By Charles H. Green
In my lending days, I lived off the kind transaction referrals of others.
Read that sentence again slowly. Yes, of course I networked, yes, I mailed post cards, thank-you notes and even wrote newspaper articles. I made (dreaded) cold calls, worked my former client list regularly, and did everything else imaginable to keep my ear to the ground, listening out for whoever might be about to buy a commercial property, expand their company or planning to buy someone else’s business.
But my gravy train was the two-three dozen people I had known for years, who might give me a brief–but vital–tip once every two or three years about a contract about to be signed, deal about to fall apart, or someone I ‘really needed to call.’ This short list of contacts had been cultivated over years of staying in touch, occasionally taking to lunch, and keeping the connection with, all without ever talking about business.
When lenders network, we like to think of it as a mutually beneficial meeting for both parties, but often that’s not what happens. Frequently it’s one person emerging as a trusted resource for the other, who can be reliably introduced to others to solve a problem or manage a task. And just so you know, many of these cultivated relationships never created a deal.
Did I ever reciprocate deal flow? Of course. In commercial lending, you regularly are in communication with people who have common needs: legal advice, accounting & tax work, insurance, real estate purchases and leasing, equipment leases, etc. And it was on these occasions I recognized the need for discretion in making these business introductions.
Meaning? If I was cultivating a good relationship with six commercial loan brokers (and all the other professions) simultaneously, each of them would naturally expect to be on my call list when some deal intelligence fell into my lap. So naturally I had to decide who was really most appropriate for the prospect, based on any number of factors, and be discreet about the decision lest I disrupt the relations I had with five other brokers.
The qualification for who was most appropriate had to rise above simply who had been the most beneficial to me, and instead focus on factors important to the third party and their transaction requirements.
Referral sources must be developed over time based on mutual respect for one’s craft, business sense, and ability to ensure the referring partner doesn’t get blamed if things don’t work out. You can’t forge these kind of relationships after three meetings, and you don’t advertise your circle to anyone, inside or outside the business.
One final word–if your referral network relies on your company passing along referral fees, the relationship is temporary at best. Your connection is good until a better bid comes along from someone willing to pay more. Work to gain the genuine confidence of your sources, BE a good resource for them, and together you’ll find a rewarding alliance that benefits both of you, your companies, and your clients.
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