How to build a successfull mortgage broking business when times are tough.
Port Group's Andrew Baker shares his secrets for building a successful small business through tough times.
From what he terms ‘humble beginnings’ back in 2001, Andrew Baker has assisted in developing and reshaping Port Finance into Port Group, a Victoria-based mortgage aggregator now supporting 30 mortgage and finance brokers. Surviving tumultuous times through the financial crisis, Baker shares his tips for surviving and thriving in the “cutthroat” finance industry.
1) Staff up as soon as you can
In the early days of Port Finance I made the mistake of trying to do everything myself. I thought I could save a few bucks if I processed all the paperwork that brokering entails. Once I wised up and employed people to handle that side of the business it freed me up to make more deals and develop more relationships. In doing so I was bringing in additional revenue, which more than covered the extra admin costs, not to mention increasing the enjoyment of my job! Doing everything myself to save money was a false economy.
2) Find a business partner
About a year after I started Port Finance, Anthony McDonald (former Melbourne footballer) joined me. We had our own clients but shared an office and some of the costs of running the business. But more important than saving money, we motivated each other to get out there and get more business. Our natural competitive streaks wouldn’t want the other person to be writing more or larger deals! Of course the value of having someone around to bounce ideas off, or share a problem with, is priceless. Not to mention the benefit of someone to have a beer with after a busy week. A business partner halves the stress and doubles the fun!
3) View quiet times as a blessing
How many times have you wished you had more time to get things done? Often when a quiet time comes around people freak out and become really unproductive. It’s actually a great time to look at some of the bigger picture issues and work on your business, not in it. Can you processes be improved? Do you need to employ staff? Should you consider expanding into other territories or other markets? Are you giving your clients enough service? During the last GFC we decided to launch Port Group as an aggregator for other brokers. If we’d not had that quiet time we probably wouldn’t have got around to making that change.
4) Get out there and meet everyone
It sounds like a cliché, but don’t underestimate the value of networking. Business relies heavily on relationships. And the six degrees of separation theory is alive and well. You never know, the person sitting next to you at the footy might have a friend or relative who could be your next big client.
5) Apply the rules of karma
Be aware that if you do the wrong thing by someone it will come back to bite you. I’ve seen it time and time again in this industry. And the reverse also applies. If you actually over-service clients, be truthful and do the right thing by people, it comes back ten-fold.
6) Think long-term
If you’re looking to make a quick buck this might not be the best industry for you. Often we’re working on relationships and deals that are not going to bring in any coin for a couple of years. You have to be prepared to be patient and put in the groundwork, even if that means spending precious weekend time at a client’s display home office.
7) Don’t put all your eggs in one basket
It pays to be flexible and to diversify. Take a step back and take an objective view of your business. Decide where the long term growth is likely to come from and start working to secure your share.
8) Look after your health
Don’t forget to invest in your health. This business can involve a lot of long lunches and late night meetings. Often people in this business burn out at quite a young age. You might think you’re superhuman but eventually it will catch up with you. Build in some time to exercise regularly, cut back on the booze when you can, even go and see a naturopath every now and then. Make your health a priority before it’s too late.
9) Look after your clients and they will look after you
Your existing clients and referrers are the best source of new leads. Look after them! Something as simple as a bottle of wine and card at Christmas sent to your existing clients can generate enormous goodwill and additional referrals. It can make you top of mind. We always give our home loan clients a department store gift voucher. It’s the first thing they find in their new letterbox and is very much appreciated. Small gestures can have a huge impact.
10) Consider joining a strong and supportive aggregator
In regard to mortgage broking specifically, ask yourself what you would expect to get from an aggregator. What kind of commission structure would you be happy with? What sort of people do you want to work with? How important are the extras such as paperwork processing facility? Shop around before you sign up. Speak to other brokers within the group and ask what their experience has been like. Find out if they are happy with the business model before you commit.
