Mortgage broker 2000: A new way to network for factoring transactions and other residual income streamsFred Steinbergnetwork marketing, residual income, recruitment
Residual income is a welcome word for Mortgage Brokers
everywhere. I am hearing from many about an industry slowdown, in
addition to the economy. Some brokers are saying that from 9-5
during the day, they have a lot of free time. A great deal of
transactions are now taking place in the evenings and on weekends.
So what's a broker to do? Stay in cash flow, increase your ability
to earn by diversifying, and stick with what you know
best...finance. Factoring can be the key, because you can earn 15%
of the factors gross earnings, for the life of the account, up to
two to three years. An account that is near the median, $200,000-
$300,000 per month being funded, can earn you approximately $28,000
per year! This is not network marketing. This is
not buying real estate without a down payment.
This is a 200-year old, $200 billion per year
industry, employed by Fortune 500 companies, and also lucrative to
all the brokers, nationwide. So what is the best way to amortize
your existing network and sphere of influence without starting
over? The answer is networking. With a twist!
Brokers in every industry that are successful understand the
true value of networking. In the factoring industry, brokers will
typically network with bankers, attorneys, and accountants, while
Mortgage Brokers typically network with real estate agents. Every
discipline has a select group of targeted individuals whom they
market to, network with, or call on the phone. Usually, either a
referral fee is offered, or the reciprocation of sending a referral
back is the enticement. It can be slow, competitive, and
unrewarding, and the group you are seeking to network with is very
often not always willing to participate. You want them to send you
a transaction, or in some instances, to be the transaction. Some of
these people, such as accountants and attorneys, are reluctant to
participate.
We can all learn something from network marketing. Why is it so
successful? What is the draw to distributing toilet paper, selling
long distance telephone contracts, and selling beauty products?
Greed, of course, is the motivating factor, and the "call-out"
remains residual income! Anyone working in an industry that earns
commissions can understand the value of having that commission paid
monthly, or periodically, as opposed to one-time-only at the
closing table. It's much more lucrative to close a transaction that
will earn income continually for the life of the account, and in
most cases, less closings will be necessary. For those of us in the
factoring industry, it was the original magnet that attracted us.
It's wonderful to continue earning income on weekends when were not
working, or while were on the ski slopes enjoying a vacation.
There's no doubt about it-residual income is an absolute
magnet.
Instead of shouldering the burden of having to identify and
close each transaction by yourself, explore the possibility of
creating your own group of sub-brokers. It's similar to a down-line
in network marketing. Begin by offering residual income, and
remember, this is not new to any of the industries, disciplines, or
income streams. Funding sources always use this technique, which is
to recruit brokers, as opposed to directly marketing to the
end-user. Recruiting can be less expensive than the advertising
necessary to attract multiple end-users. So, once you can get
someone interested in seeking out transactions for you, how do you
proceed?
First, you have to be able to explain what you do, and what
type of transactions you are looking for. In factoring,
you would simply say:
I work with funding sources who purchase invoices. They
typically pay 96%-97% of face value per 30 days to accelerate cash
flow, whether it's for survival or growth. No financials are
necessary, accounts can be funded in as little as five working
days, and we can close simply by calling the funding source. (No
paperwork).
or:
I'm looking for companies with cash flow problems that have
invoices to other businesses or the government. I can turn those
invoices into immediate cash for a low discount fee, no term
contract, no minimums, any invoice, or any customer that the client
elects to fund.
Keep the explanation simple. The failure of network marketing is
the lack of product knowledge. Many of the recruited people never
learn what it is they do, or what it is that they sell. Their only
interest is recruiting new people, who, without product knowledge,
never create horizontal down-lines. Usually, this leads to failure.
Therefore, make sure your recruited brokers understand enough to
entice the potential client, and nothing more. Let them call you
immediately, upon identification, and you contact the funding
source to assist with the close.
Your recruit may also want to know more about the mechanic of
how funding actually occurs. Once again, keep the explanation
simple to understand. Remember, your recruit may also have to give
an answer to the question. Try this:
The client faxes in the invoice that he would like funded.
The funding source sends a portion of the face value,
(approximately 75%), with the balance sent upon collection minus
the discount fee.
Who do you recruit? Since licenses are not necessary in any
state, most anyone can be recruited. Use the same networking
techniques that you have been using all along. Tweak it slightly to
become a presentation for the recruitment of the person that you
are addressing, as opposed to attempting to sell a service.
It's a game of numbers, and it's unlikely that you will
successfully recruit any long-term brokers, who bring you multiple
deals. It's similar to some real estate franchises school of
thought-offer free training to attract the potential broker, the
new broker will bring three transactions: they'll buy something,
sell something to a family member or friend, close one deal, and
leave the industry. Same situation here. Some won't bother at all,
some will seek out a deal, and some will already know someone who
needs your help. You are addressing that persons small network of
influence, as opposed to addressing only that person!
How much do you pay? In most cases, you are earning 15% of the
factors gross income, for the duration of the account. I would
suggest graduated remuneration. You may suggest 30% of your gross
earnings, which is the same as 5% of the factors gross earnings,
and graduated remuneration based on success. Most likely, you won't
pay out more than the 30% because most of your sub-brokers will
only bring in a few transactions. If the sub-broker becomes
responsible for you earning a significant amount of money through
their own success in identifying clients, it may be worth it to you
to increase remuneration. Even if you are dividing your income
among your sub-brokers, the total volume of revenue will continue
to increase. You will have many more potential transactions through
your network.
If you are unhappy with your present level of success, or would
like to increase your success, through networking, give this method
a try. Any transaction you get is one that you didn't have
before.
Fred Steinberg is CEO of Express Business Funding, Inc. and
Express Business Funding of Canada. He may be reached by phone at
(941) 945-3863 or by fax at (941) 945- 2853.
