How To Sell A Mortgage Broking Business

To sell mortgage broking business are typically sold on a multiple of the income trail. However, at BCI we believe that you should also consider valuing and selling your business based on its profit, the way most other businesses are transacted.

Key points when building your business for sale

1. Database. Keep your database clean and up to date. Keep all relevant details about both clients and prospects. This includes birthdays, unusual facts or simply things you know about that person. There are two classes of people you need to look after. Clients and potential clients. Don’t forget your current clients. They may be renegotiating a loan in five years, so make sure it is you they want to speak to and not your competition.
2. Positioning. Put yourself at the quality end of the market.
3. Promotion and Marketing. Have a marketing campaign that includes Social Media at as many levels you can manage. Social Media is your avenue to reach your client base, not just with “selling” messages, but also tips and tricks that will make your contacts smarter in their everyday lives.
4. Growth Plan. Understand and have a documented plan for the future expansion of your business. A good growth plan makes sales projections more believable. What is your growth plan? More service lines? Boosted services? Increased geographic coverage? What part of your business is online and how could this be extended to reach more customers? How responsive is your website to mobile phone browsing? What about Social Media? What differentiates you in local and non-local markets? When a buyer comes and has a look at your business, the first question they will have is how they can grow it. It’s much better if you can show them the plan that you might be halfway through implementing already, rather than something that is in your head and might be implemented one day.
5. Employees. Knowledgeable, well-trained and friendly staff can help to create satisfied customers, and will lead to the unique selling experience that customers are usually seeking. IT doesn’t really matter whether you engage contractors or hire staff. The objective for you is to build a team that you an sell along with your business. Ensure that your customers want to deal with your business. Have training processes in place for all staff members to get the most out of your team.

6. Branding: This is easier if you are in a franchise. But brand can work for you whether you are a franchise or not. Your Brand is simply what message you send to your customers when they deal with you. Fulfil customer requirements on time, every time, to exceed your customers’ expectations while reducing costs. This adds to the brand power of your business and of course its value. Why are your customers coming back to do business with you? What keeps them from taking up the offer of your competitors in favour of doing business with you?
7. Diversification. Most mortgage brokers sell home loans. However there are other areas, including commercial loans, insurance and other financial products. It is called diversification and you can get it working for you.
8. Financials. Make sure your books are in order and your financial statements are compiled and ready for investigation at the appropriate time. Your current tax figures might not show the true profit picture of your business and a competent business broker can always adjust these financials to show the true picture of the business.
9. Competition. Understand how your competition is performing and how you measure up. Some of the value in the deal comes from the acquirer’s perception of how you rate in your peer group. How good are your profit margins?
10. Transferability. Take steps to ensure that your mortgage broking business transitions easily to the acquirer. Do you have a reliable sales team or do the customer relationships begin and end with you? What can you do to ensure the customers and suppliers will continue to stay with the business after the business sale?
11. Maintainability. Be careful of what disruption might be around the corner. Machines will soon take over a lot of what professionals now do. The only thing you may have left could be your ability to have a relationship with a client.
12. SWOT analysis should be performed so that you know what your Strengths, Weaknesses, Opportunities and Threats are. The more information you can give your buyer, the better position you will be in to negotiate a price favourable to you.
13. Business Valuation. Be aware of the fact that business valuations are not written in stone and there is a huge variability in what you can get for your business. just because most people value these businesses by multiplying the trial income by a certain number doesn’t mean you have to do that. To change the status quo you will need to prove your case and have a compelling one to start with.  The more you would like to get for your business, the more planning and work you need to do to prepare your business for sale. Address potential negatives before putting the business up for sale.