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You’re going to open your own brokerage. Hard work in sales, a few stops at different firms, and now you’re ready to build a company of your own.
Perhaps the best place to start is at the end. Give thought to what you want to have when you finish: single-office independent , multi-office affiliate, or a company that can service two or more markets. Establishing the destination early helps you make smart decisions and save thousands of dollars to put toward the long-term success of your new firm.
Along with a clear vision, it’s important to embrace a new mindset. You are now an investor. It’s unlikely that your financial success will come quickly.
Year one is all about spending wisely to create a future return. Your own sales revenue, personal investment or funding from a partner will have to provide for the brokerage initially. Budget, measure and adjust are the key weekly actions during year one.
Make decisions by maintaining the discipline and direction of your budget. With your vision clear and your budget documented, here are eight key areas where you will invest as you open and operate in Year One.
Recruiting
It costs money and time to attract agents. Promotional materials, restaurant meetings and agent resources are part of the costs. Depending on your market, you may need to provide new business cards, yard signs, web design and video announcements.
Don’t skimp on recruiting costs. Every productive agent you draw to your firm is an opportunity for new revenue. It’s one of the best returns on investment you can make.
Marketing identity system
Your brokerage image is strongly supported by graphic arts. Thinking intently about the visual image of your brokerage is very important. Delegate the artwork and hold tightly to your vision, message and purpose.
Consider trademark and registration costs if you believe your material has market longevity and consumer retention. Then there is the cost of presenting it: Think clothing, swag, signs, and web placement.
Launch event
You only get to start the brokerage once, so make the most of it. Yes, you want to have fun, but this is a very significant announcement to the surrounding brokerage community and agents. Spend to demonstrate strength, communicate your vision, and let agents know that you are investing for the long term.
The cost is proportional to the objectives. Soft launch, a Chamber ribbon cutting, dinner with founding agents or a party at your community’s most expensive ballroom send different messages. Choose wisely.
Staff
Have a plan for the structure and cost of the team you want to ultimately create and start small with a part-time worker. You might be able to succeed initially with a third-party contractor.
If you are bringing along a staff member(s) from your own sales team, be sure to communicate clearly and frequently about what is changing in their roles.
Space
Will you have a property address or a virtual office? Consider both consumer and client expectations in your market.
If you need an office, consider co-working spaces that allow you to network with other start-ups. Another option is a short-term sublease in a busy building. Leverage office space to help you intersect with prospects.
If you are going virtual, you still have costs to consider. The lower cost may allow you to upgrade the service; bandwidth, group video conferencing count, meeting features and support service are valuable upgrades. Be aware of what requirements your state commission has for office locations.
Equipment and utilities
Copiers, furniture, wifi and routers, email service, and web domains and storage all have associated costs. Remember you’ll be responsible for the electricity, phone lines, postage, keys and accounts for everyone. What software do you need and what do your agents expect?
Website
Depending on your strategy and resources this could be your most expensive investment.
- What do you want your website to do?
- Who should the site influence?
- How will people find it?
- Will you promote property search or agent connection?
- Is your site a virtual business card that rarely changes or do you have a dynamic site that constantly delivers new content?
You can go with an affordable third-party vendor or invest significantly to create something custom. Your budget and vision are the guardrails to make these choices.
Services
Most MLS services require a company and/or an office registration. The fee to join as an office can be hefty.
What’s your lead strategy and how does it play out in regards to an individual, team or brokerage CRM? Your CRM choice will be a key investment decision in cost and impact.
Before you begin operations, be sure to insure yourself and the company. Your business and personal assets are at risk. Errors and omissions for sales coverage, property and event coverage for the brokerage, and an umbrella policy for the stranger things are all important.
More than likely you need to create a legal entity: S Corp, C Corp, or LLC are topics to cover with your attorney and accountant. Your legal entities require formal documentation and registrations with the state. Budget for competent professional service and the necessary fees that your state and local government require.
Don’t let the costs scare you. Your willingness to plan and prepare will contribute greatly to your success as a brokerage owner.
Kevin Woody is the COO of both Chappell, an innovative residential real estate team with Compass, and Reroute Marketing in Raleigh. He encourages and equips people to reach high for their aspirations and grow deep to achieve them.
