An area often lacking in the broking market is having a relevant and up to date business plan. The business plan will help you understand your areas of expertise, your drivers and your cost structure. This will guide you in operating your business profitably. It will also help you identify your areas of weakness, threats to your business and opportunities which exist. The business plan works as setting milestones which act as beacons to ensure you are heading in the right direction.
The main levers of operating a successful brokerage are:
- generating leads
- fulfilling the leads by providing the most appropriate lending solutions
- managing the applications through to settlement
- Having an effective retention strategy to hold on to your clients, get repeat business and obtain ongoing referrals.
Most brokers are technically brilliant and come from a banking or finance background. These skills assist them with finding good lending solutions for their clients but they tend to spend money ineffectively on Marketing and the other areas of their business.
- Identifying a market segment to specialise in
- Branding their company to be considered in that market segment
- Possessing documentation and brochures to support their image
- Having a web presence which further supports their image
- Sourcing new clients
- Managing existing ones
- Protecting their existing clients from ‘churning’
- Sourcing additional business from their existing clients
- Obtaining referral business from their existing clients
What often happens is that brokers attempt ‘Marketing’ which may be an advertisement, which may not work and then throw their hands up in despair and declare it’s a waster of money.
Doing anything without results is a waste of money but to ensure results, you need to work with experts in the nominated fields, allocate a budget, stick to it and tie back the results of the campaign to tangible and specific outcomes.
Besides Marketing, the processing side of the business can be a heavy cost burden. Again, it’s not about cutting the costs – it’s about ensuring the money allocated towards a seamless transition of the applications to settlement occurs with minimal disruption to the client and their experience is a pleasant one. Increasing the lodgement of applications rate from the industry average of 75% to 85%, has a significant impact to the bottom line profitability of the business.
This process involves frequent communication between the broker, the bank and the client. Having a Loans Packager that does this, is one solution if the organisation involves more than one operator, or alternatively, focussing on this yourself is a reasonable model as well. It’s just about deciding what model you have, which model you want and of course relating the whole decision back to your business plan.
Allocating funds towards key areas of your business is never a waste – it’s about holding yourself accountable for the return on investment you make towards any part of your business. This extends to the type of premises you operate from – whether it’s from home, an office or a shop front. Understanding and being able to justify why you have made this decision and whether it fits into your business plan about the image you are attempting to portray.
Chocolate Money has a unique, profitable business model, focussed on a low cost of acquisition of alliance related clients. Its culture of training and support for its Lending Consultants enables them to deliver on their service proposition to these Alliances, and their client retention program leaves clients raving about their experience and perpetuating the Chocolate flavoured dream.