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Jan 05, 2005

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 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.
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