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Speaking on this week’s Business Accelerator podcast, Broker Daily director Alex Whitlock and broker coach Jason Back challenged the industry’s fixation on volume-based benchmarks, such as writing $100 million annually.
“I think volume in our industry has become a bit of a vanity metric,” Back said.
“It looks good, but it can hide a lot of problems.
“I want to challenge people’s thinking around the straight equation that volume equals success. Because if you’re not careful, volume might be the very thing that’s holding you back.”
Volume doesn’t tell the full story
Back and Whitlock highlighted the limitations of using volume as a stand-alone performance metric.
“Volume tells you how busy you are, not how well your business is performing,” Back said.
“Profitability is not a linear equation in our industry, just because you write more doesn’t mean you earn more.
“When you’re writing $100 million plus, is it high revenue or thin margins? Is this a big business or is it a bit of a chaotic mess? I think sometimes we get caught up in chasing status, not sustainability.”
He said not all $100 million businesses are created equal, with factors such as loan size, client complexity, and time per deal significantly impacting profitability.
“We don’t get paid for the complexity of a file, how long that file can take, or a difference effectively in volume,” Back said.
“I’ve got clients in Sydney that are writing 300 million plus, but each of their files is an incredible challenge – trusts, multiple lenders, multiple properties. None of their deals are simple. So the profitability per file could be the same as writing a half a million dollars in mum-and-dad home loans.”
Whitlock added that focusing purely on a headline number can be misleading.
“I think focusing on a lump sum is really quite detrimental because in broking, there’s hours on file, there is attrition to where you’re going,” he said.
At the same time, Back noted that failed applications and rework can add further pressure, with brokers absorbing the cost of deals that never settle.
Retention over volume
Back said one of the most common mistakes brokers make when pursuing growth is overlooking attrition within their existing loan book.
“If you’re writing as a broker $100 million a year, and you’re leaking your loan book, your customers are disappearing, you’re tipping water into a sieve,” he said.
Rather than focusing solely on new settlements, Back said brokers should pay closer attention to how well they retain clients over time.
Strong retention, he noted, is critical to building a sustainable and compounding business, particularly as refinancing activity and competition continue to increase.
Scaling brings new challenges
As brokerages grow, Back said the structure of the business must evolve alongside it.
He said higher volumes typically require additional staff across credit analysis, administration, and client support, shifting the business from a solo operation to a multi-person team.
Without the right systems and processes in place, this can lead to inefficiencies, service gaps, and increased compliance risk.
“I see some of the most stressed, most stuck, most unprofitable brokers writing $100 million plus,” Back said.
“There’s systemisation. Volume without systems just basically makes you burn out. If your volume is going up and your time’s going up with it, then you don’t have a sustainable business. It’s not scalable.”
Back said brokers should take a more structured approach when planning for growth.
“If you’re wanting to write $100 million based on your existing state, how many clients is that? And it’s not just how many settled loans, it’s how many applications, how many appointments, how many leads,” Back said.
“You’re going all the way back down to understand what the activities look like that would service settling $100 million loans. What does that actually look like?”
[Related: How brokers are adapting as commercial finance conditions shift]
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