Business planning - Success in the making

For the last fifteen years most brokers have been able to steadily grow their businesses without having to worry too much about planning. Marginal competition from other brokers meant the path was clear for picking up all the referral partners and borrowers a broker could wish for. It was a green field opportunity ripe for development.

Today, it’s a very different story. Any broker whose business is based on crossing their fingers and simply hoping for the best will quickly find themselves going bust.

But despite the current tough market, there are still enormous opportunities for brokers who are prepared to look strategically and critically at the potential in the market as well as their own capabilities.

Consumers have made it clear they value the role of brokers in the mortgage process, and are increasingly turning to them for advice on other products as well, such as insurance, personal finance and financial planning.

It’s up to brokers then to capitalise on this consumer goodwill, or risk being left behind. And that means having a solid plan in place for business growth.

Mark DeMartino, Victorian state manager for LoanMarket Group, likens running a business without a plan to visiting a town for the first time without a street directory.

“You’ll get there okay; you will most likely spend all of your time seeing the place but maybe not getting anywhere you intended,” he says.

Mapping out your journey: the practicalities

Creating a successful business plan largely comes down to understanding where you expect your business to go and how you plan to get there.

One of the common misconceptions about business planning is that it is complicated and time consuming. The reality is that clear thinking, common sense, and a realistic view are all that is required.

With a clear picture of how you want your roadmap to look – and a belief in its benefits – the next step is to commit it to paper.

A good business plan should contain an analysis of the market in which you operate and address the short-, medium- and long-term goals and objectives of your business, as well as the financial commitment that will be required to meet them.

It should then become a working document that is constantly revised and updated as needed.

“It’s important to review business plans regularly. Don’t just stick it on a shelf and forget about it,” Phil Naylor, CEO of the MFAA says.

Steve Lambert, acting CEO at National Brokers Group, suggests brokers conduct business planning on at least an annual basis and review those plans every month.

Mr DeMartino on the other hand even advises brokers to check their progress every week.

Arriving at your destination

The progress of your business against your business plan can only be measured if you have an ultimate destination. That means goals play a very important role in business planning.

Darrell Weekes, managing director of Success Broker Coaching, says goal-setting needs to start with a statement of a broker’s personal values. The two should be in alignment.

“If you think your goal is to make $1 million this year yet personally you want to spend more time with your family, you’re not going to want to spend the time required to make that money,” he says.

The next step is to set clear business goals. Mr Weekes says too many brokers try to be all things to all people – which gets them nowhere. He urges brokers to work smarter rather than harder.

“There are so many things you can do but you need to define your business so that you can focus and achieve,” he says.

When it comes to setting financial goals, the key is to be realistic about what is achievable – and properly crunch the numbers.

“It’s no good plucking figures out of the air,” says Mr Naylor. “You need to understand the environment, the market and your business, and look at these things all together.”

Mr DeMartino recommends brokers work out how much they want to earn first and then look at what loan book would be required to achieve that outcome. This will include a consideration of the average loan value, the broker’s conversion rate, and where leads will come from.

When the going gets tough

There’s no doubt the industry is going through a time of change. And in these times, a business plan can help brokers stay on course. But sticking to a plan requires dedication and real commitment.

Mr DeMartino says one way to stay on track is to involve others in the plan.

“Often planning with others and meeting weekly with them will help you stick to your respective targets. Have your aggregator check your form too if needs be,” he says.

And remember, business goals should always be kept in clear view.

“Place your plan and photos of your goals on your wall. A goal unseen is a goal not achieved.”

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STAY ON TRACK

Jason Basseal, a broker with LoanMarket Group, explains his rationale for creating and following a business plan.

Why is business planning important?

Because ‘hope’ has no plan – if you don’t plan you will not be able to achieve anything.

What impact do you think a business plan can have on your bottom line?

It allows me to stay focused and be consistent with the process we have put in place to achieve our various goals.

In which specific areas of your business do you set goals?

I set business goals in all areas of my business. We do not focus on the outcome, but ensure all the small things are done correctly, which then allows the greater goals to be achieved.

How successful has your planning been in the past? Are you usually able to achieve your business goals?

Business planning has allowed me to experience substantial growth and strengthen my business relationships with referrers. I have been able to achieve my business goals, although at times it may have been difficult. Staying focused and sticking to my process however has allowed me to achieve the goals I have set.

When is a good time to start considering a business plan?

The earlier the better!

How are you planning for the year ahead; how different are your plans from last year?

I’ve already started planning for the year ahead. I have outlined major goals, which include changes to CRM systems, which will allow my business to maintain its existing database. CRM management is extremely important in a volatile market like today’s. We are also looking at diversifying our product portfolio to include financial planning, which will increase revenue and strengthen our client-for-life relationships.

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INSIDE THE PLANNING PROCESS


Brett Hartley, director of FirstPoint NB, describes how business planning gives his business both strength and flexibility.

Just because you’ve got a plan doesn’t mean it’s going to work. Writing a business plan however is a way of making sure everyone is on the same page. It’s a way to formulate exactly what it is you’re trying to do.

You can say one thing, but without a plan, you can lose your focus and end up doing another. For us a business plan is about setting a clear road map and not deviating from it. There’s got to be discipline involved.

We work on three basic principles – is it a core competency, is there a market for it and can you make a profit on it?

For us right now in the current market, we’re working on being more than just a broker. Rather than simply completing the transaction, ours is a more holistic approach to debt management over time.

We’re focused on our core competency – which is debt management – but it would be negligent not to advise customers to look at insurance, financial planning and other diversified products. So we are working on strategically aligning ourselves with those who provide these services.

We’re also looking at recruiting. We think it’s a good time to pick up quality people in the market.

For us, planning is a very important consideration and we use the Christmas period to devise our strategy for the year ahead.

Opportunities arise all the time and it is difficult not to jump on them, but it is important to be disciplined and revisit the greater plan to see how each opportunity might fit in with that. We look at our plan every quarter and measure our performance monthly.

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BRAVE NEW WORLD


Brokers with solid business plans will be well positioned to capitalise on future market opportunities.

With the market in a state of flux, what the next six to 12 months will bring is anyone’s guess. That means your business plan has to consider how the market might look in the months ahead, but still be concrete enough to provide some structure around your immediate plan of attack.

With commission reductions and slowing volumes having impacted broker revenues, one key issue a broker’s business plan should address is the need to diversify their revenue base.

Steve Lambert, the acting CEO of National Brokers Group, says brokers with only one income stream leave themselves vulnerable.

“Now more than ever brokers need to plan to generate multiple income streams from associated businesses, referrals and joint ventures,” he says.

With increasing recognition of the value of a loyal customer base – repeat business and referrals – Mark DeMartino, Victorian state manager for LoanMarket Group, says client service is another area brokers need to be focusing on.

“If nothing else, building and adding real value to each and every customer should be every broker’s consistent behaviour,” he says.

“Brokers who missed that during the good times will be in for a rude awakening as they now find their customers are turning to those who have already proven they give good value.”

Take control

Darrell Weekes says brokers who use the current conditions to plan smartly and strategically and navigate the changing landscape effectively will emerge strongest when the dust settles.

He says too many brokers are preoccupied with external factors they cannot change – such as the economic crisis, commission cuts and a slow property market – rather than focusing on the things they can control.

“Brokers need to plan throughout this uncertain environment so that once it settles their business is strong and ready to take advantage of a new market,” Mr Weekes says.

“Customers need brokers more than ever so it’s time to step up and improve. Know what you need to know so you can deliver the best service, get the greatest number of referrals, and in turn run a successful business.”

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