How to future proof your business during economic uncertainty

While the broking industry has come through the pandemic relatively unscathed, there could be more difficult times ahead.

According to Connective executive director Mark Haron now is the time for brokers to prepare how they will manage what could be a longer-term economic challenge moving forward.

MPA spoke with Haron and principal fellow at the Melbourne Business School Sam Wylie about the ways brokers can future-proof their businesses off the back of Connective’s seven-part virtual program “Strategic management in an uncertain world”.

A challenging road ahead

While brokers grapple with the immediate difficulties of navigating lenders’ turnaround times and managing client expectations, another challenge is looming on the horizon, says Haron.

He says there is uncertainty around how many borrowers on repayment holidays will continue to be impacted from loss of income or employment come October.

“One of the things we’ve tried to do with this education program is make people more aware that there’s a longer-term economic recovery,” he says.

“Whether it is V or U, it’s not going to be all dinky-di in 2021 and back to normal come January. We’re going to go through some challenges.”

The aggregator has partnered with the Melbourne Business School to deliver a seven-part webinar series that focuses on best practice leadership and strategy principles to future proof mortgage broking businesses.

“We really want brokers to be as prepared as possible from their own business and strategic point of view about how they can manage what could be a more difficult and longer-term economic challenge going forward,” Haron says.

A client-centric approach to sustainability

According to Wylie, looking after the needs of the customer is key to ensuring a brokerage remains sustainable amidst economic uncertainty.

“The sustainability of any business, a real foundation of it, is how well you understand your clients, the problem that you’re solving for your client and how well you treat your clients,” Wylie says.

“This is a point in time where people need more help, service and advice from their brokers than they ordinarily do. This is a time to really build deep sustainability and profitability into the business by really delivering for clients.”

Haron reiterates this by highlighting the secular disruption the pandemic has caused.

“There are different parts of the market disrupted more than others and in some case some parts of the market have seen an improvement in terms of conditions,” Haron says.

“So, it’s helping to understand that and lock into those opportunities.

“If you’re going to shine it’s about having good, close relationships with your customers.”

The job remains the same

Wylie says when building a future-proof business strategy it is important to remember that despite the many industry and tech changes taking place, the fundamental job to be done remains the same.

“Brokers live in an environment that has incredible dynamism in competition, in technology, in regulation. All three of those things are changing very rapidly,” Wylie says.

“But the thing that doesn’t change through time is the job to be done for customers.”

“People have needed to finance their ownership of housing and investment in housing for hundreds, maybe thousands of years. It’s an incredibly enduring thing and that’s something to focus and organise your sustainability around.”

Managing staff post pandemic

Prioritisation and leadership clarity are both important when it comes to preventing staff from feeling overwhelmed, says Wylie.

This may involve a “triage” of clients to identify who needs to be attended to first, adding that having a clear process of prioritisation for staff is crucial.

Haron adds that leading by example is important when it comes to ensuring staff are performing to the best of their abilities without feeling overloaded.

“I think one of the keys to getting your staff to perform at their best is make sure that you are performing to your best. As the leader of the business, do your staff see you as someone who is calm, in control and supportive of them?” Haron says.

“Once you establish that faith, then you can start to look at okay how do I make sure that my staff are then productive to the extent that I need them to be productive?

“One of the sessions coming up through Melbourne Business School is actually on leadership and leadership in times of crisis like this.

“Even though we seem to be moving through it we’ve still got a long way to go.”

A downturn may affect brokers

Haron adds that while brokers have been able to leverage refinancing activity as well as the loan activity leading into COVID-19, this may not be enough for many brokers moving forward.

“What brokers haven’t seen yet is the real effect of a downturn in applications and settlements,” he says.

With the property market off 30 to 40%, it is likely that loan activity will start to slow down.

“Refinancing activity will not completely fill that gap. There will be some brokers that will continue to thrive and there’ll be some brokers who will be scratching their heads,” he says.

“Managing that is really crucial too.”

Preparing for the road ahead

While strategic planning can be difficult when the future is cloudy, Wylie and Haron both recommend having three strategies based on different scenarios.

“The more uncertain the world is, the more options you need to create for yourself,” says Wylie.

“This is something we’re going to talk about in the disrupted strategy sessions that we’re coming to.”

Wylie and Haron caution against mapping out too many scenarios.

“There’s a temptation to map out 20 scenarios but it doesn’t help,” says Wylie.

“It’s much more helpful to think about the expected case, the really bad case and the really good state of the world so that we’re okay; we can take the growth opportunity if it comes.”

Haron says the sessions will look at how brokers can get ahead of the worst-case scenarios in order to grow their business.

“If things go down 10%, how do you increase it in time to 20%, how do you pick up again, how do you double your business in a time like this?”

He says the key to doing this is to have a good understanding of how many clients are going to be active and keen to purchase or upgrade property as opposed to the number who may not be in a position to pay their loans moving forward.

“You may have to be more defensive and helping in protecting customers or you could be more proactive in getting out there and developing things with your customers.”