How Loan Originators and Mortgage Lenders can Create an Annual Business Plan

So I think there’s a problem for most mortgage professionals, specifically guys and gals that help originate loans. And also with their real estate agent partners relative to this simple question,

Is Your Success Accidental?

For a lot of years, a lot of people have said “My business rises and falls based on other factors and not what I actually am planning to have happen in my business.”

Do You Have a Business Plan?

And I oftentimes ask audiences to raise their hand if they have a clear idea every day what has to happen in terms of a few disciplines to make their business plan for the year work. And I rarely get more than maybe 5% of the audience that says they do have a plan for the year and they follow that plan every single day. It is a severe problem if you’re waking up single day and business just happens. In other words, you’re not architecting the business plan that you would like.

And so if you don’t plan the business, the business will either fail or more than likely it will not meet your actual goals. So in this particular video and blog post, I want to provide four steps to business planning. And then I’m going to give you a step-by-step solution on how you can activate a business plan beginning right now so that you can get through this year successfully, purposefully and intentionally.

This is going to help you narrow your focus. This is going to help you target your relationships differently. It’s going to help you understand the mechanics every day of building a success rhythm or pattern. And how is this going to help you? You’re going to make more money in less time with less stress. It’s that simple. So when I refer to a business plan, there’s some optics that we want to talk about going into it.

Before we dig in, I recommend you download my Wealth Calculator so you can create your own Wealth Building Business Plan. I refer to it a number of times throughout the video and blog post, and think it would be the most helpful for you to download it now so you can follow along:

How to Calculate Your Income Goal

First, we’re going to measure your income goal. In this example it’s $300,000. We’re going to measure your commission rate and for simplicity, I’ll use 100 basis points. And then below that, what we’re going to do is we’re going to assume that your business plan will attract 10 buyers a month for every one referral partner you have. That referral partner could be a real estate agent. That referral partner could be a builder. It could be a financial planner, an estate manager. It could be an attorney, a divorce attorney. It could be any of those people.

But the optics are that you are going to decide in advance: “How many referrals are we going to work to generate together per month so I can operate my plan?” So that makes sense. What’s my income goal, what is my commission and how many referrals from buyers do I want per month? Now we go over to the top right and we start to talk about the idea of conversion and conversion is the mother lode. In high trust, the holy grail of conversion is the questions you ask, the connection you make and literally what can begin to happen is those conversion rates can skyrocket.

And so at the very top, we’ll take an average loan amount and in this example we’re going to use $350,000. There’s three conversion rates that we look at. The first is those referrals coming in from your partners that do convert to a pre-qual conversation. I randomly put the number in there of 87%. The second metric we measure is the pre-qual conversation to application rate and let’s assume that’s 22%. It could be higher, it could be lower.

And then we look at what percentage of those loans will actually close. And that is called the pull-through rate. And so once it’s in processing, 90% of those loans should close. So now what we’re looking at is we’re looking at kind of the correlation of that. Right down below that it says I need to get 0.37 loans every day to make this plan work. So now we know that we can’t get a third of a loan a day, but every three days, we can get a loan. And so what do we do is we come down to now the four elements, these are the four key elements of having an active business plan.

The Four Key Elements of a Business Plan

1. Volume Goals

The first one is called volume goals. And based on the numbers that we’ve plugged in above, what this says is that you have got to originate about 95 units. And based on the metrics up above, you need to close 85 of those units. And that means that you need to originate approximately $33 million to close 30 million. So hopefully that is transparent and you can follow that. It’s a very important number to look at and own because the greater, the pull-through, obviously the better the efficiency of the consumer experience, we call it the CX, the UX, maybe the user experience.

If we move over to the top right you can see that we take that annual number of 95 and we begin to what we call chunk that down. And so if we broke it into a monthly units goal, we would need just under eight units a month brought in. Weekly it’s just under two, about 1.8 and then daily, again, it’s 0.37. And so what we’re really looking to do here is to build a business around eight bonafide originations per month. And we look at that eight and we can say that would average two a week.

2. Number of Loans

So if you’re on the pace to do two a week, then the numbers are going to take care of themselves. Now, what we do is we go down to the bottom and we look at the number of loans. And again, that daily number is 0.37. If you go over to the right, the weekly number is 1.83. We round that up to two. So then if you have a 22 conversion rate of conversation to full-blown application, then what we know is you need to have 1.66 conversations a day. So I would always round that up and say if I have two borrower conversations a day, and all the metrics stay the same or in this case about 8.5 conversations a month, we could round that up to nine if you wanted to. That conversion rate’s going to produce that yield.

3. Percentage of Loans that Convert

So the obvious thing that we would want to work on then would be the percentage of loans that come out of a conversation that convert to a full app into processing. And so if you took that 22% and we worked over maybe a three-month period of time and took that 22% to 42%, you can start to see what would happen to volume it would in fact double without you having to speak to any more people. And that’s really one of the efficiencies that we talk about in High Trust Selling and also in our scripts and dialogues is what are the conversations that lead feed people to wanting to say yes more quickly, more rapidly so that your percentages generate the kind of volume you want by design?

4. Referrals Per Month Per Partner

If we go all the way to the fourth step in the very bottom, you can see that we decided we wanted 10 referrals per month per partner. And so that kind of bears out a number of 41. And if we divide the 41 by the 10, it essentially tells us we need four partners. So you need to make sure that your real estate agents and you, your builders and you, a financial planner, whomever your referral partners are, you need to make sure that every single week there are two qualified referrals coming in for borrowers for you to have conversation with.

Figuring out the Right Partners

And if you really just think about it as I share the whole plan, that is a business plan. Now, you do have to figure out who the right partners are. You do need to target them. You do need to sit down and have a high trust conversation with them. But the purpose of this video is to show you that if you don’t plan, the world is going to dictate your success. And you’ve heard that age-old comment many times probably, “If you failed a plan, you’re planning to fail.” And I don’t believe anybody wakes up planning to fail, but I can tell you this. About 99% of realtors and 99% of loan originators cannot produce a simple one-page business plan.

In our coaching company, this is all we use. And then we add a layer to this on how much does this business plan produce for you per hour you put into the business? So it’s a very, very predictable table on which you can set what your deep desires are around what kind of business do you on it? What kind of life do you want? And you can literally change any of this at any time to either catch up or accelerate depending on where you are, where you are in the year, and then where you are compared to what you want the end of the year to look like.

Business Planning with a Coach

So let’s make a commitment. Your next step is to have a free coaching consultation with one of our coach concierges. And the reason I want you to do that is because we’re living in very uncertain times. And I believe at the very least, a coaching conversation with one of our coach concierges particularly around the idea of business planning would help you really, really get clear on how the very best operate a plan. And as a result of that plan, they always make more money, they have less stress and they’re able to execute this in less time.

The other thing I would do is make sure you download the High Trust Interview Playbook. This playbook is designed for mortgage and real estate professionals to work together on career, an intentional business plan together connecting at deeper levels than you ever have. And what that will do is help your partners as well. If we limit the partner kind of tag, if you will, to a realtor, the very same business plan I just went through can be the very same business plan and your realtors go through. Imagine your realtors having four conversations a day with a seller or a buyer. And imagine what their book of business would start to look like if their conversion rate to contract and/or a sale would be 25% and then maybe to 50%.

Imagine how much money you would help your real realtors make by helping them execute a business plan too. All right, so let’s commit to making our success intentional. Let’s remove any of the accidents that bring us business because we’re in the right place at the right time. And let’s get after this because there’s no better way to succeed than to know the steps, and to know the direction and know the course you’re taking. I hope this was valuable. Talk to you soon.


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