Success is attracted by the person you become. Understanding banker psychology, projecting the right image, and mastering the art of the deal.
I Think I Can, I Know I Can
The author is a firm believer in the Law of Attraction. If you envision yourself with all the funding you need and a high Paydex, that's what you'll attract. If you don't believe you'll receive financing, you'll often be turned down.
Some business owners get so discouraged they don't even apply because they fear rejection. What's the worst that can happen? They say no. If you never give up on establishing corporate credit, you cannot fail.
97% of businesses fail within 5 years. To be in the 3%, you must stop thinking in numbers and start thinking in concepts. There is no absolute formula — techniques work only in the hands of a creative practitioner.
Dealing with Bankers
Bankers are humans who eat, sleep, and make mistakes. They put their pants on one leg at a time. They're paid to make loans — if they don't make loans, they won't have a job. If they make too many bad loans, they get fired. And they're paid very poorly. This is the "banker's tightrope."
The Banker's Thought Process
"Is this loan going to come back and blow up in my face? If somebody in upper management looks at this and asks why I made it, do I have all the documentation in the file that makes it look good? I don't even care if it is good — I just don't want anybody to say I made a bad judgment."
A banker's foremost thought is always whether a decision makes him look good. He's interested in a good-looking file — one with everything in it. If something is missing, there should be something in its place to make up for it.
Consumer vs. Commercial Loans
Consumer Loans
Small loans for cars, boats, vacations. Pennies compared to commercial loans. Higher default probability. Banker judges your personal credit = personal liability. Bankers feel indifferent toward consumer loans.
Commercial Loans
Larger, for business purposes. Businesses have offsetting balances on deposit. Multiple income streams. Secondary repayment sources. Borrowed money used to make more money, not buy luxuries. Bankers feel these are safe.
Image Is Everything
The author's story: At 18, he started in real estate with beat-up moccasins and two dress shirts. He was skeptical because of his age. After closing a few loans, he bought suits, dress socks, dress shoes, a briefcase, and a nice pen with his initials. He got double the loans.
People still asked how business was — because he drove a beat-up Honda SUV. After buying a BMW 328i, he got more loans than he knew what to do with. People stopped questioning him. They referred more people. He became the top loan officer in the region within months — outperforming veterans who'd been there for years.
The Lesson
Look the part even if there's not much in your pocket. Use the image of money to attract money. A person who gives the appearance of a failure tends to become a failure.
Banker's dress code: Dark conservative clothing, preferably a suit. Gray flannel, dark wool, or subtle pinstripes. Dress socks and shoes to match. Business cards, briefcase, and a nice pen (with initials if possible).
5 Things Billionaires Don't Do
1. Don't put all eggs in one basket
Make rounds at 5-10 different loan and equity sources, taking the maximum from each. This is called "stacking." Plan a search schedule on a calendar. Have your secretary make appointments. Inertia carries you through the toughest rejections.
2. Don't make their own appointments
Have a secretary, friend, or relative book appointments. This gives off the image of a successful businessman. Third-party introductions help break the ice.
3. Don't fill out applications
Consumers fill out forms. Billionaires have a third party introduce them, meet at a neutral zone (not their office or yours), and don't bring financials to the first meeting. It's strictly for rapport. Let the banker know your secretary will send financials later.
4. Don't talk to underlings
Only talk to the person who makes the final decision. Spending time convincing someone who can't approve is a waste. If they love the proposal but the big dog doesn't agree, it means nothing.
5. Don't beg
They never ask for anything. They let the banker know what they're planning and how much they need. They double the amount needed so they're not turned down for asking too little. They inform each source they're shopping for the best terms. Secretary follows up after a few days — but never call too much (seems desperate).
Assessing a Banker's Needs
Listen for what the banker needs, not just what he says he wants. Read between the lines.
If a banker asks for something you don't have, don't say you don't have it. Create something to offer in its place. Give him something so he doesn't have a blank space in his file.
Example: If you don't have your business tax returns yet (filed an extension), provide 12 months of bank statements in their place.
Golden Rule
ONLY GIVE THE LENDER WHAT THEY ASK FOR. You don't want a messy file as thick as a phone book — underwriters gravitate toward cleaner, thinner files. Don't open a can of worms. They might not notice what you don't include.
The Luncheon with the Banker
Invite the banker to lunch at a nice restaurant — neutral ground, outside their office where they have the edge.
Billionaire Mindset Readiness
Score
5/10
Add $10M to Your Balance Sheet for Under $50
Form your corporation in Nevada or Wyoming where state law allows you to assign any par value to your stock. Assign $1 par value to 10,000,000 shares and list them as "assets." Add the corporate stock as assets to your business balance sheet. This gives the corporation the image of a Fortune 500 company, and you the image of a multimillion-dollar business owner.
Which of the '5 Things Billionaires Don't Do' is your biggest growth edge?