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Building a successful brokerage is no easy feat. Plenty of experienced real estate agents strike out on their own to open new firms, only to find themselves in over their heads.
When I set out to build The Agency, I was met with an enormous number of challenges. It can be easy to underestimate the complexity of the task of starting a brokerage from scratch, and oftentimes, rising CEOs struggle to turn a profit when faced with increased overhead costs.
With the right team, the right vision and the right strategy, a brokerage can thrive. However, almost no business can get to that point without navigating some growing pains along the way. Here are some of the biggest challenges that new brokerages may face and how to weather them.
Not knowing who you are
It’s essential to have a reason why you’re taking the risk of starting a new brokerage. What niche are you hoping to carve out? What sets you apart from other firms? What unique skills or knowledge do you have to offer?
Asking yourself these questions early in the process is key. Because if you don’t know who you are, your clients won’t either.
Brokerages that haven’t established a clear brand identity struggle to make informed decisions. When you skip this step, everything from marketing strategy to acquiring new talent feels more like a shot in the dark than an intentional choice. Take the time to identify your mission statement and your core values, as this will impact every aspect of how you conduct business.
Not knowing your audience
Equally important to knowing who you are is knowing who your clients are. This will help you tailor your service offering and develop your marketing strategy. It can be tempting to cast a wide net and try to cater to as many people as possible, but narrowing your client pool allows you to gain a competitive edge.
Doing the research necessary to become an expert in the clientele you’re seeking to attract is essential.
Without a robust understanding of the target audience, new brokerages waste valuable resources on ineffective marketing materials. They may also struggle to deliver the kind of personalized service that leads to client retention and a healthy referral pipeline.
Not having the right people
Once you know what you’re all about and who your clients are, the next essential step is to surround yourself with skilled agents who mesh well with your company culture. It takes time to build a talented, energized team that works well as a unit. That’s why focusing on recruiting and training from the get-go is so important.
Keep your brand identity and your audience in mind when choosing who to hire. Some brokerages make the mistake of onboarding a whole host of agents who, while they might be talented, don’t have the specific skill set or expertise required for the firm’s niche. Once you do decide to onboard someone, be prepared to support them with the training they need to thrive.
Without strong recruiting efforts and proper training, you run the risk of facing high employee turnover, which is a significant drain on a firm’s resources. It’s better to take your time selecting new agents than to go through the process of onboarding and training someone only to realize that they’re not a good fit.
Not spending smart
It takes time for a business to become profitable. You’ll need to prepare yourself for a period of spending more than you’re making in order to ensure the long-term success of the brokerage. However, there are some common budgeting mistakes that you can avoid altogether.
When it comes to advertising, be realistic about what your brokerage can afford. Don’t try to copy the marketing efforts of bigger firms with more resources. Focus on quality over quantity and don’t be afraid to think outside of the box. Not only will you save money, you’ll set yourself apart from your competitors.
There’s also no need to splurge on a huge, flashy office space that doesn’t make sense for day-to-day operations or the size of your team. Yes, your office makes an impression on clients, but that doesn’t mean it needs to be exorbitantly expensive. Don’t waste funds on space or equipment that rarely gets used.
The road to success is often littered with obstacles, but your brokerage can overcome all its growing pains with some forethought and savvy decision-making.
Mauricio Umansky is the founder and CEO of The Agency in Los Angeles. Connect with him on Instagram.
