How one company owner wooed his bankers -- and got great service in return
Let me introduce you to some unusual bankers. They're unusual because they agreed to talk to me about one of their customers. That's rare. Rarer still, though, was their conversation about him:
Assistant vice-president: "I have 15 or 20 accounts, and I would say that his is one of the accounts I have the least concern about."
Senior vice-president: "If he wanted to start another business, it would be a lot easier to obtain financing from us."
Vice-president: "We're very careful about financing start-ups, but we would do it with someone like Bruce."
Senior vice-president: "He'd be welcomed with open arms."
In case you don't recognize this breed, they're called happy bankers. They feel this way because Bruce W. Neurohr, their customer, understands romance. Most people grasp what's involved in the birth of romance: you share your innermost secrets, anticipate each other's desires, swear eternal loyalty. That's the way most relationships, even with banks, begin.
Where Neurohr excels is in keeping romance alive. His prescription includes the obvious -- scrupulously meeting loan payments on time, for example. But it also calls on some old standbys that most people would never use on their bankers: flowers and flattery.
We could be very formal about this and call Neurohr's approach a financial marketing strategy -- because that's exactly what it is. But then we'd miss the essence of Neurohr's philosophy, which is personal: "You want everyone at the bank to like you as they would like a social acquaintance," Neurohr explains. "It's very important to sell them all the time. Otherwise, it becomes easy for them to call the loans because they don't know you very well."
Neurohr has given a lot of thought to the care of bankers for a couple of reasons. First, the success of his Atlanta-based business, Transamerica Energy Associates Inc., depends entirely on how well he treats people. Transamerica is a sophisticated temporary-help agency that places engineering personnel and negotiators skilled in land acquisition for stints of six months or longer in large companies. Such a "body shop," Neurohr reasoned when he started Transamerica seven years ago at age 27, is only as good as the bodies it can attract. He decided to try to draw the best by treating them better than his competitors do.
The second reason Neurohr works so hard on his relationship with his current bank, Bank South, is that relations with his previous bank were so bad. Profitable since 1985, Transamerica has also enjoyed impressive revenue and margin growth. Last year sales grew to $11.6 million from $7.7 million. Despite its strong performance and a perfect interest-repayment record, last year Neurohr's former bank refused to renew his $550,000 line of credit unless it continued to be backed by a letter of credit from another bank.
Neurohr didn't mind borrowing on a secured basis. In fact, he was eager to use Transamerica's receivables as collateral. From such blue-chip customers as AT&T, MCI Communications, and Enron, the receivables were far more creditworthy than Transamerica was. What's more, they represented services already rendered -- the only risk was whether an AT&T would pay its bills. But banks just aren't used to lending against receivables unless the borrower has an inventory of tangible products. Until he found Bank South, Neurohr found it almost impossible to get a banker to extend receivables financing to a service business.
So when the bank agreed to extend a $1.5-million line of credit, Neurohr was determined to prevent a recurrence of his past experience. His first move was symbolic, but the bankers remember it. In return for Bank South's confidence in Transamerica, Neurohr explained in a letter to Bank South's senior vice-president Richard Suever that Transamerica would express its confidence in the bank by buying 1,000 shares of the bank's stock. "I wanted to demonstrate that we have a vested interest in this relationship," Neurohr recalls.
Some of Neurohr's most effective moves have been just as simple. Take thank-you letters, for example. Getting a thank-you note from a customer is all very well and good. Let's face it, though, in the getting-a-promotion-and-a-big-raise sense, it's meaningless. But what if, instead, your boss gets the letter? What if the customer not only expresses thanks but also praises you and your work? Neurohr finds such letters a win-win strategy. Bosses are happy because their people are doing good work; the subordinates feel great that someone (finally) told the boss.
There's more going on here than good feelings, however. All too familiar with the high turnover of account officers at banks, Neurohr is building relationships with as many people in as many areas of the bank as he can. He considers ties to four layers of management the minimum acceptable for Transamerica. As a result, says Eugene R. Casey, a Bank South senior vice-president, "Our files are full of letters that he wrote to me, to our president, to branch employees, to the branch manager. He has paved his own way in this bank.'
Neurohr has generated goodwill in concrete ways as well. Though it wasn't required for the credit line that Bank South granted him, he strengthened his new relationship by bringing the bank ancillary business. He sent a memo to his employees about how important Bank South was to Transamerica (getting right to the heart of the matter, Neurohr pointed out that the bank had made it possible for the company to pay them) and suggested that they give Bank South their checking and other personal business. Nearly everyone complied.
Neurohr also brought Transamerica's $160,000 profit-sharing trust, a $1.5-million escrow account for AT&T, and all of his personal savings and investments into the bank. Not only does this extra business make Transamerica a more profitable account for Bank South, it extends Neurohr's reputation. Whenever the company's name comes up, it gets recognition from several quarters, says Lewis Spiller, the bank vice-president who helped Neurohr initiate a relationship with Bank South.
So where's the payoff in Neurohr's bankwide celebrity? In the year that Neurohr has been a Bank South customer, he's enjoyed immediate attention when problems arise, service that has been customized for his needs on the AT&T escrow account, and an offer to discuss financing additional business opportunities. Then there's what we might call the quality-of-life factor. Neurohr boasts that he gets taken to lunch by his bankers, instead of the other way around. He joined the local Chamber of Commerce at the invitation of one of his bankers and has received tickets to an Atlanta Hawks basketball playoff game. Neurohr, for his part, has sent flowers to a banker who was in the hospital.
But the most important benefit will be obvious when Neurohr's credit line is up for renewal. The bankers say it will certainly be renewed. His account may even "graduate" to another group within the bank. That would mean Transamerica would receive less intensive financial monitoring and perhaps a slightly lower borrowing rate.
Of course, all of Neurohr's niceties would be meaningless if he hadn't been able to run Transamerica profitably. Yet profitable businesses, especially small ones, don't usually make nearly the impression that Neurohr has at Bank South. Casey concludes, "He can be doing the best job in the world, but this is a people business."
ODE TO A BANKER
Writing a first-class financial summary
Selling yourself to your banker may be important, but getting a banker in the first place is obviously the most critical sales job you've got. A first-class financial summary won't necessarily work wonders. Bruce Neurohr sent one to a half-dozen banks, but he didn't get a half-dozen loan offers. Still, it was his prospectus that smoothed the way at Bank South, Neurohr's current bank. His company, Transamerica Energy Associates Inc., "is in an area that we don't have a lot of expertise in," explains one of his bankers. Here's what impressed them most.
* Language. Neurohr helped his case enormously by using lay terminology. You won't impress bankers with your command of industry jargon. What's even worse, you'll probably confuse or bore them.
* Company history. In two and a half pages, Neurohr told Transamerica's story. "This is very unusual," says Bank South senior vice-president Eugene R. Casey. "We usually have to do this ourselves." And the bank found Neurohr's narrative especially instructive. He not only incorporated his background and experience but also described the industry conditions and segments that existed when he launched his company.
* Corporate goals. This section is essentially a descriptive version of the working capital projections that are a must in any loan application. The banker usually has to create a mental picture to explain the projected numbers anyway. You can help by explaining what's going to happen to cause the numbers to change.