Congratulations, You’ve Decided to Become an Asset Finance Broker.
Recently, Piotr Twaits of our sister company Synergy Commercial Finance Ltd wrote an article listing the things you might want to consider before embarking on a career as a Commercial Finance Broker, much of which is relevant to Asset Finance Brokers too. If you have already worked your way through those steps, then you may be ready to set up your own brokerage. In a future article, we will be outlining a typical checklist for your first 30, 60, 90 days. Meanwhile, you have other important decisions to make.
To Network or Not – That Is the Question
One of the biggest decisions you will make when setting up your business is whether or not to join a broker network. Networks provide a range of services and support to the fledgling broker aimed at getting you up and running as quickly as possible. Typically, they offer services that you may find difficult or expensive to procure on your own, or they provide valuable business knowledge and skills through mentorship arrangements.
When evaluating whether to join a broker network, it is essential to consider the success rates of franchisee business models compared to non-franchisee models. While exact statistics may vary, franchisee businesses often have a higher success rate than non-franchisee models. According to some industry studies, franchise businesses have a success rate of around 90%, while non-franchise businesses have a success rate of approximately 20%. This stark difference can be attributed to the support and resources provided by franchise networks.
Franchise networks offer a proven business model, established brand recognition, comprehensive training programs, ongoing support, marketing assistance, and a network of experienced professionals to lean on. These resources can significantly reduce the learning curve and provide a solid foundation for new brokers to thrive.
Moreover, networks often have established relationships with lenders and financial institutions, making it easier for brokers to access a wide range of financing options for their clients. This access to a broader pool of lenders can be a crucial advantage in securing deals and growing your business.
Additionally, being part of a franchise network allows brokers to leverage the reputation and credibility of the brand. Clients often feel more confident working with brokers affiliated with reputable networks, which can lead to increased business opportunities and client trust.
Not All Networks Are Created Equal
Networks come in many shapes and sizes, and it is important to evaluate their specific contract terms, taking a long-term view of the commitment rather than solely considering the initial joining fee. To make an informed decision, it is recommended to list out the services provided by each network alongside their terms and costs, enabling you to make a comparison. Consider not only your immediate needs, but also where you plan to take your business and whether the network is the right partner to grow with you and support your goals. It is crucial to think practically about how many of the benefits you will actually use and any potential limitations on accessing them. This exercise will help you gauge the type of support on offer and determine if it aligns with your needs.
People and Reputation Matter
If you decide to enter into a network agreement, it is important to find one that shares your values and aspirations. Look for networks that have solid references from members and funders, and a likeminded group of employees. Don’t be afraid to ask for references and get to know the their values before committing.
What is the Alternative?
Not every new asset finance broker joins a network; some decide to go it alone and manage the requirements of regulation, compliance, managing funders, clients, and negotiating premiums for association membership, IT services, and insurance independently. If you choose this route, consider listing out the bare basics that you will need to cover and plan how you will allocate your time to handle all the necessary aspects of the business. In this case, joining organisations such as the NACFB may be helpful in keeping you up to date on key issues that might impact your business.
It is Never Too Late
In general, individuals in the asset finance industry are incredibly supportive of each other, even in a competitive environment. If you decide that a network is not for you when you first start out, there is always the opportunity to join one later when you are more established and looking to grow.
While joining a specialist broker network may involve upfront costs and ongoing fees, these expenses are often offset by the benefits and support provided. It’s important to carefully evaluate the financial implications and weigh them against the potential advantages. Consider the long-term value and growth potential a network can offer, rather than focusing solely on the initial costs.
Joining an asset finance broker network can be highly beneficial for aspiring brokers. The comprehensive support, resources, and established brand recognition provided by a network can accelerate the growth and success of your brokerage. However, it is essential to evaluate different networks, their services, terms, and costs, ensuring they align with your long-term goals. If you choose not to join a network initially, it’s never too late to reconsider and join one later as your business becomes more established.
Asset Finance Solutions and Synergy Commercial Finance are networks that promote excellence in asset and commercial finance broking. Our ever-evolving “Broker in a Box” solution has been fast-tracking the start of new finance brokerages for nearly 20 years. If you have been working in asset or commercial finance for three years or more and are considering setting up your own business, we would be happy to share our expertise with you.
– Lee Simms, Managing Director at Asset Finance Solutions Ltd