The Only 4 Goals to Achieve in a Mortgage Business
Sam Panetta breaks down the only four things you want from a mortgage business, and how to measure where you are today against where you want to be in six months.
There are only four things you want from a mortgage business: cash flow, business value, time and fulfilment. Sam shows how an extra $2M a month in settlements moves each one.
1) The four things you want
Every mortgage business comes down to four outcomes.
- Cash flow: what you take out of the business each month.
- Value: the business and its recurring revenue.
- Time: the hours you work each week.
- Fulfilment: enjoying the work, not dreading it.
2) Measure today, target six months out
Look at where each of the four sits right now, then decide where you want it to be in six months’ time.
- Score yourself today.
- Set a six-month target for each.
3) Cash flow: the quick maths
Say you’re doing $23,000 a month in revenue and it costs $8,000 a month to run the business. You’re taking out, or leaving in, $15,000 a month.
- $23k revenue.
- $8k costs.
- $15k a month.
4) Settle more, earn more
Lift settlements from $3M to $5M a month and revenue rises to around $39,000. Spend an extra $10,000 on paid ads and team members, and you’re now making $21,000 a month.
- An extra $2M a month in settlements.
- An extra $10k in ads and team.
- An extra $6k a month in profit.
5) Business value: your trail book
A trail book paying $5,000 a month is worth roughly $5,000 × 12 × 3. People are typically happy to transact at a three-times multiple, so that book is worth around $180,000.
- $5k a month in trail.
- A 3x multiple.
- About $180k in value.
6) Grow the book, grow the asset
Settle the extra $2M a month for six months and the trail book grows to around $9,000 a month. That extra $4,000 a month adds roughly $144,000 in asset value.
- Trail up from $5k to around $9k a month.
- About $144k more in asset value.
7) Time: how many hours you work
Fifty hours a week is fine if you’re building the business. A hundred hours a week is a problem that needs fixing.
- 50 hours a week is fine while building.
- 100 hours a week needs fixing.
8) Fulfilment: how you feel
You can feel ambitious, excited and keen, or stressed, overwhelmed and uncertain about what’s next. Keep the good feelings going, and fix the negative ones within six months.
- Keep ambition, excitement and drive.
- Fix stress, overwhelm and uncertainty.
9) Happy, productive and accomplished
Sam suggests chasing three feelings. Happy means enough money for the lifestyle you want. Productive means working enough to prove your work adds value, but not 100 hours a week. Accomplished means being on track for the financial goals that justify the risk of starting the business.
- Happy.
- Productive.
- Accomplished.
10) Why six months
Anything shorter isn’t enough time to make changes, because of the long cash conversion cycle in broking. Anything longer is too far away to plan well.
- Shorter is too short to see change.
- Longer is too hard to plan.
The simplest version of the playbook
Measure cash flow, value, time and fulfilment today, set a six-month target for each, and use your settlement numbers to move all four.
