Transitioning from broker to business owner

Are you a mortgage broker wondering what it’s like to be your own boss instead of being part of a larger company?

It’s a transition that many take – but it’s not one without its pitfalls. In this article, Mortgage Introducer catches up with a host of brokerage owners who have made that switch to delve into their experiences.

Transitioning to brokerage owner

Rhys Schofield (pictured), brand director at Peak Mortgages and Protection, said it is a tough transition, seeing as most principals will also be their top income generator.

“Be prepared to knuckle down and work your butt off to top up the money to pay everyone else for a while, and seriously ask yourself the question, ‘do you want the headache or are you better off just referring surplus work to another broker you trust in exchange for a split of commission?’” he said.

Schofield added that he grew his business to 14 advisers before selling recently, and he can recount some dark and lonely days as a principal. Making the switch to setting up your own business, Schofield said, should not be entered into lightly ‘as the job can eat you alive.’

For those set on making the transition, Schofield said they must get used to taking the rough with the smooth.

“From experience, unless you are a big team, I would also look to grow with self-employed brokers initially, as otherwise you are on the hook for a big expense with no guarantee of income,” he added.

Stephen Perkins, managing director at Yellow Brick Mortgages, said being a great broker and being a great business owner are two completely different skillsets.

“Being accomplished at the former does not guarantee being good at the latter; and it certainly is not easy doing both roles simultaneously, especially as the business grows,” he said.

Perkins concurred with Schofield that sometimes one must sacrifice their personal income for a while, as they step away from writing business and attempt to grow their new firm to the point of earning the required amount.

“That is why so many brokerages reach plateaus at three to five advisers, and again at around 10 brokers, as those next steps need plenty of infrastructure and, of course, lead supply,” Perkins said.

Things to consider before becoming a brokerage owner

Gary Boakes, director at Verve Financial, said having worked for one of the largest estate agency based mortgage advisers before setting up his own business, he believes stepping away and setting up your own firm must be carefully considered.

“I think you are not human if you do not have doubts in your head when taking the plunge – ‘am I good enough, can I get my own business, what is it going to look like financially’,” Boakes said.

Despite the concerns, Boakes said the payoff can be massive, and one will realise that there is a very sustainable business there due to existing customers, referrals and strong relationships with builders and estate agents.

However, he added that anyone thinking of taking the plunge must not take it lightly, as they will work longer hours than they have ever done before.

James Bull, mortgage broker at JB Mortgages, said it is very difficult to transition from mortgage broker to business owner, and it can take many years to fully realise.

As a mortgage broker, Bull said you just need to advise on the cases put in front of you and convert them into business.

“As a business owner, it is much more than this, and the role includes compliance, training, lead generation, business development, as well as profit and loss, to name just a few,” he said.

On top of this, Bull said it is a huge financial investment to grow a team of mortgage brokers, even if they are all self-employed and there is no salary, the upfront cost of lead generation is significant and can run into the thousands each month.

What advice do you have for someone considering transitioning from broker to business owner? Let us know in the comment section below.