For the second time this year, Momentum Media and mortgages brand The Adviser hosted the SME Broker Bootcamp in November, with a focus on why a fully diversified brokerage is now more important than ever. We review how we wrapped up the year by sharpening brokers’ skills in SME lending.
Accendo Financial partner and business coach Stuart Donaldson emceed the SME Broker Bootcamp 2022.
In November 2022, brokers gathered in Brisbane, Sydney, and Melbourne for the second Small-to-Medium Enterprise (SME) Broker Bootcamp of the year, hosted by The Adviser.
Facilitated by Accendo Financial partner and business coach Stuart Donaldson, the bootcamp was held under very different circumstances compared to the one in February. Interest rates and inflation have been rising, with predictions that this will continue, the property market has been losing steam, and business owners have been facing labour shortages and supply chain issues.
In this climate, Mr Donaldson and other speakers emphasised that it is essential for mortgage brokers to consider building a fully diversified brokerage and offering clients a holistic range of finance products and services under one roof to ensure they are not relying on one revenue stream or market.
He added that it is now more critical than at any other time in the last decade for brokers to diversify their brokerage, particularly because the SME market is well-defined and forms a substantial part of the Australian economy.
Kicking off by painting the big picture
Mr Donaldson began the day by setting the scene for the sessions. He quantified the benefits of diversification across loan types in three to five years if brokers followed the big picture pathway.
He outlined the potential financial gains, the risk/reward payout, and how long the diversification journey could take.
Mr Donaldson also broke down the numbers by dollar amount and the number of deals based on types of loans, including cars, trade finance, insurance, commercial property, and referrals. He provided practical insights into the number of deals and revenue brokers could expect, and the steps required to maximise a broker’s service offerings and multiply their revenue.
In NSW, brokers were given practical advice from Accendo Financial’s other partner Trent Carter, who embarked on the diversification journey a few years ago as director of Provident Lending & Business Solutions. The brokerage offers commercial, property and business loans, home and investment loans, car and personal loans, equipment and asset finance, and cashflow advisory services.
The key to diversifying a brokerage, Mr Carter explained, is gaining exposure to business' financials repeatedly, building a broker’s technical skills, and understanding a business’ cashflow requirements and profit and loss statements to provide them with optimal solutions.
Being interactive
Other sessions at the SME Broker Bootcamp offered brokers a chance to get their hands dirty with a hands-on session that covered practical case studies and actionable resources designed to provide them with a deeper understanding of their existing and new SME clients.
To do this, participants were given worksheets and asked to build out a financial scorecard for an SME and filter it to five success driver metrics.
Mr Donaldson also incorporated a powerful, single-page procedure manual called “The SME Lending Compass” that brokers can use to understand the underlying financial drivers of all businesses, and a framework for conducting impactful and powerful meetings with SME clients.
Alongside this, brokers learned how to produce quality lending submissions to meet their clients’ funding needs.
Building their knowledge, skills, and confidence in this area is essential because a lending submission for a business is more complex than a home loan (which is traditionally more product-focused), Mr Donaldson pointed out.
Venturing outside your database
In another session, Deena Janes, director of marketing company for the finance industry Your Client Matters’, unpacked how brokers could find new SME clients beyond their database and why this is crucial in the current environment where the housing market is cooling and mortgage brokers are facing stiff competition from their peers.
She said that while mortgage brokers have smaller databases, asset finance brokers have thousands of clients in their list, opening doors to additional revenue streams.
Ms Janes offered strategies on how brokers could expand their SME database, scale new leads beyond their current database, become the trusted adviser for clients seeking access to finance by identifying suitable funding options, and educate them on funding alternatives other than the major banks.
In another session, a panel of speakers gazed into the future and outlined the trends that could shape SME lending in the next one to five years. They equipped brokers with tools to enable them to participate in their SME clients’ growth journey and pushed them to be ahead of the trends to gear their own brokerage for success.
For example, Commercial & Asset Finance Brokers Association of Australia president Matt Atkin pointed out that with the revival of the manufacturing sector across various industries in Australia, it could create opportunities for brokers to help clients with technology-based lending and equipment finance.
Moreover, with cashflow remaining a perennial challenge for SMEs (particularly in the current economic environment), Mr Atkin suggested that brokers should become a business owner’s trusted adviser and provide a broad range of cashflow lending solutions, including trade and debtor finance or overdrafts.
Sharpening business value – a double-whammy approach
To close the bootcamp, Mr Donaldson returned to the stage with a two-in-one session on how brokers could optimise both the value of their clients’ business and their own brokerage in the process.
To boost their client’s business value, brokers must become a finance professional, he said, and understand why their clients require access to finance and how it could benefit their business.
Brokers must have conversations with clients about the strengths and weaknesses in their business, align funding proposals to maintain their growth profile, and reduce the cost of finance to the extent possible, Mr Donaldson suggested.
He provided strategies to drive value, explored key risks and mitigants and how to turn these into value drivers, and introduced participants to a platform they can use to facilitate discussions and present professionally to all clients.
Simultaneously, brokers who diversify into SME lending could increase profitability, move their cashflow, and de-risk their brokerage by becoming less reliant on one source of revenue that is often held to the mercy of economic conditions or one corner of the market, Mr Donaldson concluded.
Throughout the bootcamp, delegates could network with their peers, listen to fireside discussions by lenders, participate in interactive exercises to sharpen their skills and understanding of a business' financials, and ask speakers questions during the sessions.