The Mortgage Cicerone: Developing Your Mortgage Business Plan

Consider these simple instructions on writing your own plan. Keep in mind that your own personal business plan does not have to be a huge document. It only has to include key components and serve as a guide to building a long-term mortgage practice. In addition, understand that your business plan is a flexible document that should change as your business grows.

Preface

Before you start your business plan, you will need to follow several critical preparation steps. First of all, you will need to answer some key questions that will become the foundation of your plan. You need to know where you are NOW. What does your business look like today? It’s difficult to get anywhere if you don't know where you are to begin with! The good news is that it’s relatively easy to determine this. You can easily establish where you are by answering these simple questions:

What business are you in specifically?
What product and services do you offer?
How many hours do you work per day?
What is your prospecting strategy?
What is your ‘conversion rate’? (prospecting leads converted to closed loans)
How much income did you make last week? Last month? Last year?
Where is your business coming from?
What is a simple profile of a typical customer?
What referral sources send you business?
What is your sales process (if you have one)?
If you have a sales process, do you use it with every customer?
Do you keep track of your past customers?
How do you keep track of them?
How many past customers do you have?
What do you send past customers monthly/quarterly?
Do you send out ‘customer surveys’?
What is your customer tracking system?

What software do you use to support sales presentations, loan originations, marketing, processing, tracking, reporting and customer relationship management (CRM)?

Answering these questions will expose a great deal about your business and where it currently stands. Remember, you must be aware of gaps before you can close them. Once this is done, you can establish your own ‘vision’ for where you want your business to go…and grow. You now have a shot at organizing the chaos.

Secondly, you need a vision for where you want to take your business. One of my favorite quotes is by author and aviator, Antoine de Saint-Exupery. He states that, "A rock pile ceases to be a rock pile the moment a single man contemplates it, bearing within him the image of a cathedral." Any vision can be achieved if it’s thought out in advance, and broken down into bite-sized pieces. You must have a vision first, and then you can break it down into workable parts. Those workable parts will then be the map that guides you toward your goals.

Now that you know where you are, your vision can be established by answering these questions:

Where do you see yourself in 3, 6, 12, 24, or 36 months?
What are the tasks you love to do?
What are the tasks you hate to do?
What about the mortgage business are you passionate about?
How much money do you want to make?
What office or company will you be working for?
How many loans will you need to originate to reach your goals?
How many loans will you need to close to reach your goals?
How many staff members will be on your team?
What referral sources will be sending you their business on a consistent basis?
How will your business be set up?
What systems will you use to build your business?
How will your customers view you and your business?

It’s vitally important to answer these questions in as much detail as possible. The more detailed you are, the more realistic your vision will become!

Thirdly, you need to chart your course. This is where you create your own mortgage success map within your business plan. I have developed a “Mortgage Success Map” within the Mortgage Business Builder™ for you to follow in building your mortgage practice. Our first destination on the map is heading toward the “mortgage business opportunities." These opportunities consist of three Direct-to-Consumer strategies, and seven Referral-Source strategies.

The Direct-to-Consumer strategies are: the media, consumer-direct, and past-customers. The Referral-Source strategies are: realtors, builders, CPA’s, financial planners, attorneys, business professionals, and corporations. The Direct-to-Consumer strategies are critically important to the growth-cycle of your business. This is where you can really make a difference in attaining quality referrals. These strategies need to be broken down so that you can implement them into your plan.

Lastly, you have to resolve to succeed. Understand that you are the driving force behind your mortgage business. Your business plan documents what you are about to accomplish. Now it’s up to you to execute the plan. Do whatever it takes to succeed! When it comes right down to it, the most important sale you’ll ever make is not to the customer you pursue, but the sale of yourself. The ability to persuade yourself that what you have is much more valuable than anything you’d ask back from the customer is the single most important element in your long-term success. Your ability to connect with your uniqueness, your potential, your attitude, as well as your ability to overcome challenges and grow is a key factor that will determine your success. This is the internal engine that will get you to persuade yourself to make the necessary calls when you don’t feel like it. This will drive your ability to motivate yourself and ask one more time after five or six "no's." It will be your ability to withstand the arrows of rejection that we all face, and your ability generate levels of enthusiasm on a moment’s notice that will set you apart and make you a champion.

Now, let’s review. Make sure that you know where you are, have a vision for where you want to go, chart-out and map your course, and have an undying resolution to succeed! Your customers and referral sources will be the ultimate beneficiaries of your success! You’re now ready to start you business plan.

Introduction

Any worthwhile endeavor requires planning. It requires thinking through and writing up a business plan will help you chart a steady course for your business.

If you don't know where you are going, you will end up somewhere else. The business plan is a written document that clearly defines the goals of a business and outlines the methods for achieving those goals. It serves as your company's navigational tool.

A business plan:

Acts as the management and financial blueprint for a business and the profitable operation of a business venture.
Explains specifically how a business will function and details how a business will be capitalized, managed, and marketed.

Mission Statement

In this section of your business plan, you should provide a detailed description of your business. In describing your business, an excellent question to ask yourself is: What business am I in? Describe your products, services, market, and profile your targeted customers. Be sure to include a thorough description of what makes your business unique. This can also serve as your “mission statement.” Some basic guidelines to use when writing your mission statement are:

A mission statement should say who your company is, what you do, what you stand for, and why you do it.
An effective mission statement is best developed with input by all the members of an organization.
The best mission statements tend to be 4 to 8 sentences long.
Avoid saying how great you are, what great quality and what great service you provide.
Key in on the needs of the consumer and how your products and services serve those needs.
Examine other company's mission statements, but make certain your statement is you and not some other company. That is why you should not copy a statement.
Make sure you actually believe in your mission statement, if you don't, it's a lie, and your customers will soon realize it.

