This is the season when mortgage loan originators around the country are beginning to focus on their goals for next year. If you are one of those originators — or you manage a group of loan originators — keep this absolute truth in mind: A goal without a plan is just a dream.

Simply stating you want to produce $10 million in volume next year or $20 million or $50 million isn’t going to get you there. You must have a plan, or a road map, for the 12-month journey that waits ahead of you. Your strategy must detail the steps you need to take and the changes you need to make if you are to reach your goal.

Let's test that lesson with a question right now: Will you meet or exceed your 2014 loan production goal? If the answer is no, I’ll bet you a dime to a dollar you didn’t have or haven’t been following any type of plan.

Of all the sales training workshops I deliver, none is more interesting or important as the "Planning for Success" sessions I facilitate with groups of loan originators between November and January each year. In these seminars, we invest three solid hours dissecting each originator's annual production goal and formulating a step-by-step plan for how they intend to achieve it.

Participants walk away with a four-page game plan that includes 10 major elements of an effective loan production plan wrapped around their goal. More than that, originators in attendance fully realize the importance of a written business plan and that moving from a reactive and reactionary role to a more premeditated and proactive role can make all the difference in the world.

One of the most critical steps in that business plan is the first one: "Chunking down" their annual production goal into monthly (even weekly) lead and prospect-generating activities. We call this "eating the elephant one bite at a time."  Here is a brief tutorial on how that works:

Step 1: Set your annual loan production goal. Consider what you originated during the past three years, work out an average, and look at the market opportunities and forecasts for the coming calendar year. What do you feel would be a realistic yet somewhat challenging goal to set for yourself to achieve in 2015? Don't just pick a number out of the air or put down a figure that looks good on paper; choose a goal that is practical. For purposes of illustrating this lesson, let's assume you arrived at a 2015 loan production goal of $16 million.

Step 2: Discover your average loan amount. While you likely originated transactions at various loan amounts throughout this year, look at your company's production reports or divide your year-to-date closed loan volume by your total units closed to get that number. Don't guess! Precise numbers throughout this exercise mean an accurate answer at the end. Suppose you learn your average loan amount is currently running around $200,000.

Step 3: Calculate your unit goal. This is simple math. Divide your 2015 loan production goal by your average loan amount. In our example, if you set a goal of $16 million with a $200,000 average loan amount, you'll need to fund 80 loans next year.

Step 4: Determine your conversion rate. Conversion rate measures how many loan applications you take and register as "real deals" that actually reach the closing table. No originator has a 100% conversion rate; everybody experiences some fallout. Again, it's highly likely you or your company keeps a report on this. Add up how many loans you've closed year-to-date (along with those deals cleared to close before year's end) and tally the total number or loan apps you've taken. Divide the closed loans by your loan applications. That's your conversion rate. Let's say you find you’ve taken 75 loan apps this year and closed 60. Your conversion rate is 80%. So, to close 80 loans in 2015 with an 80% conversion rate, you'll need to take 100 loan applications.

Step 5: Conclude your capture rate. Capture rate measures how many pre-qualifications or pre-approvals you execute that move forward into real loan applications. We know that some borrowers don't qualify, some aren't ready to buy, and others end up going elsewhere for their home loan. Since it's required that you run a credit check to perform any legitimate pre-qualification or pre-approval, study your 2014 records and reports to see how many times you've pulled credit this year.  Imagine you verify that you've pulled credit 150 times this year to net your 75 loan applications. That's a 50% overall capture rate. Considering your 2015 plan to take 100 loan applications with a 50% capture rate, you must pull credit for a pre-qualification or pre-approval a total of 200 times.

Step 6: Realize your monthly (or weekly) goal. Completing this example, if you need to conduct 200 pre-qualifications or pre-approvals next year, you'll need to be on a run rate of 16 to 17 prequals a month (200 divided by 12). That means you'll need to generate 16 to 17 prospects consistently every month — or if you choose to break that down even further, four to five prospects each week, or about one prospect per day. 

When you come to work every Monday morning, don't dwell on funding $16 million or closing 80 loans or taking 100 loan applications. Focus instead on your weekly goal of four to five prospects. If you land four to five potential borrower prospects a week, that adds up to 16 or 17 a month.

If you capture 50% of those prospects into applications, you'll take around 100 loan apps. If you are successful in converting 80% of those to closings, you'll close 80 units.  If your average loan amount remains around $200,000, you'll reach or exceed your goal of $16 million. That's how the numbers work and that's how you eat the elephant one bite at a time.

When you are finished with this exercise, you'll clearly see what it's going to take to reach your 2015 production goal. If you recognize that your weekly or monthly prospect number is completely unattainable, ratchet down your annual production goal and work the numbers again. It makes absolutely no sense to start out the year with a goal you don’t have the ability to achieve. Goals should challenge you, but they should be realistically reachable in the end.

A new year is right around the corner. Do you know where you are going? Do you know what it will take to get there? Smart, successful and forward-thinking loan originators do.

Doug Smith is a nationally known industry speaker, author and sales trainer. For more information, please visit or call Douglas Smith & Associates at 877-430-2329.