Increased earning potential, financial freedom and control over their vision of business are the main reasons real estate agents start their own brokerage. However, there are a lot of challenges associated with starting and running your own brokerage. It means more work for you, at least at first, and more risk. So, you have to be certain your reasons for hanging your own sign are the right ones.
But if you plan properly and employ the right business model, owning a brokerage may be right for you. In this blog you’ll learn how to determine if you’re ready to open your own brokerage. If you’re part of the TL;DR crowd then start your free seven-day trial of AgentEDU today and watch the full course, ‘Are you ready to open your own brokerage?’
Before reviewing the steps of the planning and transition process, think about what you can confidently take on and where you may need some help. These are important things to consider before you decide to go out on your own.
Ask yourself these questions:
- Do you understand the financial and personal risks, and are you willing to accept them?
- Do you feel confident that you can manage and run all aspects of your own business?
- Have you put your financial plan together? Do you have enough capital to support your efforts?
- Do you have the right people lined up to join your business? If not, do you have a recruiting plan?
If you answered “yes” to all of these questions, then you could be a good candidate to open your own brokerage. But there is a lot that you need to know before you do.
Have an exit plan
Make sure you account for potential practical, political and emotional issues when leaving your current business. You’ll still need a strong professional network once you open your brokerage, so make sure you don’t burn any bridges during the transition.
Think about these questions:
What will the process be? Who do you need to speak with, and when? How will your current brokerage react? How will you handle any sales that are currently in process? Does your brokerage have your database, and do they have the right to use it after you leave? What if other agents want to leave with you? Where will your new office be? Would your new office be in direct competition with your current office? What are your obligations to the brokerage, the managing broker and other agents in the office?
Along with an exit plan, you’ll need to write up your plan for the new business.
What will your business model look like?
Begin by deciding on a business model. What specialties will you offer? How many agents will work with your brokerage? How will the brokerage support them? Outline the roles you will play, as well as any additional responsibilities you’ll have to take on. Figure out which roles you need to hire for. Use technology to help fill in the services you lose by separating from your old brokerage. Draw up a transition plan for your team that details how workflow will continue through the changeover.
Become an expert on your financials
Nothing can happen until all the financial pieces are in place, so you’ll need to be an expert on your budget. Opening your own brokerage will require a financial investment. Can you fund the start-up costs on your own or will you need to borrow capital? What about investors?
Many businesses fail because they are under-capitalized. Make certain that you have enough capital to manage startup costs. Plan to cover operating expenses with savings for at least six months, including rent and utilities. You’ll need to budget for office equipment and marketing expenses. Make sure to include insurance costs for your business, fees for any online services you use, membership fees and other miscellaneous items.
To learn more about the financials needed to launch your own brokerage as well as your next steps, start your seven-day free trial of AgentEDU today and watch the full course titled, ‘Are you ready to open your own brokerage?’