His financing needs were minimal. But Lupe recognized that he might need a bank someday, and he established relationships before he needed them. Later, when he needed a line of credit for his inventory or an equipment loan to improve his technology, he had already established the relationship with a banker who understood his business.

Topic for discussion: How do you locate or identify the best banks to establish relationships with?

Answer: Most likely, they'll find you. Banks have super marketing efforts. You'll probably get mailings and telephone calls, invite them out to see your business. Don't establish a relationship now, establish relationships. When you need a bank, you want to have a few to choose from.

Bankers are also very active on the rubber chicken circuit. You'll meet them at Chamber functions, networking events; anywhere they can rub the flesh. And yours is new, so they'll be delighted to meet you.

Topic for discussion: When the time comes, how do you select a bank?

Answer:First, remember that bankers are vendors. They sell the right to use their money. You select a bank the same way you select another vendor and the same way your customers select you. All buy decisions are based on two factors: quality of product/service and price. Banks don't provide service, bankers do.

The relationship is the key. It's not unusual for a business to follow its banker if the banker assumes a new position at a different bank. It's sort of like following your doctor from one clinic to another. And don't make the mistake of thinking that prime+2=prime+2. Banks are great at developing complex pricing schemes. Get term sheets in writing; make sure you have a clear understanding of both the interest rate and any associated fees. Fees can be paid in dollars or based on balances. Do the calculation; it could save you some money.

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