The Nature of Commercial Finance Consultancy: Relationship Building Over Product Selling
The world of professional commercial finance is both intricate and exciting. Though you are likely entering the industry as a referrer or sponsored agent, it’s crucial for you also to understand the role of a professional commercial finance consultant. It is a role that transcends mere product selling. Unlike retail transactions, where products are promoted and sold based on features, benefits, and competitive pricing, business finance solutions such as factoring or even popular merchant cash advances cannot be sold to the masses in the traditional sense. Instead, these financial instruments serve as tools to address specific needs—namely, cash flow or working capital challenges—that businesses may periodically encounter.
Identifying Genuine Needs: Cash Flow and Working Capital Solutions
Business owners often grapple with complex financial challenges that necessitate tailored solutions. Whether managing unpredictable cash flows, financing growth initiatives, or navigating seasonal fluctuations, the underlying need revolves around ensuring liquidity and maintaining operational stability. In this context, a one-size-fits-all approach to selling financial products is impractical and counterproductive. Additionally, small business owners are often faced with a challenge that is too common (and real). ..and that is that the banks will not lend. When the need for capital arises, virtually all small business owners search at their local bank. It is usually the bank they deal with daily, accepting sales deposits and clearing checks for payables. But what if the bank you deal with daily says “NO!”. As we’ve said, recent polls show that 80% of business owners are turned down for a loan. Now what? Well, that, in a nutshell, is what the “Alternative Commercial Finance Industry” is all about. This robust industry is made up of products and financing options that are “alternative” to traditional bank lending.
The Role of a Commercial Finance Consultant: Building Trust and Dependability
Much like a personal private banker who establishes long-standing relationships based on trust, integrity, and personalized service, a commercial finance consultant’s primary objective is to forge enduring relationships or partnerships with business owners. Commercial finance consultants can offer tailored advice, guidance, and solutions that align with their clients’ best interests by taking the time to understand each client’s unique needs, goals, and challenges.
The actual value of a commercial finance consultant lies not in selling products but in being a trusted advisor and strategic partner to business owners. By maintaining open lines of communication, staying informed about clients’ evolving needs, and proactively identifying opportunities to add value, consultants can position themselves as indispensable allies when financing needs arise. Commercial finance consultants know you CANNOT SELL FACTORING or other alternative finance products if the need is not there. You must build long-term relationships with small business owners, touching base periodically, and when the need for ready capital arises, and it often does eventually, the consultant can now provide services and earn commissions.
The Role of Referrers and Sponsored Agents: Lead Generation
So, Commercial Finance Consultants are entrusted with the task of cultivating trust and dependability with prospects over time. Their role extends beyond mere transactions; it involves building long-term relationships based on expertise, integrity, and personalized service. Commercial finance consultants leverage their knowledge and experience to guide clients through complex financial decisions, earning their trust through consistent delivery and reliability. This consultant side of the business, however, comes at some cost.
Commercial Finance Consultants and Costs of Direct Marketing
All successful commercial finance consultants utilize direct marketing at some level. And direct marketing can be expensive. You will require a CRM (Contact Relationship Manager) 100% of the time to manage your leads and marketing ($50 per month). You will also need to utilize direct mail, which requires postage, printing, and more ($100 – $200 per month).
As a CFC, you must join at least one local Chamber of Commerce ($300 annually). You naturally require a professional website ($200 – $500). You need hosting ($15 per month). You will need to spend hours on both the phone making client calls and marketing your services on social media such as LinkedIn. Radio spots? Maybe. Television? Maybe. The list goes on and on.
Sponsored Agents and Referrers and Costs of Direct Marketing
On the other hand, the role of Referrers and Referral Agents is rooted in networking and lead generation. Their primary focus is to identify and refer potential clients to Commercial Finance Consultants or factors. Unlike consultants, sponsored agents and referrers operate part-time, engaging in socially active online and offline networks to uncover opportunities. Their success hinges on one thing. They make commissions by being in the right place at the right time. They gauge success by leveraging their existing community involvement and connections to spot and uncover prospect opportunities whose companies could benefit from financial solutions from alternative commercial finance.
Referrers earn a share of commissions simply by facilitating connections between clients and their sponsoring consultant or factors. Their effectiveness relies on their ability to remain active and engaged within their communities, constantly seeking out opportunities and establishing themselves as trusted sources for financial referrals. Unlike consultants with significant marketing costs and expenses, referrers are exactly the opposite, incurring virtually no expenses other than those they normally incur as a part of their community. Most referrers and agents do invest in a basic website to enjoy the lead-generating power of marketing on social media through blog articles and also have the ability to generate quality leads by offering free booklets, articles, and reports. However, the cost of such direct marketing “extravagance” for agents and referrers is still not much more than $10 a month.
In essence, while commercial finance consultants prioritize long-term relationship building and have very in-depth financial expertise, referrers and referral agents excel in “right time – right place lead generation. Both play crucial roles in driving business growth and fostering opportunities within the commercial finance landscape. By recognizing and embracing the unique contributions of each, the industry can thrive through collaborative efforts and mutual support.
Being There When It Matters Most: Anticipating and Responding to Financing Needs
So in commercial finance, these two key business development players operate with distinct yet complementary roles: Commercial Finance Consultants and Referrers/Referral Agents. While both contribute to the industry’s success, their approaches and objectives do differ significantly.