While having your name over the door can be an enticing prospect, three industry experts say many principals underestimate the financial and emotional costs of establishing a brand.
And, as it takes time and energy from the core business, principals should consider all their options before striking out on their own.
Why principals are jumping ship
Over the past few decades, the franchise model had come to dominate the Australian real estate industry. Many principals joined the big groups lured by the brand recognition and support that came with a long-established name.
Then the internet changed the rules of the game. As a result, more principals question the franchise system, and look into going it alone.
After all, nobody wants to pay commissions to head office and surrender a lot of control if they get little perceived value in return.
Starting from scratch
Nic Fren, former Real Estate agent and now, founder of Bespoke Media Group, outlined some of the initial expenses principals face building a brand from the ground up.
“A branding kit complete with logo and colour palettes is between $10,000 and $15,000 to create,” he said.
“A good website costs a minimum of $5,000. On top of this, comes flags, A-frames, signage, shop front and the like – so it’s easy to see how it soon stacks up.”
All these costs need to be paid before your business turns a dollar. Then it takes at least six months to discover if you are going to get a return on this investment.
And while choosing logos and fonts might be exciting at first, it eats up valuable time and headspace that should be spent winning new clients.
“The last thing you want to do as a business owner is worry about how your newsletter templates look.”
Time is money
Tristin Hanna, co-founder of brand and design consultancy Thursday Design, said a brand roll-out can take up to a year to complete, once all touch-points are considered. It therefore requires a commitment to both time and budget to be delivered effectively.
“It’s not just as simple as commissioning someone and then you’re ready to go,” he said.
The world on your shoulders
Paul Davies, founder and CEO of One Agency, pointed out that the costs of establishing a brand aren’t just financial, but emotional too.
“Building your own brand can be mentally taxing. You’re facing a significant outlay without any guarantee that the result will have commercial appeal,” he said.
“Then there are all your financial and legal obligations. Without sufficient support from a head office it can be very confusing and a major distraction from income producing activities”.
Mr Davies said principals should know there are alternatives to the traditional franchise model that are easier and more cost-effective than going it alone.
“Join a network group like One Agency, and you’ll get the freedom to be an independent operator with the security of an established brand. It’s a turn-key solution where all the hard work has been done for you, so you can hit the ground running.”
“It’s not what you make, it’s what you keep that counts.”
‒ Paul Davies, Founder and CEO
Revised edition: Written by our Founder and CEO Paul Davies with a foreword by leading real estate coach and trainer Tom Panos, ‘How To Profit In Real Estate Business Ownership’ is compulsive reading for established and aspiring agents looking for a way to achieve success and maximise fee retention.
As founder and CEO of the fastest growing real estate network across Australasia, I offer real estate professionals an opportunity to reap the financial rewards of going it alone with the security and clout of an established brand. Talk to me and my team about your options.
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