and lenders that
Noah Grayson is managing director and founder of South End Capital Corp. (SECC). Founded in
2009, SECC is a nationwide, nonconforming lender providing small-balance commercial loans,
residential-investment loans, bridge loans, business loans and merchant cash advance (MCA)
consolidation loans. Reach Grayson at email@example.com or (888) 268-7778.
<< Signs continued from Page 51
Fortunately, the things that may be stifling or hurting your mortgage-broker business are often very simple to fix. Some of the corrections that need to be made may even seem counterintuitive.
Among the business strategies that should be employed are the
■ Not charging more when you’ve been making less;
■ Spending money on advertising when finances are tight; and
■ Giving more decisionmaking control to your clients when you
have fewer of them.
At first glance, these strategies may seem to be recipes for increasing your business woes. The opposite, however, is actually the case.
Overcharging for services may seem like an obvious path to avoid, but
it’s not as straightforward as it seems. With borrowers turning to the
internet to find lenders — and banks loosening their lending parameters
again — borrowers who need a mortgage broker’s help have become
scarcer. That creates a temptation to raise prices on the remaining clients
to boost revenue. The brokers and lenders that overcharge their clients,
however, are fast-tracking their demise.
For mortgage brokers who follow players operating in the merchant cash advance (MCA) and alternative business-loan spaces, this
trend is readily evident, as some large lenders who were in years past
reporting multimillion dollar earnings have now closed their doors.
This also is true of a large number of independent sales organizations
(ISOs) that are no longer making a profit with costly MCA and alternative business-loan products.
What is helping to precipitate problems in the MCA industry — and
the theme that is starting to trickle over into the commercial mortgage-broker space — is the knee-jerk reaction of many business owners to overcharge the clients they have out of fear that there aren’t
more coming behind them. It doesn’t matter who the client is or how
badly they need a service. They know when they’re being overcharged
or paying more than they had hoped.
Although those clients may seem grateful at loan-closing time, cognitive dissidence sets in fast, and it quickly becomes unlikely that they
will work with you again. They may even turn to social media or their
business network to share their distaste with your service. The answer
to a dwindling client pool is not to overcharge the clients you are able
to gain, but to differentiate yourself by providing excellent service at a
reasonable cost and adapting your business to grow your client base.
Lack of marketing
If the previous section left you wondering how you can adapt your brokerage business to grow your client base, the answer is to market your
business. This doesn’t mean you need to spend thousands of dollars you
may not have on pay-per-click ads or Facebook advertising, because
there are plenty of inexpensive or free ways to get your company’s
name out there.
Start by deciding how big you want your market to be. Many mortgage
brokers do extremely well just by sourcing business in their own community. Others feel their best bet is to build an internet presence and play on
a national scale to gain clientele across state lines. There is no doubt the
latter option is the more expensive one and certainly not always the best.
When you increase your market, you increase your competition
and your customer-acquisition costs. If you have not already established yourself as a nationwide brokerage, now isn’t the best time to
do so. It’s best to plant roots in your local community and branch out
Even though many people walk around with their smartphones
glued to their face, a large number of them still enjoy reading local
community newspapers and magazines. A targeted advertisement in
your local news publication can often cost only a few hundred dollars and will reach a comparatively large potential customer base.
Additionally, sponsoring a local event also can be reasonably priced
and get you great exposure. Whether it’s your child’s school event or
a community fundraiser, sponsorships can get you face to face with a
lot of potential borrowers.
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