Should You Build a Team or Plug Into One?

As a loan officer, once you realize the power of leverage, you ‘get’ why it’s so important to have a team. But should you build a team or plug into an existing team? There are pros and cons to each approach – one has greater initial expense while the other is turn-key. I actually don’t know if there’s a right or wrong answer to this question because I’ve experienced both and been very successful with each method. That said, it’s important to explore this topic for your business so here goes.

Here’s the first reality of being a loan officer – you have to be a good salesperson to succeed. As a general rule, you are great at what you do because you’re keeping food on the table. (If that’s not the case, we need to talk – please DM me immediately!). 

However, just because you’re good at sales doesn’t mean you make a successful human resources (HR) officer — that’s an entirely different skill set. Just because I think I’m a darn good salesperson doesn’t mean I’d be good at knowing how to hire and fire people. Granted, some people have both skill sets, but that’s not typical. 

One of the most common scenarios I find in this business is that people are hesitant about adding someone to their team. I’ve been asked, “Carl, what if they’re not the right person and I have to fire them?” People procrastinate on starting or expanding their team because they’re worried the new hire won’t be a good fit. So let’s just take care of this little myth right now - when you hire enough people, you will eventually hire someone who is going to be a wrong fit. It is statistically rare that every hire you make will turn out perfectly. You have to learn how to hire and do it fire fast, because delay can cost you a fortune.

The good news is we find every time someone is added to a team, as long as that team member pulls their weight, it frees up the loan officer or branch manager’s time to get more business. We’ve found the average person who adds someone to their team does an additional 5–7 loans monthly. For the example I’m about to share, we’ll use six loans as an approximate number (but that may vary in your real-world situation). 

Let’s say every employee hired means an additional six loans to you and your business per month. Let’s go a little further with another general assumption and say you make $2,000 per loan. Ultimately, each time you hire a new employee, you’re adding an extra $12,000 of revenue per month, using these hypothetical numbers. 

Of course, you need to pay your employee. To make it easy for our example, let’s say they get $5,000 a month. That’s $7,000 of net profit per month going into your business. Keep in mind that, while you’re bringing in this $7,000, you’re actually doing less of the work because the person you hired is helping you take applications, chase leads and put out fires. All you’re doing is making the phone ring, selling deals, and turning them over to your team to handle the rest.

Now, it might take someone six months before they hire their first team member. Of course, it’s not your fault if you’re not the best HR person. In my organization, someone else does the hiring and firing because that’s not my gift. However, if you force yourself into the HR position and there’s a six-month delay, you miss out on $7,000 of net profit revenue per month. That’s a total potential profit loss of $42,000 from not hiring that new person right off the bat.

You might think getting help is expensive, but not getting help costs you a lot more in money, time and potential opportunities. It’s okay to recognize that building a team isn’t one of your skill sets and that you need to find someone who has that talent for your business. Building a team is a major undertaking and I highly recommend it. Here’s the downside: every minute you spend building your team, you’re not out selling.

This leads into another viable alternative — plugging into a team that’s already in place. You don’t have to leave your company to take advantage of this method. Just find a group already in your company and join their team. I did this early in my loan officer career, and it helped me immensely.

You need to know when you plug into an existing team, they’re going to charge you some basis points. Let’s say that ‘cost’ runs about 25 basis points. If you’re used to making 100 basis points and you plug into that team, you’ll get 75 basis points, and the team will receive 25 points from you. The benefit is that, instead of worrying about the headache of hiring and firing people, you’ll be able to focus on closing more loans and getting revenue for you and the team.

The math will prove the point. Let’s say you’re doing $200,000 loans, closing five loans a month with 100 BPS, and you are earning $2,000 per loan. That’d be $10,000 of revenue as a one-(wo)man band. Now, when you plug into that established team, you’ll drop down to 75 basis points, but you’ll still be doing $200,000 loans — that doesn’t change. What does change is the number of loans you’re doing, which obviously affects your earnings. If you were doing five loans a month by yourself and adding six loans from being plugged into a team, you’d be doing 11 loans a month. So instead of making $10,000 a month, you’d be making $16,500 every month. Even though your basis points are lower, you’ll be closing more loans by having a team.

Again, both methods can bring success. Since they’re both effective, I don’t know which is right for you and your business – only you can make that decision. However, I’m happy for me and my team to be a sounding board for you to work out what’s best for your business. If you want a personal 1:1 strategy session, we’re standing by. 

Meanwhile, if you have been in the position of making this choice, or are currently going through it, share about your experience and what factors are / were important in your decision. One of the best things about the people here is their generosity in sharing what works – because I love to learn! (And I really like celebrating success too.) Thanks in advance for sharing!