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Sean Murray: Okay, hello,
welcome back. I am going to try

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this a second time we had a
little bit of an audio issue

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before I apologize for that.
Today I wanted to talk about and

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just real briefly, I wanted to
talk about a question that came

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up in our live stream yesterday.
Hopefully you tuned in, we had a

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two and a half hour broadcast
that was done off site, I was

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there with Johnny Fernandez and
a few special guests from

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Horizon Financial Group, United
Capital Source, and also Central

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Diligence Group. And one of the
questions that came up was by

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Kevin Travers, he's a reporter
here at deBanked. And he has

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John Celifarco, one of the
Managing Directors of Horizon

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Financial Group, whether or not
a broker, a new broker could

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expect to make a million dollars
in their first year. And I think

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John, if I recall correctly, was
incredulous by the question at

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the suggestion that someone
could even think that that or

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that it would even be asked,
could you make a million dollars

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as a broker in your first year?
And his answer more or less was

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no and to not go in thinking
that that could happen? But

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Kevin's question wasn't exactly
misguided, because it's a

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question I've heard many times
before. And you have to ever

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think about where does that
question even come from? Where

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did that mindset come from, that
you could just make a million

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dollars in your first year?
Well, you can make a good amount

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of money in your first year, you
could potentially make six

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figures. But I've heard the
million dollar number thrown

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around. And it comes from I
think, the commissions that are

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often spoken about in this
business, you could potentially

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on a funded deal, we're talking
about non bank business funding,

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could be alone could be MCA
could be some other product, you

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could make 10, or more percent
of the origination amount of the

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funded amount on a deal. So if
you fund a $100,000 deal as a

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broker and your 10%, commission
would be $10,000. That's

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significant, right? And if you
do a million dollar deal, you

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can make $100 grand or more,
right? If you're making up to 17

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points on a million dollars,
you're making significant money.

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And people start to think, well,
if that's the case, how can you

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not make a million dollars,
right? It looks like it's

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something you can get rich quick
off of. And when I think that a

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lot of people fail to understand
that commissions is really just

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kind of your revenue in a
business. Because these deals

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don't come out of nowhere, they
have to be earned. And so if you

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do hear friends, or if you see
posts on social media to watch

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video to say, this person made a
million dollars in commissions

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in the first year of second
year, whatever, whatever amount

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of time it is, you have to
consider that it probably cost

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them money to generate that
commission. So if you if they

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earned $1 million, it could have
cost them $900,000 in marketing

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cost to get that million dollars
in commission. So the million

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dollars sounds awesome, except
that it's kind of like any other

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business in that there are
expenses to acquire those

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clients. And so that person
might have only made $100,000.

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And that doesn't even account
for any of the overhead that

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they might have had to shell out
also. Now there's a difference.

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Because if you own the company
and have agents working for you,

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they're the ones that are
typically the other ones that

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are typically paying for those
those expensive paying for the

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marketing cost. And the agents
are usually not so their

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commissions are usually just
their commissions with without

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any any out of pocket expense.
And you don't really hear too

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many of those individual those
agents making a million dollars

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plus per year, I don't think I
have ever encountered any that

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are making agents that are
making a million plus per year,

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you definitely hear of shops,
broker shops that have agents

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working for them making a
million plus, absolutely. But

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they also have significant
marketing costs. They have

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overhead, they might have legal
fees, they have rent, they have

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all these other things that go
into running a normal business.

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And so even if you hear that a
broker shop made like $10

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million, they might have spent
$9 million, or honestly, they

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could have spent $11 million and
had a loss. And so we always

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need to think about when we see
the big fancy numbers in this

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industry. What did it cost to
generate that and I think that

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kind of gets, you know, muddied
into the the messaging for when

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people are trying to entice you
into the business, they want to

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throw that top line number at
you. So and so a million

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dollars. So and so made $10
million. You need to ask another

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question and that is how much
does it cost for them to

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generate that amount of money.
Another area of confusion is its

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origination figures. So if you
are a broker and your client

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took $10,000 from a funder that
a deal you referred, the client

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got approved for 10 grand as
because of you, you originated

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the $10,000 deal. You didn't
make $10,000 the funder didn't

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make $10,000 the only the only
person got $10,000 was the

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merchant which they now need to
pay back. And I have heard of

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people getting confused by the
origination figure somehow

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getting lumped in with how much
somebody made, for example, I

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think we ran a story, it had to
be like five years ago. So where

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somebody, or a company
originated $40 million worth of

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deals. And those who were new to
the business misunderstood or

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misinterpreted that to mean that
that person or company earned

