Buying a Loan Book and Growing the Practice

I hope this article provides inspiration or insights to help your realise your own potential so you too can operate a broking practice that provides you ongoing professional and personal reward.?

……………………………………

Buying your own broking practice can be both a successful and stressful time. Many first time business owners can feel like they’re fumbling in the dark trying to figure out what to do to avoid expensive mistakes and give themselves the greatest chance of moving forward with progress and consistency.

That is why it can be helpful to discover what others have done when in this position.

One of our members, Paul, had the opportunity to purchase a broking practice in 2018. I spoke to him about this experience and how he grew the practice with a strong focus on internal culture and staff development.

When he bought the business, it was from a retiring broker.? He believed the previous owners, who he know of, were selling for the right reasons after having been operating for 9+ years.? The business had a good reputation and Paul believed the local property market had strong growth expectations in the coming years.??

In terms of due diligence when making the purchase, Paul admits that he was na?ve about what he was taking on at the time. He knew the broking space and thought he was familiar with good business practices, however, had a steep learning curve once he took things over.?

In hindsight, he believes he didn’t fully understand the risks associated with it. He wasn’t strong at doing forecasts and cash flow was a problem from the beginning. He had to borrow the full amount of over $1,000,000 with a high interest rate.?

Suffice to say, it was far from a money-spinner to begin with.??

However, he also reflects that being na?ve helped because had he of known what he was getting into, he may not have done it. He is a big believer that mistakes are great learning opportunities.

Things he believes he needed to learn about include:

• How claw back provisions are made
• How existing staff are paid
• GST and goodwill and how they are treated
• Having/ not having referral income from financial planner and direct agreements
• Ensuring you are not paying too much for the business based on the above

One vital decision Paul made as he was growing the business was that he wanted to create a really supportive and collaborative team environment.?

He wanted to ensure people were valued, could take their holidays and loved coming into work because they felt the firm truly cared about them.??

He uses the phrase “It didn’t really matter if I was running it or not, I just wanted to be a part of it.” In other words, he wanted to create a business where he and others would be happy working in.?

Many of his subsequent decisions have been made with this intention in mind.

Paul was aware that the business needed to get to a certain size to achieve this, however, he also wasn’t aiming to be too big.

One of the first decisions Paul made was to have an employee and bonus model. The thinking behind this was that he believed he was able to build a more collaborative environment from having a team of employees rather than a blend of employees and contractors. He also believed that he would have more success influencing the behaviour of employees too.

While the PAYG broker structure may not fit all broking firms, this was the one Paul believed would help him pursue his business goals.

Initially, he hired an off shore staff member for admin support and then approached a friend to begin as a broker.?

Other things Paul believes has helped him build the environment are:

• Expectation that everyone treats each other as family members
• When hiring, Paul looks for staff that will stay with the company over the long term.? This has meant occasionally saying ‘no’ to a gun broker who didn’t seem to fit their ethos
• Team players vs lone riders
• Social events
• Sharing problems and challenges and wins and successes
• Enabling staff to resolve their own issues amicably and professionally without needing to involve management?
• Taking a long view approach to goals. Often employing new industry to gain buy-in to the culture and longevity of employment in the business.?
• Mentoring new employees and being patient to get them to the point they need to be.

Paul has built success around staying true to his vision, setting achievable KPI’s and building a collaborative team environment with a great culture.

By building the team and environment, Paul has put himself in a position where he can take holidays for several weeks without needing to be attached to his laptop.

If or when you are reading to expand your team or get off the teams, I invite you to an initial conversation to see how we can point you in the right direction.

……………………………………

Want to grow your broking practice?

I’m James McCracken, Broker Growth Strategist, where for the past 10 years, I've coached brokers to grow their practices with structure and consistency.

Here are further ways I can help:

Speaking & Presenting:?Would you like a tailored presentation for your conference or PD Day so your brokers can grow their volumes??Send me a LinkedIn message to request my speaker kit.

Deal Flow Plan:?Download a personalised plan that pinpoints growth inhibitors and options for operating with more structure, efficiency and consistency.?thesuccessfuladviser.com/dfp/

Ultimate Broker:?For established mortgage brokers only, this service provides guided support to accelerate settlement volumes, improve operational efficiency and reduce worth hours.?

Book an initial call?to see if there is potentially a fit.

To your continued success!

James