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Speaking on Broker Daily’s Business Accelerator podcast, broker coach and Broker Essentials founder Jason Back said that many small operators fall into what he called a “bottleneck trap”, where increasing workloads begin to erode the very qualities that helped them succeed in the first place.
“The biggest risk to a small brokerage is becoming the bottleneck itself. And that’s generally the principal because they are the business,” Back said.
According to Back, smaller brokerages often outperform larger competitors because they can move faster, make quicker decisions, and build deeper relationships with clients. However, he said those strengths can disappear when brokers take on more business than they have the capacity to manage.
“If you can’t lodge an application within a couple of weeks because you’re over your capacity and you’ve got a small operator down the road that can do it same day, the consumer’s going to have some choices to make,” he said.
Speed and relationships are the real key advantages
According to Back, the ability to act quickly remains one of the strongest differentiators available to smaller brokerages, particularly at a time when some larger operators are struggling with capacity constraints.
Beyond speed, Back said smaller brokerages are often better positioned to build deeper relationships with clients.
“The personal relationship, that ability to connect and empathise because you’ve got the capacity, because you are not running on the edge the whole time, I think that can be a real competitive advantage,” Back said.
He said this advantage can be particularly valuable when dealing with first home buyers, self-employed borrowers, and clients with more complex lending requirements.
Becoming the bottleneck
Despite the advantages, Back acknowledged that running a smaller brokerage comes with significant pressures, particularly for sole operators who often wear multiple hats within the business.
“It does come with operational fatigue that can lead to things like a drop in service standards, slower turnaround times, increased stress levels and inconsistency,” Back said.
Back noted that around 40 per cent of brokers still operate as solo practitioners without support staff, highlighting the scale of the challenge facing many businesses across the sector.
Creating capacity
For brokers looking to grow, Back said hiring decisions should be driven by capacity rather than simply cost considerations.
“I think the question probably needs to be, can you afford not to bring on resources?” he said.
Back said the first hire for many brokerages should be someone who can handle processing and administrative functions, allowing brokers to spend more time generating business.
“That first decision to bring someone on board has to be about freeing up more time for you to speak to more clients, to convert more sales,” Back said.
He also stressed the importance of clearly defining responsibilities as businesses grow.
“Role clarity creates capability. Without it, there’s confusion,” Back said.
“I know what I do. I know what you do. There’s no crossing over. We’re looking at operational excellence and efficiency.”
Niche expertise can outperform scale
While many brokers focus on growing lead volumes, Back said that smaller brokerages should instead lean into specialisation.
“If I had to define it in two words, I’d define it by niche deeply,” he said.
“There’s nothing wrong with being small.”
Rather than attempting to compete on volume, Back said brokers can often achieve stronger outcomes by focusing on a select group of clients and building deeper relationships.
“You might have less clients, but they’re high average loan size, deeper share of wallet, or they transact more often,” he said.
“I think the mentality would be effectively something like: do more with less.”
Back pointed to examples including brokers specialising in expat lending, self-employed borrowers, and investors, where expertise and customer experience can outweigh the benefits of scale.
Leadership becomes critical
As brokerages expand, Back said principals need to transition from being solely responsible for delivery to becoming effective leaders.
“Moving from doer to leader is a really important cadence,” he said.
“Leadership will set the tone for the success of a brokerage.”
Back said culture, accountability, and shared values become increasingly important as teams grow, regardless of whether staff are onshore, offshore, outsourced, or employed directly.
Technology changing the equation
Looking ahead, Back believes technology and AI will create significant opportunities for smaller brokerages to compete more effectively with larger firms.
“There’s going to be huge advantages,” he said.
“I think there will come a time with the right types of clientele where you’ll see solo practitioners, maybe with only one or two support staff members, easily writing $100 million because they’re utilising the technology.”
However, Back warned that technology alone won’t replace the human side of broking.
“It’s not going to replace the need to be able to sell. It’s not going to replace the need to create relationships and form empathetic relationships,” he said.
“AI is not the panacea of everything just yet.”
[Related: Brokers urged to rethink how they build partnerships]
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