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$40 million. That was absolutely
not the case. And do not go into

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this business thinking that you
as an individual, or a company

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is going to make $40 million in
profit. It's just not, it's just

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not going to happen. And so when
you hear origination figures

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also or if you have any big
number, ask specifically what

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what that number means. Don't
see the top line number and just

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jump in and then wonder why you
didn't make $40 million. And I

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would just like to like to add
to that, especially if you're,

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if you're new to the business,
or even if you're a regulator,

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that this industry is really not
unlike any other industry out

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there. Whether you're selling
like real estate or insurance

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you can do well, you can make
six figures, you could

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potentially become you could
potentially become a

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millionaire, I don't want to say
you can't, you could potentially

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become a millionaire. But the
idea that, you know, you're

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going to be a sales agent making
a million dollars a year,

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especially when you're brand
new. I think that's a little bit

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of a fantasy. And one way to
illustrate that point is we saw

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a big clearing out not only
brokers, but funders during the

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pandemic. If you look at it from
the other side, if you're a

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regulator, or even just, you
know, a media outlet, and you

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see the numbers that are charged
in some of these deals, you

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could erroneously arrive at the
conclusion that the one offering

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the money is getting rich off of
it, they might see something

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like a a 1.40 factor rate, but
oh my goodness, they're making

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40% they're getting rich.
Imagine that all the clients how

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much money they're making. And
they fail to understand that.

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Let's see, they have to pay the
commission, we just talked about

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the Commissions they made. So
there, it could be 10%. And they

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have to pay marketing costs,
they have to pay overhead, you

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know, they have rent, they have
all the insurances, they have

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payroll and all that stuff. And
at the end of the day, and then

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have defaults, hello, defaults,
all these deals don't perform,

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right. These are typically
clients that could not get money

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from from a traditional source,
there is a huge risk of default,

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that's also built in. And you
know what, a lot of these

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funding companies, their margins
are actually quite slim. And

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they're not getting, they're not
getting rich, despite the

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perception that they might be
because of how much they charge,

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it's important to look at all
the different factors that go

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into making these deals
possible. And a 1.40 factor

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rate, doesn't mean it's not
expensive. But if you're if

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you're a small business owner,
and you look at and say, Boy,

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that's expensive, you're allowed
to think it's expensive. And it

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is it is expensive, of course
expensive is all relative, and

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it depends on what you're going
to use the money for. Hopefully,

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hopefully, it's for a good
purpose. And it's for, you know,

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you're doing it based on an
informed decision. But it

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doesn't mean that the funder, or
the lender is getting rich, even

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if you yourself perform, because
they've spread their money out

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around a lot of different deals.
And they have a lot of costs

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that go into making it happen.
And so it's really just a

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marketplace. That's it's
capitalism. And you have both

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parties coming to a meeting
place a meeting of the minds as

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to whether or not this makes
sense to do. And I hope that

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anyone watching whether it's a
new player, regulator or the

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media, is that when they see
these numbers, that they take

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the time to understand what they
mean, a million dollars in

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commission doesn't mean someone
made one million dollars in

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originations doesn't mean anyone
made 40 million, definitely do

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sn't mean anyone made $40 mil
ion. That just means $40 million

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went out the door. That
eans business owners got $40 mil

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ion. And a 1.40 factor rate do
sn't mean someone made 40%. In

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act, I guarantee you they didn't
make 40% because we already know

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that they have to pay commission
and all these other expenses of

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the top. So you should really
hink about it from that standp

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int. Before you, you know, yo
get you get all caught up and

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hink that it's something a littl
bit more. And that's all I r

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ally want to share with you tod
y. I thought it was an intere

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ting question, can you make a mi
lion dollars in your first year

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you can do well, you can mak
six figures, you can mak

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six figures in any business
oing sales, if you try hard i

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you have the skills, if you hav
the experience if you put i

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the time if you put in the
hard work. So and you

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ould potentially you
ould potentially make a mi

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lion dollars in a year or ove
the lifetime of the busine

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s. I don't know that that's goi
g to depend on you and on your

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kill set. So thank you for joini
g me today. That's that's all t

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at I have. And I hope that y
u do come to our conference lat

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r in the year Broker Fair Decem
er 6 here in New York. You can

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earn more about it. Brokerfai
.org You can also join me here

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00:10:07.050 --> 00:10:10.890
live Monday and Wednesday us
ally around 12:15 sometimes it's

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just myself like today. Other
imes I'm here with Johny Ferna

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dez. Other times they might have
some special guests, but either

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way, hope you tune in deBanked.c
m/tv I'm Sean Mu