Mortgage technology and beyond: We can't do it aloneJohn D. SvirskyMortgage Business Owners, forum phone calls, One Transaction Thinking
If you are a business owner, an entrepreneur or if you own a net
branch, this article is for you. I have found that although it
feels we do everything ourselves, we are not alone, and this
month's review is about a great service that I highly recommend. It
is called Mortgage
Business Owners (MBO), founded by a long-time Mortgage Broker
Tom Ward, who sold his business, Majestic Mortgage in Chicago, in
2006. Ward is also the chief executive officer of Majestic
Consulting.
I am breaking one of my own rules in doing this review.
Normally, I will not write about anything that I have not used and
have not made money from. As all of my long-term readers know, I do
not get paid for writing these reviews. I do it as a way of giving
back to an industry that has provided me with so much. But in these
troubled times, I did not want to wait. Ward has generously offered
me a membership, but the timing didn't permit me to use it before
this review.
I heard about the good work that Ward was doing two years ago at
several of the conventions that I attended. In November 2007, I sat
next to a broker from Missouri at a convention who had just joined
MBO, and he said that I should look into it. He explained that Ward
came to his company and analyzed his business, and his productivity
jumped as a result. He even added another branch operation in 2007.
My own business was experiencing a downturn, and I decided to check
MBO out. That was the stimulus for writing this article. I met with
Ward at the convention and then again for several hours. I also
read the material and have participated in one of the forum phone
calls. That is the basis for this review. I will say this now and
again at the conclusion of this article: If you are a mortgage
business owner, I recommend you check this out and sign up for a
year.
With so much negativity being written about our industry and so
much negativity coming from people within our industry, I find that
negativity only breeds itself. As an entrepreneur, I always remain
positive as I look for an opportunity in every market. Don't you? I
want to be around other winners. I want to be around other people
who are working for positive change rather than crying over spilled
milk. Yesterday's market is gone. Wake up, make radical changes and
we will do well once again. It is so nice to have the support of
fellow brokers in the storm—like-minded people helping each
other. In so doing, we all grow. Success breeds success.
Ward struggled with finding a way to create a standardized
vehicle to compare cost per loan, whether the company was doing 300
loans per year or 3,000 loans per year. The cost per loan analysis
would permit the business owner to compare his numbers against a
benchmark of fellow owners. Along the path, Ward created and
trademarked One Transaction Thinking (OTT), breaking down the
profit and loss (P&L) to one sheet of paper, standardizing the
cost per transaction. This does not replace the accountant's
P&L, which does not talk to us in a manner that quantifies the
cost of doing business in a meaningful way to the business owner.
This allows members to answer the question, 'How do I compare?' By
doing this, it enables the owner to see "what if" scenarios rather
than leaving it to chance. For example, if the company currently
charges a $375 processing fee, what would the net effect be if it
were raised to $400. The business owner would be able to see the
effect of his actions immediately.
MBO, which currently has a little less than 100 mortgage owners,
was modeled after the Young
Presidents' Organization (YPO), of which Ward was a member and
was greatly influenced by having other presidents of non-competing
companies help each other. It gives business owners a forum where
they can share intimately, without fearing that a competitor will
use the information against them. The premise is real people
helping improve their profitability through sharing their
experiences.
Ward wanted to create an organization that would help other
mortgage owners figure out how they compare with others in the
industry. There was no where to find statistical information where
an owner could benchmark his company's performance against other
companies of similar size before the program. To achieve this, Ward
created OTT by compiling P&L information of each of the member
companies into the OTT format to be able to draw clear correlations
between practices and financial performance. Most members provide a
QuickBooks P&L report for the analysis. This way, owners can
see if their cost per transaction for, let's say, underwriting or
processing is in line with other companies of their size. They
might find out that other companies have been able to have a single
processor do X amount of loans per week. The processor is paid a
straight salary regardless of the number of loans processed that
week. Therefore, the cost per loan increases if there are fewer
loans in-house to be processed and vice versa if the number of
loans in-house increases.
