Oh, how I love the Summer months..
It isn’t just the balmy days, BBQs and holidays in the sun. It is also a time of year when I can really indulge one of my passions – golf. I’m very fortunate in that we sponsor a golf tournament for intermediaries and one the perks of the job is that I get to play in the matches as well as organise them.
Golf is a great opportunity to get to know people and have a good chat about their businesses. I’ve partnered some really interesting intermediaries over the past few months and my conversations have given me a useful insight into the way in which their businesses work.
For many intermediaries, mortgage broking is a ‘lifestyle’ business. What I mean by ‘lifestyle’ is that their objective is not necessarily to build a growing and ever more profitable firm, but instead to run a company that supports a comfortable lifestyle and generates a healthy level of income.
There’s nothing wrong with that. There is always an assumption that the primary objective of all businesses is constant growth and increasing levels of turnover and profit. But if you think about it for just a moment, it is simply not possible for every company to keep growing at double-digit rates.
Having a business which enables you to support a decent lifestyle, which is based in a location in which you are rooted and in a way which does not place the burden on your shoulders of having to manage increasing numbers of staff, holds a lot of appeal for many. You are master of your own destiny, answerable to no one and able to determine the pace at which you work.
However, one of the difficulties of running a lifestyle business is that although growth may not necessarily be the prime objective, neither is it desirable for the business to slip backwards and make less money than in the previous year. Maintaining the status quo is actually quite difficult; businesses either tends to move forwards or backwards – they rarely stand still.
It is essential, therefore, that every business, even if it is a lifestyle business, has a vision for the future and a plan as to how that vision is going to be translated into reality. Without such a plan, future success is down to fate – not a desirable position to be in.
An unpredictable business
During my discussions on the golf course, it also struck me just how unpredictable new business is for most brokers. Many mortgage advisers could not say with any degree of accuracy where their business was going to come from in the months ahead, but they were none-the-less pretty confident that it would come.
Word of mouth recommendations are clearly important, as well as repeat business from existing clients and referrals from lead generation companies. A few systematically trawl their client base for further business, but they were the exception rather than the rule. Likewise, a number were actively engaged in marketing activities such as advertising, but they tended to be short-term tactical campaigns and one-off adverts, rather than ongoing campaigns. The impression I got was that if business was quiet, brokers would go out and forage for more; if they were busy, they had no time to think about marketing campaigns or business planning for the future.
I have to confess that this short-term approach came as something of a surprise. Why? Because intermediaries are, by their very nature, good at taking a holistic view of matters. It is what they do when they appraise a client’s financial needs. They are good at not only dealing with financial detail, but also rising above the detail and understanding how the components fit together. I would have thought this skills set was ideal for taking an overview of their own businesses, but this doesn’t appear to be the case.
Don’t misunderstand me, this is not a criticism – it is simply an observation. All the brokers I have spoken to appear to be very successful, so clearly the business model they have adopted works for them. It has made me ponder, however, that if I were an intermediary running my own business (a scary thought), what approach would I take?
Not leaving it to fate
I think I would start by analysing my existing business and client bank. What type of clients have I been tending to deal with and what sort of business have I been successful at generating? This would clearly be my area of greatest strength, so the next question I would ask would be how I could generate more of the same? If, for example, buy-to-let was a big part of what I did, or arranging mortgages for first-time buyers, I would be considering how I could position my business more strongly in those particular markets. How could I make myself the local expert – a regular article in the local paper perhaps, focusing on best-buys for first-time buyers, which is supported by advertising and a comprehensive, compliant website?
I would also be considering markets that I may not be active in at the moment, but may present a future opportunity. For example, if I worked in an area of high-income earners, mortgages for overseas properties or second homes in the UK may be an opportunity. I would also be considering how I could ensure I maximise insurance sales and capitalise on opportunities to sell essential extras, such as conveyancing services.
Now I know that many of you are doing all of this anyway – you have told me so on the golf course. But the impression I get is that they are occasional activities and are not undertaken on a regular basis. Do you have a business plan for the year ahead that specifies what type of business you intend generating, how you are going to get it and how much profit you will generate? If not, I suggest it would be worth drafting one, even if your business ambitions remain modest.
There is a lot to be said in favour of lifestyle businesses, until they start to deviate from the plan. I suggest that the key to everlasting happiness is to ensure there is a plan – and not to abandon your future destiny to fate.
