So often real estate salespeople make the decision to open their own office based on an argument with the boss, their desire for a larger slice of the commission, wanting to run their own show or a whole range of emotion driven reasons however, starting a business in real estate should always be based on logic and a well structured strategic plan according to CPREA Chairman and long standing real estate leader, Geoff Baldwin.
“Recently I had a conversation with a fairly new independent office owner who stated that, if she knew then what she knows now she would have stayed a salesperson.
“On the other hand we have people in our group who a super successful operators with highly profitable real estate businesses.
“The worse way to find out how a real estate business runs is by opening one without proper consideration for the financial and human realities that will inevitably effect its success or otherwise”, he said.
“The two critical components that will be found in any successful business are what I refer to as the “2 Ships”, ownership and leadership.
“When I refer to ownership I am more talking about an acknowledgement and willingness to own and take responsibility for, even to welcome, the challenges that will intimately confront every business over time.
“In regards to leadership, I have never in my 28 years in business, come across a genuinely successful business without also finding a successful leader.
“A legitimate question to ask oneself when considering opening an office is – am I a person who can influence, motivate, instruct, manage, placate, lead and support a team of human beings? If the answer isn’t an emphatic YES then it’s time to reconsider your plans.
“There are also other realities such as the fact that the according to regular surveys the average retention of commission to profit across all Australian real estate agencies over the past decade is around 7% with the more successful agencies retaining up to around 22 percent.
“Salespeople who have not been exposed to the inner workings of an agency are often guilty of thinking the boss takes home half of their commission without doing a lot to earn that slice but nothing could be further from the truth.
“Of course there is the substantial extra benefit of building goodwill via a rent roll but that tends to be a secondary thought when salespeople decide to open their own office.
“There is no argument that opening a real estate office can be hugely profitable but the chances of its success with be significantly enhanced by good planning, knowledge and mind that is armed with facts rather than clouded by emotion.
“In a nutshell, it is good advice to sit down with someone who has travelled the journey and to go through every aspect of running a real estate office in today’s environment before moving away from a sales position where you are able to take home a large slice of each commission without having to pay for considerable fixed and variable outgoings each month and with only having to manage your own emotions and human challenges rather than those of a team of often needy salespeople and property managers”