Where Do I start as a New Managing Broker

If you are considering becoming a real estate broker or recently obtained a real estate broker’s license, you will need to develop a business plan to ensure success. Like all other businesses, running a robust brokerage requires foresight, oversight, and hindsight analysis. By using these three lenses, new or aspiring brokers can avoid some of the pitfalls that hinder real estate brokers and new business owners.

Foresight

First, you will need to plan for the future. Before you start onboarding agents to work for your brokerage, you should consider all of the known costs and have cash set aside for unanticipated expenses.

Costs that you need to figure out first are:

• Payroll
• Outsourcing
• Software
• Office costs
• Advertising
• Associations
• Insurance
• Professional fees
• Recruiting
• Advertising
• Public relations
• Meals and Events
• Office Supplies

While this list is not exhaustive, it will at least give you a starting point.

Payroll

Payroll should be your first priority because it will drive the rest of your planning. How much do you want to spend on help? You should try to decide how many agents you want to have. You agents will require administrative help, so make sure that you have adequately planned for administrative employment costs which will help your operations run smoothly.

If you are looking for a way to keep employee costs low, outsourcing is a good method to do so. Brokerage tasks such as transaction management, brokerage file review, and more can be easily outsourced. Additionally, for agent services such as photography, marketing, storage, etc., it would be wise to consider outsourcing as well.

Software

The next cost to consider are software costs. There are many brokerage software options available today, but the most common categories you will need are: Showing Services, MLS, CRM, Websites, Digital Marketing Suite, Transaction and Financial Management, Paperless Contract Software, and Agent Recruiting Software.

Office Costs

Office costs will be a large expense, unless you operate completely virtually. The costs associated with an office building include the base rent, Common Area Maintenance (CAM) fees, utilities, and maintenance. Base rent is the amount you must pay each month for the use of your office. Base rent is found by the product of the rent cost per square foot and the total square footage of your office.

CAM fees are costs directly related to your space as well as the costs associated with the rest of the property. These expenses are cleaning, repairs, building maintenance, utilities, internet, insurance, security, parking lot maintenance, snow removal, landscaping, trash, and taxes.

Utilities are sometimes included in CAM fees. If they are not, you will need to budget for them as well. These may include gas, electricity, water, and sewer, as well as internet and phone. Maintenance includes services like cleaning, trash removal, and paper shredding.

Advertising

Advertising is the next expense to consider. Many brokerages today offer some brokerage referred leads or lead programs, but it is not required. Another good option would be an all-in-one Customer Relationship Management to generate leads. Platforms such as Real Geeks, Zillow, or BoldLeads are popular for lead generation.

Association Fees

Association fees will be unavoidable for a brokerage firm. The types of association fees you will likely encounter are licensing (i.e., brokerage license), insurance (i.e., liability insurance), memberships (i.e., Chamber of Commerce), legal (i.e., corporate/real estate attorney), accounting (i.e., bookkeeper), and bank charges (i.e., account fees).

If you want to have employees at your brokerage firm, you will most likely need to account for recruiting, advertising, and public relation (PR) costs. Recruiting ads can be posted on websites such as Indeed and ZipRecruiter. You can also post ads in the newspaper or in a press release. Contracting with a sign company can be great for printing, storing, and managing your brokerage’s listings. Branded items such as pens, cups, etc. help promote your brand on a more subtle scale. You could also make a presence for your business on social media websites such as LinkedIn, Facebook, Twitter, or Instagram. Yet another idea would be a marketing campaign on Google.

Meals and Events

Meals and events should be one of the lower expenses you have, but you still need to budget for them unless you want to pay for everything out of your own pocket. Some expenses you may encounter in this area are recruiting and retention events, team meetings, training events, potentially larger events (such as an award ceremony), and a holiday party.

Office Supplies

The last expense area we will touch on is office supplies. Unless your firm is completely paperless, you will have to budget for these. The most common expenses in this area are paper, office supplies (pens, paper clips, staplers, etc.), copy machine and ink, and shredding.

Oversight

Now that you have planned for the future, you need to oversee your firm in the present. Oversight requires that you understand and are aware of the happenings within your business from a managerial point of view. You do not want to be breathing down your employees’ necks and make them feel pressured, but you do not want to be oblivious either.

A good way to maintain oversight would be setting up weekly or bi-weekly employee progress report meetings to stay updated on your employees’ work. You can schedule them all at once, or you may have more in-depth, personal meetings. The number of employees you have and your availability will play a factor into that decision.

Hindsight

The last analysis lens we will be looking at is hindsight. Learning from your decisions in the past can lead to better decision making in the future. It is important to take a lesson away from your mistakes; doing this will help you in many areas, not just in the real estate brokerage field.

You may find that some marketing avenues are not efficient or profitable. For example, you have an advertisement along a busy street but you are not getting any leads in the surrounding area. Instead of wasting the money to keep the sign up, you can redirect that money into another form of advertising, move the advertisement to a different area, or eliminate it entirely.

I hope you have this blog to be helpful. By using foresight, oversight, and hindsight analysis, you will be able to avoid of the stumbling blocks that hinder real estate brokers and new business owners.