You've gotten your broker's license, and you've decided to step out on your own. You've been successful as an agent, which means you have experience in developing a plan and following it through. Opening your own real estate office is no different, just more complex with the addition of other people and more responsibility.
Using the resources of this site, you'll find help starting your new brokerage, setting up your business systems and growing it for an exit strategy. Real estate brokerage office management needs a plan to be effective and below are some tips to consider.
The Franchise Decision
When a broker decides to go with a real estate franchise, it's typically for the instant brand recognition, immediate structure, training, and ongoing support that the franchiser provides. From national marketing exposure to group buying power for everything from signage to advertising space, the franchise provides immediate "bigness" to the brokerage. Of course, all this comes at a cost, both upfront and ongoing. Most franchises charge a significant up-front fee and an ongoing percentage of revenue.
The Office Facility
Now you jump from your cubicle or home office to a building or large space that must accommodate multiple agents, the support staff, conference rooms, and storage space. The facility cost is a big part of the overall cost of doing business. New considerations include:
- Privacy for agents and clients
- Communications equipment and furniture
- Computers and information technology equipment
- Visibility and client presentation
- Access and parking space
- Training and conference areas
Operating Procedures and Systems
Efficient and productive offices don't get that way by accident. Written operations and procedure manuals that give step-by-step instructions for even the most obvious tasks are necessary. It's important to outline a detailed business plan and outline what steps will need to be taken to get your brokerage off the ground. Do the "leg work" and put together the necessary personnel, process, and systems before you open the doors.
Sales and Lead Management
Most brokerages promise their agents some form of prospect generation from the brokerage advertising, floor time, and operating the phones. Untold amounts of sales are lost each year when the broker doesn't set up a system to manage these leads and require agent accountability. At the very least, any leads that come in from the company website should be carefully tracked and the agent's follow-up actions monitored. Identifying top performers for more leads will pay great rewards.
Insurance and Risk Management
It's a shame to have a profitable brokerage business go under from a lawsuit or lost the ability to get Errors and Omissions Insurance. Training your team should be a priority. In addition to passing the license exam, there's sales training, and training on legal issues, forms, ethics, as well as contracts. Also, check your state laws as to whether you must open your practice as an LLC or a corporation. If necessary, consult an attorney to make sure you're compliant with local laws.
Start Your Exit Strategy from Day One
Most of us would like to scale back or retire some day. Planning from the beginning for building value in your business is extremely important to your plan to exit the business. If you get to the last couple of years before retirement before considering the value of the business, it may be an inopportune time to sell it. You should start thinking about how much the business is worth early on and how you can increase the value of it.