EXAMPLE: John and Jane Doe own and operate ABC Mortgage Group as a company that customers and clients can count on to service all of their residential real estate financial needs. Our existence is maintained through our willingness and ability to use our knowledge and experience to care for and serve our customers at a world-class level. ABC Mortgage Group believes that everybody should have the privilege and the freedom of home ownership. Customers and clients come first and they can count on ABC Mortgage Group to have their best interest in mind. Excellence in customer service is norm at ABC Mortgage Group.

Products and Services

In this section of your plan, describe what you intend to sell, what it does, why buying it will benefit the customer, and what makes it unique or special. This should describe the specific loan programs you will be offering. If you’re brand new to the mortgage industry, you can make this somewhat generic. For example, FHA, VA and FNMA loans for single family residences. You should also describe the benefits of your goods and services from your customer's perspective.

Successful business owners endeavor to understand what their customers want or expect from them. You will want to write out all of the products and services that you offer. This includes the types of loan products that will meet the needs of your targeted customer. Understanding the customer is most important in winning customer satisfaction and in building profits.

Sales and Marketing

If you’re serious about building a mortgage company that does high-volume, you must have a solid plan for sales and marketing. One key to successful selling is to know your customers - their likes, dislikes, needs, and expectations. By identifying these factors, you can develop a marketing strategy that will allow you to understand and fulfill their needs.

You must also know your competition and state how you are different in this plan. Consider their advertising and pricing strategies. If you understand why your competitors succeed, you can better position yourself to compete with them. You must also include a pricing strategy. Whether you price above or below your competition, first establish a policy, and then state it in this plan. Then you can monitor prices and operating costs and adjust to ensure profitability.

Operating Requirements

Even if you’re working for another lender or broker, you should still practice "good business" and develop an operating plan. Remember, you are the CEO of your business whether you are working for somebody else or not.

In this section of your business plan, explain how the business will be managed on a day-to-day basis. Discuss hiring and personnel policies. Discuss insurance, lease or rent agreements, legal regulations, and other operating requirements of doing business. Account for any equipment necessary to produce your products or services. Describe the production process and delivery of those products and services.

Financial Management

Sound financial management is one of the best ways for your business to remain profitable and solvent. This is critical! It doesn’t matter how much revenue you bring to the table if it’s not managed properly. You could be bringing in $100,000 per month in commissions, but spending $100,000 to operate the business. This happens a lot with mortgage companies. Don’t let this happen to you!

To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs). In this section of your business plan, you need to prepare a sales forecast, cash flow projections, projected income statements, a break-even analysis, and a balance sheet.

nless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is to understand the financial tools well enough to gain their benefits. Your accountant can help you to accomplish this goal.

Management Profile

The most important asset your business has is the people and this starts with you. It is important to identify the skills you will need to accomplish your plan. Then you must plan for identifying the people who are going to implement the tasks with specific skill sets. This includes listing the skills and experience that you have as well as a plan to hire or outsource individuals to cover for skills that you don’t have. This section of your business plan identifies the owners and key employees. It discusses the skills and experience they bring to the business.

Check Your Understanding

Now that you have seen all of the components of the business plan, let's check your understanding. You will be presented with a series of multiple choice questions.
Good luck!

1.) Why is a business plan important?
A. It is required by your bank.
B. It provides direction and focus for the business.
C. It is required to apply for a business loan.
D. It acts as a blueprint for the business.
E. All of the above.

2.) The Business Description section should answer the question:
A. Who is my competition?
B. How will my business be managed?
C. What business am I in?
D. What are my operating expenses?

3.) Becoming aware of the benefits of your goods and/or services from the customer's perspective helps to build:
A. Company description
B. Customer loyalty
C. A good product price
D. Sound financial management

4.) Identifying your customers and their likes, dislikes, and expectations allows you to:
A. Match your competition
B. Operate your business more efficiently
C. Anticipate business expenses
D. Understand and fulfill customers' needs

5.) The following should be discussed in the Operating Requirements section:
A. Insurance, lease or rent agreements and legal regulations
B. A complete description of your products and services
C. Your pricing strategy
D. The owners and key employees and their skills and experience

6.) Financial Statements are very helpful for the new business owner because:
A. They help to employ accountants
B. Sound financial management is one of the best ways to remain solvent
C. They make it possible to better define your product or service
D. They help to determine employee policies

7.) Which section identifies the owners and key employees, then discusses the skills and experience that they bring to the business?
A. Management Profile
B. Operating Requirements
C. Products and Services
D. Business Description

Congratulations!

You have now completed the course on writing a business plan. Remember, if you don't plan where you are going, you will end up somewhere else. Once you have completed your business plan, review it with a friend or business associate. Remember that your business plan is a flexible document that should change as your business grows.

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By Mike Baker

Mike Baker, mortgage industry speaker/trainer is the author of several best selling books and products including, “Selling Smart,” “Mortgage Power,” “Loan Officer Recruiting,” “Credit Smart,“ and “The Mortgage Business Builder™. Visit him on the web at www.mortgagespeaker.com or call 800.928.7110