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ISCOVER
Investing in the burgeoning opportunities of business and commercial lending could transform your brokerage, writes FAST’s Head of Northern Region, Rob Ryan.
For brokers looking to position their businesses to excel, diversifying your revenue streams is an opportunity not to be ignored. The evidence is clear. Take for example these figures from FAST. In the past two years alone, FAST’s business lending origination has doubled, rising from $3 billion in FY14 to $6 billion this financial year, as our brokers’ capitalise on the opportunity to cater to this market.
For the uninitiated, diversifying your services might seem daunting, but there are so many ways to move into new revenue streams – and many FAST brokers will tell you, it’s worth it.
One of the greatest places to start is by getting out and learning from others. We’re proud to be supporting The Adviser’s New Revenue Streams Bootcamp events, taking place across various states at the moment. Getting the opportunity to hear from experts and fellow peers – as well as engage with them and ask all the questions you want to – is a perfect way to commence your exploration into new revenue streams. If you haven’t already, I’d encourage you to get along to your closest event.
Still not convinced? Here’s just a few reasons why diversifying into new revenue streams will benefit your business:
Get a piece of the SME opportunity
Small businesses represent the backbone of the Australian economy. With around two million small businesses across the country, SMEs represent an enormous business opportunity for many industries and businesses – including brokers.
Earlier this year, the Scottish Pacific SME Growth Index showed 58% of SMEs are in a positive growth mode. This is an encouraging sign for brokers looking to service SMEs, as these businesses will undoubtedly be looking for ways to finance these growth aspirations.
The index also showed that the majority of SMEs are still not making use of the broad range of commercial finance options available to them. For example, two-thirds of small business leaders said that they dip into their own pockets (often using personal credit cards) to fund growth, with almost one in five doing this regularly.
SMEs certainly don’t need to feel constrained when it comes to accessing finance, funding growth and managing cash flow. There are many solutions available for them. SMEs are however, largely unaware of their options, and anyone who can help them navigate these difficulties, is going to be exceptionally well-received.
Existing clients will thank you for it
Being in a position to meet more of your existing client base’s needs strengthens your existing client relationships.
Around 10 to 30 per cent of most brokers’ existing client bases are small-business owners, so there’s a strong chance your residential clients will have business lending requirements too. If you are able to bring business lending into your client conversations, you may be able to provide them with an opportunity to improve their business’ cash flows and help them grow their business – and that’s got to be good for your client relationships. Not only will they appreciate the additional services you can offer, by entering into additional transactions, you’re creating a stickier, longer-term relationship that is likely to endure.
Capture growth trends
By diversifying your business, you will also be better able to capture certain growth trends. For example, we have seen asset finance becoming a greater focus for brokers, as a response to the government’s federal budget. Changes in the tax allowance for assets worth under $20,000 purchased before the end of the 2016/2017 tax year has meant the country has seen growing demand for motor vehicles, equipment, IT infrastructure. Brokers who can offer these solutions will be the ones increasing their revenues.
To us at FAST, it’s a no-brainer – diversify your offering and you will be future-proofing your brokerage. The biggest mistake is to sit still, because if you don’t try and tap into this market, someone else will.
