This is the fourth in a continuing series of articles from Ron’s newest book, Getting to Yes with Your Banker, which includes 93 secrets you likely didn’t know about dealing with your banker. Presented in a Click and Clack format, from an entrepreneur’s and a lender’s perspective, the book is co-authored by Ron Sturgeon, a serial entrepreneur, and Greg Morse, founder and president of Worthington National Bank, a community bank with four locations throughout Tarrant County.
The book is packed with tips and advice about how to choose and get along with a banker, what your banker wants to see, and other valuable tips for both start ups and existing businesses from a banker’s and entrepreneur’s perspective. Today’s article continues our discussion of finding the right banker.
How to Choose (and Court) a Banker
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 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 in and say hello 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 best meet your needs. In Ron’s book, Green Weenies and Due Diligence, this phase is called a “beauty contest”. As part of this phase, you’re going to size up the competition and see which bank looks the best to you. But don’t worry — being a judge in this beauty contest doesn’t mean that you’ll have to see your banker in a swimsuit.
Looking for the Right Banker
Greg: Banks, like doctors, specialize in different things. If your hand hurts, you’re not going to go to a heart doctor. If you have a brain tumor, you see a neurosurgeon. 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 credit unions 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.
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.
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 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 lending decisions based on very black-and-white numbers.
Greg: Walking in the door is exactly the wrong thing to do. A better way is to find out where someone else banks and get them to refer you.
Ron: Instead of just getting a referral, I would even ask that friend to call the bank as a sounding board and open the door a little bit. You know, maybe have this person call up and say, “I have a friend who’s a car dealer, and he’s looking for a loan, but I wasn’t sure if you guys did loans for car dealers.”
Greg: That’s a good idea. I’m also big on choosing someone who has common interests with you. It might be hunting, fishing or golf; whatever it might be, it helps to have some common ground.
Next time, we will talk more about what kind of experience the right banker should have.
Remember only you can make business great!
Ron Sturgeon, business owner, consultant and peer bench marketing leader, combines over 35 years of entrepreneurship with an extensive resume in consulting, speaking and business writing. Ron can be reached at 5940 Eden, Haltom City, TX 76117, 817-834-3625 or by email at rons@MrMissonPossible.com.