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Calyx teams with Greg Frost to provide marketing tools

National Mortgage Professional
Apr 13, 2008

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: 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.
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