The BIGG Successs Show
Don't Fear the Banker!
If you understand these 3 things, your banker won't be so intimidating! Read our show summary at biggsuccess.com.
Welcome to The Big Success Show! Today we say, don't fear The Banker! The Big Success Show, with George and Mary Lynn. Boy Mary Lynn, I thought you were heading for Blue Oyster Cult there for just a second. Neneer, neer, neer, neer. You know, I think the point here is that unseasoned entrepreneurs, and I think even some seasoned ones, this thought of going to the bank to get alone can be very intimidating. Well yeah, because a lot of us are very uncomfortable talking about money when it comes to negotiating our salary, asking for the sale, and what we're focusing on today, asking for a loan. And you have to mentally prepare yourself for any of these situations, but I think the thing is, we don't go to the bank that often, so it seems like this mysterious process. You know, how do they determine whether or not I'm going to get the loan? But if we understand where bankers are coming from, then we're in a better position to get the money we need. And so there are three things to understand about your banker. First one is, banks can't afford to lose money. Now I think a lot of people just don't understand this. The banks operate on very thin profit margins. So contrary to popular belief, they don't make that much money on every loan. So the banker's primary focus is, will we get paid back? Not how much will we make? And they're more concerned about the return of their investment than the return on their investment. That second part comes later. They want to feel comfortable that they're going to get their money back before they think about anything else, which leads us to the second point. Banks don't fund startups. And this is, I think, one of the biggest misperceptions in the business world. People think, hey, if I'm going to start a business and I need money, I'm just going to go to the bank and get a loan for it. To which we say, refer to our first point, right? Banks can't afford to lose money. You know, startups are unproven ventures. Bankers are relatively risk averse for the reasons we just learned. So banks don't tend to lend money to new businesses. And what's confusing about this, George, is that I do know a lot of people who got money to start their business from a bank. Yeah, Mary Lynn, but I think the thing is the bank wasn't loaning money to their business. They loan money to the individual for their business. And I'll bet you, if we surveyed those business owners, we'd find that in almost every case, if not in every case, that they secured the loan with equity in their house or some other asset. Okay, and the third thing that you need to understand about bankers, banks do need to lend money. That is their business. So if you need money and you can prove that you can pay it back and you have some assets to secure the loan, by all means, go to the bank with confidence. And coming up, how a business you frequently visit for fun is more like a bank than you would have ever imagined. Today, we're talking about banks and bankers and we've shared three things to understand about your banker to make asking for money less intimidating. Now here's a way to think about it. Your bank is just like your favorite video store. That's right, Mary Lynn. It's hard to believe, isn't it? But the thing is video stores rent DVDs for a fee. Banks simply rent money for a fee. So going to the bank is just like renting a movie. You have to return the movie and pay a fee. And here's the cool thing about bankers. They don't charge you that fee up front like a video store would. Yeah, but the bummer is they don't sell those individual microwave popcorn packages. I give them time. Yeah, that's coming. You can get a written summary of today's show on our blog at big success.com. And if you enjoyed what you heard today, subscribe to us on iTunes who make it real easy for you to do on our website. Let's get our big quote for today. Our big quote today comes from Stephen Covey who said seek first to understand then to be understood. So understand your banker's needs so you stand to get your money needs. Next time we'll talk about how to offer criticism without being critical. And until then, here's to your big success. The big success show at B.I.G.G. success.com. (birds chirping) [BLANK_AUDIO]