Planning For Profitability
By Todd Duncan
Look at your business. You are 100% responsible for it. With that being said, I suggest that you do an analysis at least quarterly to determine the profit picture on a per-prospect basis. There are really only 4 types of clients you can have:
The High Profit: High Maintenance client typically is that source that refers you lots of business, but that business and the nature of the operating style of the source require inordinate amounts of time from you. Consequently, you have higher levels of stress and are not able to develop other, less maintenance-oriented relationships. This source also tends to create havoc with your support team for the very same reasons.
The High Profit: Low Maintenance source is however, the best kind of client to have. They treat their career as a profession, develop the right kinds of pro-active work habits, don’t spend their time on clients that are high maintenance, and focus on creating meaningful encounters for their clients, leading to repeat and referral business. These are the low-stress, high-quality business prospects.
The Low Profit: Low Maintenance source is generally one who either is new to the business and has not yet developed a large book of business, or for many reasons, doesn’t necessarily need to do lots of volume. In either case, this source is good because the profit per loan is still comparatively very high.
The Low Profit: High Maintenance source. Look out! These sources are the easiest to influence to give you business but the hardest to manage. They are usually more transaction-driven, operating out of fear and lack of confidence. They are on the phone to you and your staff constantly and every deal is a neck breaker. These types of sources are very plentiful, but, over time, will destroy you. BEWARE.
One thing you should do is evaluate each of your prospects from the above perspective. Decide clearly which ones represent the greatest long-term opportunity. Additionally, you might want to quantify this.
Create a profitability model by mapping, on a graph, the annual worth of everyone whom you consider to be a core client. Determine exactly how much they earned for you in commissions last year. Then, do the same analysis for the first 6 months of this year. This will allow you to develop a keen awareness about your business profile. First, based on pure “gut feelings,” you’ll know whose business was not worth what you made from it. Second, it will allow you to develop a standard by which you can now compare all future business prospects, either in the targeting stage or after they have chosen to do business with you.
This system acts as a benchmark to make your business more profitable.comments powered by Disqus