere fool you. They are bottom-line oriented, and each banker who has an actual desk in the bank's "front end" has a portfolio of customers they "brought in" and are more or less credited with or blamed for, personally. Banks don't "give" you loans. They rent you the power money conveys. Nowadays, they are every bit as profitable as the very most profitable of legitimate businesses. Who owns the biggest buildings in any town?
Be a Regular Customer
Become a Real Person to your Personal Banker. Only do your most routine transactions with a teller at a window. Don't use ATM's for anything. Become A Regular Customer. Use your personal banker as a sounding board for simple business operations advice, and to refer you to other services you need,. like CPA's or laywers. As you are referred to others, tell them who sent you. Your personal banker is probably not much more sophisticated in business than you are, but let them think they are a Valued Advisor. You'd be surprised how many people--who really form the financial structure of your town--that they know. The Local Chamber of Commerce network is far more influential than you probably think. Join it, and you'll quickly see. Banks "give" loans to people they feel comfortable with--especially when all the formula rating methods are a bit on the edge.
Your personal banker has what amounts to a "floor limit" for loans and activities that they can handle on their own discretion without messy complexities like supervisors and committees. It's probably 5-10 thousand if they have a desk out in the open in the "front end", and probably 10-25 thousand if they have a small office with a door. Beyond that, things get more complex. Break your butt to never let this person down, to never violate the trust they put in you. If this person changes banks, go with them to the new bank. If they get promoted out of a position where they can continue with you, ask them to make an intro to somebody who can carry on with you. There is probably no more important single trade relationship you'll ever have.
Finding the right bank
It's a service business. If you think you have the wrong bank how, here's one way to get off on the right foot with a new one. Find the bank that has the hours and location you want. Make it a small one-town, two or three office bank. Huge institutions will never treat you with any respect, or any personal service. Their great power is of no use to you. Next time you score a two or three thousand dollar check from a client, go into the new bank you've identified as a good one, and use that check to set up a new business checking account. (Don't open the account with Chump Change. Be a "player".)
Go in at around ten a.m. on a Tuesday, Wednesday, or a Thursday. Things are slowest then, and they'll have time to talk to you, to learn a little about who you are. Tell them all about your business, especially where you want to take it over time. (Don't be a bore.) Take plenty of time to get the right type of account, with the right business checks and book format, and especially with the right monthly charges and suite of services.
Try like hell to make your account "bounce proof" by giving your personal banker your home phone number, or a small security deposit in another account--whatever it takes. Let your new personal banker determine just how to do it--it starts to get them psychologically invested in you as a person. Visit with them personally from time to time on some thin excuse to keep up the continuous personal contact.
Sounds like a lot of trouble? It is. But it's going to be vitally important to putting over your first few deals--like when you need a fast 3,000 dollars to finance a project you just landed. Walk in with a solid purchase order, show it to them, and enlist their help in fronting you a few thousand on a sixty day business note against the p.o. Assume they want to help you. Do this entire process all over again at another bank if they don't.
(When you need the cash NOW is too late. All this groundwork needs to be done well in advance of that first urgent and timely need.)
Don't lease anything. Buy it with a bank loan. Rent it from a rental house. Leasing only makes money for the lessor, and the back ends of many leases really suck. The tax advantages are quickly lost in the higher-than-a-loan total cost of the leasing plan. Show your personal banker any potential leasing deal, and chances are they'll leap into showing you how a bank loan is a better deal..... See how this works?
Send Biz to Your Banker
Send good people to Your Banker. NOT just to your bank--to Your Banker. Tell them to make it clear to Your Banker who sent them. Don't send any flakes or duds. (Send them to the bank you hate.) Love your bank. Talk up your bank. Word will get around....
Keep Things Businesslike
Don't make Your Banker a personal friend. Keep it businesslike. If your bank turns evil, you might have to move out. This is much harder if you get to feel you're pulling the plug on a friend. Banks have no loyalty, and neither should you.
You cannot succeed without a good bank behind you. Water and fertilize this relationship regularly. It's your single most important trade relationship. (Yes, I know I said that twice...)
I hope you find some of this useful....
Thus armed, go forth, and swing a mighty sword....
Bill Barrett is a partner in Studio One in Ridgefield CT. He's been in the video business for eighteen years. He can be reached at (203) 438-3117, MoovyMagic@aol.com, www.eci.com/StudioOne.