Despite new challenges in the broking market, growing your business is not an impossible venture
The broking industry is in the midst of rapid change. What was once a reasonably simple business model is now far more complex and dynamic. And as broker numbers continue to grow, lending is stagnating. This is a time of intense media influence, regulatory scrutiny, political interference and legislative change. On the horizon, there’s a banking royal commission; continued changes to broker remuneration and lending policies; mergers, acquisitions, enablers, disruptors and many other distractions.
In this climate, if you want to maintain or expand your business and stay on track to prosperity, you must be disciplined and structured. Do you need a plan? The answer should be self-evident.
Your strategic plan should reflect your expectations and map out the milestones and timelines to get you to your goals. If you have one already, it might be time to review it to strengthen the focus of your core business.
You’re fortunate to be in an industry that offers strong support through industry associations, lenders, aggregators and your peers. This support comes in many forms, including education, technology, training, process, compliance and resource libraries.
Draw from the industry support, as part of your planning process, and inculcate the best of what they offer. Be focused on eliminating noise and distraction, and be prepared to challenge your thinking.
As consultants, we’re frequently asked to help assess growth opportunities. It’s good to be energetic, motivated, creative and passionate about your business and its future. These are all important attributes of successful entrepreneurs, especially when bundled with a dose of focus and, wait for it… a plan.
What’s your plan?
You’ve been in business for what seems like forever and now you’re gazing at a greener pasture, thinking something like…
- How did they become so successful as a finance broker?
- My customers need other finance solutions
- Maybe I should expand into other products and services
- If I could just buy them out, I could eliminate my competition!
- What about if I open offices in more locations?
Having a process for evaluating growth strategies such as these is essential. The starting point for the process is to assess how the strategies fit within your existing business – initially with its vision and mission. If it passes that test, the next step is to assess how the strategy fits with your existing culture, infrastructure, competencies and financial picture.
"Don’t put your core business at risk by chasing an opportunity based on emotional decision-making"
Draw up a one-page plan that captures the essence of your company. Once you have that, deciding which growth strategies to pursue becomes easier. Do they fit within your plan and move the company closer to your vision?
Business plans will evolve over time and should be revisited at least once a year. Your objectives and strategies will change more frequently and should also be revisited and revised at least annually.
We recommend writing a one-page plan that documents these core foundations:
- Vision – What are you building? A large, multi-licensee operation with significant market coverage? A reliable and caring member of your community? Or a specialist residential mortgage broker annuity stream?
- Mission – Why does your business exist? What does it do for its customers, employees and community?
- Objectives – What are the measurable outcomes you seek? How will you know when you have succeeded?
- Strategies – What will make the business successful over time? Include both short-term and long-term strategies for achieving your objectives.
- Action plans – What work must be done? What is the timeline?
When considering which opportunities will become strategies and plans, it is essential that you have a clear understanding of the value the opportunity offers. This requires a thorough and realistic estimate of additional costs, including the infrastructure required, so you can determine whether the opportunity affords a sufficient return on investment.
Once you’ve decided to move forward, measure your progress regularly and don’t be afraid to adjust your plan or abandon it completely if you realise the investment is higher than expected or the value is less than you planned. Don’t put your core business at risk by chasing an opportunity based on emotional decision-making. The challenges of expansion The challenges depend on which strategy you implement. It is an insightful exercise to work through the challenges, make a list of them, and research what others have done before you. What are the best practices and how can I align these to my model?
In summary, do not be fooled that the grass is greener. There is no silver bullet, and you cannot build your future without careful planning. You would not renovate or build a house without carefully constructed plans, and your business is just as valuable. It is arguably as important, if not more so, given the intangibles of wiring together people, products, processes, relationships, culture, and financial performance. Those that take the time will reap the reward.
Owner and founder, Banyan Co
Stuart Donaldson is an experienced banking and finance executive, educator, business coach and financial advocate for owners of small to medium enterprises. Donaldson excels at taking the mystery out of the numbers with his common-sense approach and always-compassionate personal style.