Last week I boiled down 25+ years of finance experience into eight different areas of focus. Five of those were mostly related to personal finance and the other three were related to business finance. The last one I shared on the business finance side of things was the most important skill you can have as a founder that will completely alter your financial outlook. That was my belief that Marketing and Sales were the most important skills you can have.
There are plenty of other skills that you will need to master as a founder. More on that next week.
However, without paying customers you don’t have a business, you have a hobby.
The best way to market a business varies based on the industry you are in, the resources you have, and other factors. Including, how unique your business model is.
When you have a truly unique product or service, your Marketing efforts become more about educating the market on why your way of solving their pain point is the best. I experienced this when I launched my first startup in 2010. At that time, we were the first online business-to-business networking site that connected professionals face-to-face. When we were launching, social media was just starting to reach a real growth curve and a lot of professionals believed that networking online was the only way to go. They just didn’t understand why face-to-face meetings mattered (because they allow you to build trust faster). Had there been other competitors in the market there would have been less of a need to educate the market.
If your business model is more commoditized, then your approach to Marketing requires less of a focus on educating the market that you can solve their pain point and more attention on why your business is different. A good example of this is realtors. Any realtor can help you sell your home. The really good ones differentiate themselves through their work ethic, the connections they have, etc.
That is also true for loan brokers. There is no shortage of lenders that will give a business capital and any commercial loan broker can source a deal. Because capital is largely commoditized, commercial loan brokers have to find a way to stand out from the competition.
If you have taken my course on starting a commercial loan broker business then you will already know my favorite way to attract borrowers. Building a referral network is the single most powerful Marketing approach. Imagine having established relationships with referral partners, who already work with the types of clients you like to help, and they funnel opportunities your way. Some of the best referral partners are small business attorneys, accountants, and business brokers. If you build a successful network then you shouldn’t need to cold call or run paid online ads.
This approach is exactly how I market my business. That said, it takes time to build up a network. Other brokers or lenders have likely built relationships with those referral sources. So, you will need to find a way to differentiate yourself.
One way I do that is by sharing the volume of deals that I have been involved with, over $800M. That tells the potential referral partner that I know what I am doing and can get deals done. You may not have that level of experience. If not, it helps to be part of a network of brokers. One of the benefits people who take my course get is the ability to say, “I’m part of a network that has done over $800M in deals.”
If you are new to being a loan broker, there are other ways to market yourself. I advise a lot of the newer brokers that I speak with to focus on a niche. That niche could be specific types of loans or specific industries. By focusing on a niche you can quickly become an expert in that area. For example, you might be an expert in equipment financing deals, like my student Sid.
One final way I market my business is by offering to pay referral fees. That is not always possible, depending on the referral partner’s industry or company they work for. If that is the case, I still look for ways to make referring business to me worth their while. That can look as simple as handling their referrals professionally so as not to hurt their reputation. Or, by looking for ways to refer business back their way.
I’m not opposed to online advertising. Building up a referral network can take time because receiving referrals is often built on trust.
So, for loan brokers who are looking to get started quickly, it can be necessary to run online ads.
The challenge is that competing across high-volume keywords, such as business loans, can be very expensive and have very low click-through rates.
I’ve personally tried ads in the past and even when my marketing funnels were set up well, the quality of leads I got was not good. In my experience, online ads tend to attract borrowers who are not fundable or are “tire kickers.”
Still, online ads can be beneficial for branding purposes.
I won’t spend too much time here.
There are companies that are better at marketing online than I am. So, they likely have better results than my personal experience.
Regardless, I have never bought online leads. From speaking to other brokers, I have rarely heard a success story.
Just like most other businesses, there are no real shortcuts to quick success. Building up a referral network takes time. But, it is the best marketing approach in my opinion. Particularly for building a loan broker business that lasts.
Have a commercial loan brokerage business, but not sure how to market it? Check out my Marketing Mini-Course.