Before I write any more, I need to be clear about the ground
rules of MBO. All information, including the P&L information,
is kept confidential and is only seen by the MBO internal staff. No
business owner gets to know the exact numbers of any other shop,
unless the business owner shares them freely. The most powerful
feature of MBO is the monthly forum meetings comprised of 15 to 20
mortgage owners/entrepreneurs from non-competing markets. YPO found
out that with complete confidentiality among non-competing
businesses, the owners shared the most intimate details of their
business experience. The more deeply they shared, the more the
business grew, even in tough markets. In tough markets like this,
we need help, and who better to get it from than someone who knows
our business intimately. They are facing the same hurdles. In
preparing for this writing, I sat in on one group's monthly call.
One owner shared a change in his marketing that permitted him to do
$8 million in January and $12 million in February. That's pretty
impressive considering how badly the market was doing. I believe he
said his average was 1.75 percent per loan. When he shared the
marketing practice, others on the phone call responded and asked
questions like how it was implemented and what the effects of
implementation were in terms of dollars. All of this information is
kept completely confidential. Joining MBO will help you learn a
wealth of new information.
Another major conversation point was tenure and how to keep
valued employees during these tough times. It is so wonderful for
entrepreneurs to have a place to call and talk with their peers
about hiring practices and any other issue that might be pertinent.
MBO works because only business owners and net branch owners can be
a part of it. If you are a business owner or a net branch owner,
you know what it takes to pay everyone else a salary before
yourself. You might have even had to dip into home equity or
business lines of credit to carry the business. By definition, a
business owner is willing to take the risks that are required to
succeed, but there is nothing written that says you cannot get help
from others who are having similar experiences. I know, from my own
experience, that helping others can be beneficial to your own
career. Ward wrote an excellent book, "The Empathy Effect: Build
Your Business—and Your Wealth—By Putting Yourself in
Other People's Shoes." Its premise is the idea that in order to
obtain long-term success, one must put himself in the role of the
client and fulfill what he needs and wants. Ward used the example
of doing dry-run closings three days prior to the actual closing so
that the customers know what to expect, including costs, etc. If
you were a customer, wouldn't you want to know all of the costs in
advance so that you wouldn't be surprised at the closing table? In
his book, Ward also explains that it is not enough to just make the
sale, but rather, it is important to consider what the customer
would want after the sale. What kind of after-the-sale marketing
would be helpful to the client and what would make them want to
refer you more business? In a forum phone call, one of the MBO
owners said he was paying about $175 in marketing costs per client
after closing. He found the return on this investment to be
beneficial because he had client retention and his client-referral
ratio went up dramatically. With OTT, he was able to quantify the
exact dollar benefit for his group.
I highly recommend you join MBO if you are an entrepreneur, if
you own a Mortgage Broker shop or you are a net branch owner. There
are various sign-up options starting as lows as $69 per month.
Sometimes business owners become isolated. They only know their own
market and don't realize what else it out there. This is the
perfect anecdote to that isolation and to negativity. MBO is an
unusual and beneficial program, and I recommend it to all. Please
let me know what you think.
John D. Svirsky has been a Mortgage Broker for more than 25
years, doing both commercial and residential mortgages. He is also
a volunteer firefighter, avid cigar enthusiast and cook. He may be
reached by phone at (845) 424-3388 or e-mail
[email protected].
Product Summary
Product name: Mortgage Business Owners
Web site: www.mortgagebusinessowners.com
Who is it for: Exclusively for people who own
their own mortgage brokerage business or net branch. This is geared
for those who consider themselves entrepreneurs and leaders rather
than followers.
What is it: Through the use of financial
benchmarks, each owner is able to see how he compares to others in
the industry in terms of profitability and productivity. Members
are broken down into groups of 15 to 20 in non-competing markets
who participate in monthly forum telephone calls where they share
experiences, marketing practices, what is working and what is not.
They generally help all of their businesses grow by helping each
other. In the process, best business practices for origination,
marketing, operations workflow, commission structure, profit
sharing and expense management are created.
Price: Level one: $69 per month. $895 takes your
information from P&L and compares it to that of other MBO
members. Spend an hour on the phone with Tom Ward and Ken Maier to
review the data.
