How many hours does it take you to settle $1m?

Posted by Feb03, 2018 Comments Comments Off on How many hours does it take you to settle $1m?
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The only way you are going to become more successful in 2018 is if you focus on improving one key measure: “hours per million settled”.

There’s only ever going to be 168 hours in one week – you cannot find anymore. And if you are consistently working more than 40 hours, then I’d suggest something is broken (unless you are a seriously high producer) because a happy, peaceful life is all about balance; some work, some play and some rest. Therefore, if you want to dramatically increase your settlements and profitability in 2018 without working more than 40 hours per week, you must focus on reducing “hours per million settled”. If you think you must work more than 40 hours per week to dramatically increase your settlements, you’re wrong. When I was writing loans, I settled > $100m p.a. and worked 40 hours or less.

Steve is a broker with 5 years of experience. He settled $50m in the 2017 calendar year. Steve’s goal is to settle $75m in 2018. There are 1920 working hours in a year (i.e. 40 hours per week, 48 weeks p.a.). Therefore, Steve settled $26k per hour in 2017 ($50m / 1920 hours). Steve’s average loan size is $450k. Therefore, on average, it took Steve 17 hours to settle a new loan in 2017. What about you?

 

Steve should work on two things inside his business to get to $75m

To increase settlements, Steve should focus on two things.

Firstly, he needs to reduce the time it takes to settle one loan. If he can reduce it to say 12 hours, he has the capacity to increase his settlements to $72m. He can do this by implementing an easy to follow sales system.

Secondly, through implementing a targeted market system, Steve could work to increase his average loan size. It shouldn’t be too difficult to increase it from $450k to say $550k-$600k. If he does this, his capacity increases to $92m (i.e. the impact of both improvements).

Now, these improvements won’t happen overnight (some will), but focusing on these two things throughout 2018 is the easiest way to get to $75m.

The solution is simple

Running a business without good systems is like trying to open a combination lock without the number code. It doesn’t matter how hard you try, you’ll never open the lock and you’ll just get more and more frustrated! But once you have the code (i.e. good systems), opening the lock is a walk in the park.

This is why it’s silly to think that all you need is to generate more leads to grow your business. More leads will just mean more work which leads to poorer work-life balance and, in time, probably unhappiness. Business systems are the ‘number code’ to success.

My suggestion is to focus on one thing

Instead of focusing on lead generation, I encourage you to focus on improving “hours per million settled”. To do this, I believe that you need to have three critical systems in place:

  1. A marketing system – a system that requires only a few hours of your time per week that generates a consistent flow of quality leads. The good news is that I believe the best marketing activities are free (no cost). Therefore, you need very little time, no money, just good systems.
  2. A sales process – you must have a consistent sales process that builds trust quickly, repels non-target and unprofitable prospects and attracts the right clients and converts them with minimal fuss. This is where I think most brokers waste the most time.
  3. A loan fulfillment system – this is your back-office system. The aim is that you (the broker) should have very little involvement after an application is signed. The only way you can achieve this is to have excellent back office systems.

So, what do I do with all this extra time?

You might be thinking; if I do reduce hours per million settled from 17 to 12 per loan, what do I do with the extra time (assuming you don’t have more leads to work on)? The answer is that I believe that there are a few daily and weekly activities that a successful broker must do that are highly valuable. They aren’t valuable if you do these things once and a while. But if you do them consistently over 100 days, 200 days, 2 years, the more valuable they become. This is your marketing system (which I’ll cover in my next blog).

Therefore, instead of wasting time in an inefficient business, make it more efficient and then use your newfound time to undertake these high value activities. After doing that, you will soon have more leads to fill your time and increase settlements. Then, you repeat the process i.e. continually focus on reducing hours per million settled.

Three-part series

In my next blog (in 2 weeks), I will show you what a successful marketing system looks like and how to put one together. In part 3, I’ll talk about a successful sales system.

 

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