If you’re anything like me, you’ll only have to work in real estate for a nanosecond before you start seeing things that could be done differently. Let’s not mince words, when I say “differently” you know I really mean “better”. Ahh the naivety and blissful ignorance of my youth.
I was not more than 19 before fantasies of owning my own agency so I could do things “my way” started permeating my work life to the point where I knew that some day, if I wanted to stay in this industry, I’d have to start my own agency.
Now, as I write this at age 32, having started two independent agencies with business partners from scratch, one at 21 (which later brought a franchise group into the mix), the other at 29 I smile when I think of just how little I knew at 19.
My fantasies didn’t have a great basis in reality. But it’s a great thing they didn’t, because if they had, I may never have started that first agency.
If I’d been aware of the difficulties I’d go through over the next few years including: staffing issues, partnership issues, financing issues, client issues, legal battles, expansion issues and more I might have just gone with my plan B which somewhat sophisticatedly involved finding a job where I could live in my pajamas day in and out.
That said, my adventures in real estate, both as a career through business ownership and as a passion through property investment have lead me to where I am today. My second book was called “Retired at 27, If I can do it anyone can” and I have this beast called real estate to thank for being able to state that.
So, if you’re like I was: young and eager to make it on your own, or perhaps even older and more experienced and looking to create your own path – what are the important issues to consider before you step out of security and into entrepreneurship.
Firstly, lets talk why you wouldn’t do it. There’s any number of reasons but these are the ones that jump straight to my mind:
- If you’re a great sales person and you want to make even more money: being a great sales person doesn’t mean you’ll be a great manager and I’ve know plenty of business owners whose top sales person makes more than they do from their business (with a lot less stress).
- If you’re doing it to improve your work life balance: Ha! Most business owners I know double their work hours in the first few years and regardless of just the hours, the stress is always more when it’s your business.
- If you’re planning on doing everything yourself: you probably already have a job. Starting an agency that is completely reliant upon you takes you from one job (where someone else shoulders the stress and responsibility) to another (where you do so!). It’s also no way to build a saleable asset and one day (at some stage) you WILL need to dispose of your business whether you retire or get the urge to move on before then. A business that’s just you and your brilliance is a hard one to sell without you leaving your brain in a glass jar by the door.
So say you pass the three pronged test above and you’re still crazy to go ahead. Get ready to start making some choices.
Franchise, Independent or Purchase?
Having done each of these three options there’s huge pros and cons to each:
A franchise gives you structure, experience to draw upon, networks, referrals, systems, training and a brand. But you also have to live with being restricted as to what you can do with your branding, you have to be happy to be lumped together with the reputation of everybody else within that franchise (good or bad) and there will be times when you don’t agree with the decisions handed down from high. Flexible it ‘aint, but it can offer you an amazing leg up IF you choose the right organization.
Starting as an independent your world will be awash with decisions. What colours do you want to go with, what will you call your new baby, what will your logo be, who will do your website, who can you turn to for advice. Once you’ve made those decisions you’ve now got to face the harsh reality that no-one’s ever heard of your fledgling brand. You get to create your own reputation, but you’ve got to start from scratch.
Much like a franchise, but even more so, buying into an existing operation buys you into an existing reputation within your marketplace. You might have the added benefit of a rent roll to give you some sound cash flow, but you’ll also typically have a larger debt than those establishing from scratch will be able to bootstrap. Then you’ve also got the minefield of taking on existing staff, will you be getting a star or a diva?
Shop Front, Office or Closet under the Stairs?
Where to operate from probably forms your next big question. Over the years I’ve had real estate offices in: a 2 bedroom residential apartment with no commercial zoning, a motel (where I also got to live on site as the manager), shared space in a lawyer’s office, ground floor office space, a converted brick townhouse and a huge three level building.
Each served its purpose at the time, but I must say, being in one place that really suits far outweighs moving all the time. That said, we started in an apartment because that’s what we could afford. What we lacked in our ability to even see clients in it (no zoning) we made up with a lovely view!
Right now my business is purely property management and for that, we haven’t felt the need for a shop front. In my last company, we were the state head office and a sales and property management company, so the ultimate aim was to own a space that large enough for us, had a great street frontage and had parking on site.
Know that wherever you hang your shingle, ultimately, if your operation, plan and people are good enough, your location won’t be the primary factor in your success or failure. Real estate is all about the people involved and the experience and results you provide, not what your walls look like.
Advertising, Press or Talk?
So now you’ve got your brand and your office, but what about getting your clients? This is the trickier side of business ownership. As I see it, you’ve got three main methods of client attraction. Which will be the most attractive to you?
Advertising: Billboards, television, newspaper, online, brochures, yellow pages, letterbox drops and more. This is the marketing stuff you flat out pay for to get your name out there. If this is your main angle, make sure all your marketing materials reflect your brand and the type of client you’re trying to attract. Budget well because you can spend your whole opening budget just on marketing before you blink. Aim to get a verifiable return from any $$s you outlay. How to do this? Survey all clients as to how they found out about your agency.
Press: If you’ve got an angle to your business you stand a chance at getting some free marketing in the form of good press. For me, it’s typically been about being a young female in the industry, or from the awards I’ve won. Find your uniqueness and get prepared with your sound bytes. Respect and value journos time and make sure they see the experience as a positive one if you ever want them to return to you.
Talk: Social media, twitter, facebook, your website and your blog all form free or low cost methods of engaging and talking with your clients. Done well this is a modern form of promotion that can enhance your relations with tech savvy clients. Done poorly you’ll find that this can just eat up hours and hours of your day with little to no return.
Best Talk: To me, the best form of marketing any business can have is when a friend asks another “who should I use to sell / rent my house?” and the friend emphatically names you. It’s harder to cultivate than any of the above because it involves knocking the socks of each client you deal with and it can be derailed quicker than any of the above by a bad interaction, BUT, to me, this is the most important form of “getting your name out there” any business can do.
So… I honestly hope I’ve scared some of you off. If you’re going to get scared by a few words on a page, the difficulties you encounter in business ownership WILL be too much for you.
But… for those of you still keen. Go forth and plan, do your research and your homework – but not too much, I believe if you wait for perfection in planning you’ll never get started.
As much as I’ve had difficult times over the past decade of real estate business ownership, I’ve had some of the highlights of my life including:
Meeting my husband across the real estate counter (he was a purchaser and he thought I was the receptionist!)
Watching 9 of my former staff members go on to real estate business ownership for themselves and knowing I’ve been a part of their progression.
- Achieving financial security for myself and my family.
- Assisting thousands of people in home ownership, in moving to better places and in financial security through management of their investment properties.
- Forming some of the closest friendships I’ll ever have in my life with those who have been on my teams.
So whether you’re itching to start from scratch, investing in an existing business or going forth with a franchise, I hope your happy moments far outweigh the challenges, as mine do.
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