Numerous commercial finance brokers struggle to balance the demands of managing smaller, recurring “flow” businesses with the allure of higher earnings from larger transactions.
“When I launched my company, I initially strained myself chasing after big-ticket deals,” the owner of a $50 million annual broker operation recently told Monitor. “Ironically, landing a massive deal early on led to erratic income streams, alternating between feast and famine for years. I learned the hard way that sustainable business growth often hinges on consistent performance rather than always swinging for the fences in pursuit of grandiose wins.”
Below are some insights from brokers who have successfully maintained a stable and profitable core flow business, enabling them to cater to more complex clients without sacrificing income.
Super Small Ticket
The CEO of a firm generating $22 million in annual volume shared how focusing on the micro-ticket sector led to substantial success.
“We identified a niche that was severely underserved by retail financing and overlooked by most commercial equipment finance providers. While we initially focused primarily on working capital brokerage, we found a supportive lender willing to finance equipment deals ranging from $1,000 to $15,000. By positioning ourselves as specialists in catering to the micro-market, we struck gold,” the CEO said. “With minimal competition and negligible rate disputes due to the insignificance of payment differences on such small amounts, we’ve now been consistently funding over $10 million annually in high-margin, low-ticket flow business for six years.”
The Side Hustle Experts
Amidst the upheaval in retail during 2020, a successful brokerage swiftly adapted by crafting finance solutions tailored for the burgeoning “side hustle” phenomenon.
“We swiftly developed working capital and technology finance solutions targeting small office/home office (SOHO) ventures. The response was overwhelming. Within three months of launching our marketing campaign, we were securing six to seven deals worth $10K to $15K every few days. Over time, many of these ventures evolved into primary businesses, and we continued to support their growth,” the brokerage’s president said.
Take-Out Kings
Recognizing the substantial investments made by restaurants in enhancing their online ordering systems in recent years, one brokerage devised a unique solution, bundling working capital options with technology equipment financing (such as point-of-sale systems) and marketing it directly to restaurants through targeted direct mail campaigns.
“We initially focused on local eateries, then expanded statewide, and now we’re funding restaurateurs across the entire East Coast,” the brokerage’s vice president of sales said. “Our approach yields a steady flow of 10 to 12 deals per month, providing us with a robust fee stream.”
Your flow business can evolve beyond mere groundwork by leveraging creativity, cultivating strong funding partnerships, and maintaining consistent marketing efforts to promote differentiated solutions. Embracing a strategy like the above examples can yield substantial and sustainable profits.
