It’s that time of year when many of us reassess where our lives are heading, when we might consider making a few changes for the better and set some goals.
If you’re a real estate agent who works for someone else, then you are part of your employer’s wealth creation process. And that can be fine for a while, especially at the start of your real estate career when you need someone to show you the ropes.
But when you start to feel as though you are putting copious amounts of your blood sweat and tears into someone else’s business, along with long hours, and the rewards just aren’t enough, then it may be time to consider setting up your own real estate business.
We will share a suggested real estate business cashflow spreadsheet and a cost forecast for 2016 at the end of this article, to help you get started with planning the financial side of opening a new venture.
Running your own business is one of the most rewarding things you will ever do, yes it can be hard, but most challenges are, and we develop and grow by setting ourselves new challenges to overcome. All you really need is the ability to list and sell property. If you’re confident that you have that skill, then the other requirements for business ownership can be learned, coached or outsourced.
Find out how much better off you could be by using our Real Estate Business Cashflow Spreadsheet and Cost Forecast
There are all kind of resources out there to use, including a book by our Founder & CEO, Paul Davies, who freely admits, he’s made all the mistakes there are to make over his 40+ years in the industry. He’s been an employee, a franchise owner and independent real estate business owner.
An expert is a man who has made all the mistakes which can be made, in a narrow field.
Neils Bohr, Nobel Prize winning physicist.
With a lifetime of experience, Paul now knows what works and you can read that in this book (click here), in less than a few hours. It’s valuable to any agent who is considering getting started, regardless of which business model they choose.
Paul’s advice works equally with those considering an independent/boutique style agency, buying into a traditional franchise or a One Agency business. Of course, we think our business model is the very best option, and so do those who’ve made the move. View some testimonials here.
However, we also feel confident to say this: You may be concerned that you’ll need to find a franchise or brand in order to get in new business, but the truth is that in practically all cases, a vendor will list with a person, not an organisation or brand.
The agent is the brand. The option of joining a brand gives individuals agents a great ‘real estate vehicle’ to drive and promote themselves and their services. But it’s always up to the individual agent as to how successful they will be.
No organisation or brand can do it for you, which is really exciting if you consider that you can be a great success if you apply effort and skill, because at the end of the day it’s within your power and control.
To be a successful business owner there are two main requirements. Firstly the practical concerns, getting everything organised properly; and secondly, adopting a business owner mentality. If you have owned a business before, any business, then you’ll probably understand what this means. But if you’re a salesperson moving to business owner then your mindset is still that of a sales person, which is ‘where do I get my next deal?’.
A person who has developed a mature and balanced business owner’s mentality includes ‘where do I get my next deal?’, but everything comes back to the bottom line, ‘what is my profit after expenses this month?’.
Now that doesn’t sound too complicated and it isn’t, but this is where so many business owners get it wrong.
They take their eye off the expenses and the next thing they know is that they’re running out of money. Remember, cashflow is king and essential to survivability of the business! The less it costs to operate your business, the greater the potential for profit, which is the only thing that counts!
Here is a simple plan to get you started with the financial side of setting up your business:
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Work out what you think your costs will be. We would normally suggest you add 20% to this figure as a safety margin.
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Enlist the help of others who are experts and who are trained in this area, including your accountant or financial advisor.
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Then estimate your income, and do this very conservatively. As a starting point halve what you would normally write in gross fees just to be conservative, bearing in mind you’ll be keeping 100% of your fees now (if you go either Independent or with One Agency).
If on this basis, your sums stack up with a profit factor, then you’re on the right track to have a successful business.
Download our suggested Real Estate Business Cashflow Spreadsheet here.
Find our Estimated Business Operating Costs 2016 here.
At One Agency we are always open for a conversation and very happy to help if you have any questions, obligation free and in complete confidence, so please contact us.
It’s ONE call you’ll make that could completely change your life for the better!
T 1300 79 23 88
T +61 2 8039 2110 (International)
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