Fast growth can create serious cash flow issues. Iconic Home Loans' James Pibworth reveals his coping strategies.
MPA brings you advice from the industry's thought leaders on their biggest business challenge and how they tackled it. This week we speak with James Pibworth from Iconic Home Loans.
MPA: What has been one of your biggest challenges in mortgage broking to date and why?
James Pibworth: I think the level of growth, mainly based around referral partners growing very quickly as well. Our volumes increased by $40m per month in nine months and we went from seven brokers to 24 over a short space of time too. Iconic Home Loans and Iconic Financial Planning have seen explosive growth. Obviously there are a whole host of challenges that occur when you grow at the rate we did, such as:
MPA: How did you overcome this challenge?
JP: Back then, I had some good friends.
Since then, good fiscal management and policies and tightening up on everything. We resisted all the new software ideas, technology (I’m a sucker for it), marketing ideas. Basically we had to revert to core business, batten down the hatches, roll sleeves up and if it wasn’t critical to opening my doors each and every month – we weren’t buying it.
What are some of the key lessons you learned from this experience?
JP: Probably the same amount as an MBA! I think the main thing I/we learned here is always have the business ready for a surprise. Due to our referral partners exploding into growth, suddenly we needed a lot more brokers, and of course everything else in order to process that much increase in volume. But even looking back I don’t think there was anything we could have done, we were in it, we were breathing it and we just had to get on with it.
MPA: How have those lessons benefited you in business since?
JP: Absolutely – I recruited another large referral partner a month ago and it was a lot easier. Our broker support department was already built to take more volume without cracking or compromising on service to our clients and referral partners, and we already had a lot of the organisation needed to be able to facilitate this. The largest aspect was systems – we had built them much stronger and much better. We also continued to use Carla at Pathways with a recruitment program in which we would target one new trainee each or every other month – as we knew the likelihood was we would take on more referral partners. So even with the broker we had our own on the 'production line' if you like.
MPA: If you were to tackle this again would you do anything differently?
JP: Retire first! No, as above really.
MPA: What advice would you give to other brokers who are facing a similar situation?
JP: Know the strengths and weaknesses of your business. I/we thought we did, I updated SWOT analysis every three months, and we worked on some of our systems now and again to improve them – but nothing like we should have. There should have been more thought put into the future – more systems and processes.
Always ask 'what if' and try and picture the business in a different situation down the line and what would it be like, feel like, look like staff wise, financially, process and system wise – would service fall down overnight as the systems are not stress tested?
Don’t be scared to bring in trainees. The industry is desperate for new blood and they are great for the business as you mould them and teach them the way you want them operate.
Have you faced similar problems? Share your story below.
MPA: What has been one of your biggest challenges in mortgage broking to date and why?
James Pibworth: I think the level of growth, mainly based around referral partners growing very quickly as well. Our volumes increased by $40m per month in nine months and we went from seven brokers to 24 over a short space of time too. Iconic Home Loans and Iconic Financial Planning have seen explosive growth. Obviously there are a whole host of challenges that occur when you grow at the rate we did, such as:
- Recruitment.
- Main company systems such as our processing (broker support) that grew from two full time support staff to seven full time support staff and a broker support/operations manager.
- Cash flow – as not only do your fixed and variable costs increase, you are recruiting more brokers, paying retainers and we needed a larger premises – everything is expanding in tandem and everything gets more expensive. Constantly re writing budgets, cash flow projections and profit and loss forecasts became habitual, as well as stress levels increasing in proportion. The main issue here was that due to the majority of our lending being in construction, payment was also delayed for a lot longer. Couple that with the land titles issue in Perth, this turned out to be a nightmare. Even now, 67% of our pipeline is unconditionally approved, pending settlement – waiting on titles to issue – they just keep getting pushed out month after month. Yes, we are owed a fortune.
MPA: How did you overcome this challenge?
JP: Back then, I had some good friends.
Since then, good fiscal management and policies and tightening up on everything. We resisted all the new software ideas, technology (I’m a sucker for it), marketing ideas. Basically we had to revert to core business, batten down the hatches, roll sleeves up and if it wasn’t critical to opening my doors each and every month – we weren’t buying it.
What are some of the key lessons you learned from this experience?
JP: Probably the same amount as an MBA! I think the main thing I/we learned here is always have the business ready for a surprise. Due to our referral partners exploding into growth, suddenly we needed a lot more brokers, and of course everything else in order to process that much increase in volume. But even looking back I don’t think there was anything we could have done, we were in it, we were breathing it and we just had to get on with it.
MPA: How have those lessons benefited you in business since?
JP: Absolutely – I recruited another large referral partner a month ago and it was a lot easier. Our broker support department was already built to take more volume without cracking or compromising on service to our clients and referral partners, and we already had a lot of the organisation needed to be able to facilitate this. The largest aspect was systems – we had built them much stronger and much better. We also continued to use Carla at Pathways with a recruitment program in which we would target one new trainee each or every other month – as we knew the likelihood was we would take on more referral partners. So even with the broker we had our own on the 'production line' if you like.
MPA: If you were to tackle this again would you do anything differently?
JP: Retire first! No, as above really.
MPA: What advice would you give to other brokers who are facing a similar situation?
JP: Know the strengths and weaknesses of your business. I/we thought we did, I updated SWOT analysis every three months, and we worked on some of our systems now and again to improve them – but nothing like we should have. There should have been more thought put into the future – more systems and processes.
Always ask 'what if' and try and picture the business in a different situation down the line and what would it be like, feel like, look like staff wise, financially, process and system wise – would service fall down overnight as the systems are not stress tested?
Don’t be scared to bring in trainees. The industry is desperate for new blood and they are great for the business as you mould them and teach them the way you want them operate.
Have you faced similar problems? Share your story below.
