In the eagerness to grow a note business note brokers all too often focus on revenues and not profits. Increasing revenues is vital to a growing note business. But cost increases that outpace gains in month-over-month revenue can deteriorate the profitability of a sustainable note business if not kept in check. During slow times and busy times, note brokers have to make whatever changes they can to save money.
As such, as you grow your note business create a checklist of costs you annually, bi-annually, or quarterly check and audit so that you can cut costs where possible increasing the overall profitability of your note business. Spending less, then, becomes an important way to protect the bottom line of any note business. Here are some simple tips that will allow note professionals to not just break even, but to actually save a few bucks; money that can be reinvested in their business.
No Office or Smaller Offices – I have always said I could do my business on a boat in the middle of the ocean with just internet access and a phone. Thanks to smartphones, laptop computers, internet and email, note professionals have to spend very little, if any, time in an actual office.
Because technology has allowed note professionals to conduct most of their business from their home, coffee shops or their cars, note brokers can now save the cost of having an office. Very few if any noteholders walk into a note buyers’ office to sell their note. The expense of an office is often one that could be eliminated. The yearly savings in rent can add up.
Recurring Payments – Every so often you must check your credit card statement to see whether you are being billed for any moot or discontinued recurring payments. Vigilant note professionals will do this every month. But, at a minimum, all note businesses must review their statements at least quarterly hunting for stale payments that should be discontinued.
For instance, we recently discovered a double payment to the same provider occurring on a monthly basis. That was quickly remedied for a savings of $79.99 per month. Sure, that’s under $80 dollars. That’s almost $1,000 per year!
Go Paperless – We would absolutely love it but we do not think the note business will ever be totally paperless. Even a one man operation goes through at least a case of paper a year. But why do we need all of that paper? With today’s computer programs and electronic signature capabilities the world of what needs to be physically printed out has shrunk significantly. You can lower a wide range of costs by moving all of your account documents online, which will allow you to manage them on either your desktop, mobile or tablet devices. Plus, consider eliminating paper mail and instead send mail electronically. This will not only cut costs for you, but it has immeasurable impacts on the environment and on your level of daily efficiency. So go paperless. Not only will you save the cost of paper but also the ink used to print it.
Marketing – As you all know I can go on and on about marketing and keeping statistics so I will keep it short. How much are you spending on your marketing? Do you track your marketing expenditures to make sure your investments are paying off? Do you pay for pay-per-click advertisements? Recently I realized that we were paying hundreds of dollars per month for a certain pay-per-click program that was not generating any closed transactions. The people using that search engine must, in large part, be the Internet’s modern day window shoppers, clicking but not in real need to sell their note. As such, we shut down these ads to save a wasted expenditure.
But saving on marketing is not limited pay-per-click campaigns; you must evaluate all marketing expenditures to make sure they are worth the dollars invested. Sure, branding people will yell and scream at me that marketing has two functions: (1) immediate inbound potential leads and (2) long-term brand recognition. The latter must always be taken into account. But, in my opinion, long-term branding must always bow to short-term profitability. So audit your marketing expenditures on a regular basis to cut costs where non-profitable marketing exists.
Shop for New Service Providers – Over time a note business acquires numerous service providers. From the Internet service provider that keeps you connected to the phone company that keeps the lines open to receive those highly sought after calls. Often, however, we become complacent with our existing service providers and fail to notice that our original teaser rate they used to get our business has been slowly but steadily rose over the years.
Don’t let this happen. There is almost always another service provider that can perform these services for you no matter what they are. So keep a list of your service providers and their rates. Make a habit of routinely—at least once a year–shopping for better rates. And politely let the existing providers know this is your policy so they will be more averse to raising rates on a customer they know will find someone else.
Market your note seller testimonials – Okay, a little more on marketing. Testimonials from satisfied note sellers can go a very long way in attracting and retaining new note holders. Spread the word about positive feedback you’ve received from your note sellers. Whether you’re talking about it briefly in passing, on the phone or in a formal presentation, note holders love to hear about satisfied note sellers, which could lead to more business for you at no expense.
Turn It Off or Put It to Sleep – In the note business our computers are on and used constantly. Are you the type of person that leaves computers running 24/7? Are the lights on from morning to night? By implementing simple energy saving habits, you can lower your monthly energy bills. Enable low-power sleep modes and turn off computers and monitors at night. If your work area or office receives a good amount of natural daylight, turn the lights off or use small lamps instead of lighting up the entire area, which helps conserve energy. Turn off the lights in unoccupied rooms and turn down the thermostat at the end of each day and over the weekends. Every little bit does help.
Digitize Your Letterhead – Create a digital version of your letterhead for correspondence, memos and proposals. Offer your brochure in a digital format that can be sent via email. Provide manuals, brochures and any other type of advertising or marketing piece in a downloadable format from your website. By digitizing your stationery and marketing peices, you’ll realize that people are perfectly fine these days with something that can be read on-screen. Going digital will always help note businesses reduce their printing costs. It’s really a no brainer.
Use Member Rewards – Do you fly often? Does your business credit card offer cash back on purchases? Take advantage of any member rewards as much as you can! You’ll find that points can be used for almost anything from paper clips, Kleenex and gas to computers, printers and office related purchases. You can even maximize your reward points by “double-dipping” on programs for many of your note business related purchases. For example, you can gain points from your credit card provider when making purchases from stores that provide their own member rewards program.
About once a year I sit down with my accountant and review my note business expenses and ways to reduce or control overhead to ramp up profitability. As the old cliché goes “a penny saved is a penny earned”. We’ve come a long way from Benjamin Franklin’s era where a penny was worth a lot more than it is today. Nevertheless, these penny saving tips could add up to thousands over time if implemented and monitored properly. Remember success demands action, keep on marketing, it’s going to work! TWITA! (That’s What I’m Talkin’ About!)
Jeff Armstrong of Armstrong Capital, your favorite Master Buyer, has been in the cash flow industry since 1991. Specializing in the private mortgage note niche and seller financed notes he can be reached at 818-865-2322 or by email at info@armstrongcapital.com. For beginning to advance training opportunities, resources, to learn more or to obtain a quote visit armstrongcapital.com and secretsofpaper.com