It is one of the most important decisions you will make if you are opening your own real estate office - whose name to put on the door?
It may seem like a simple matter of branding, but in fact the question has far greater ramifications for your business.
Basically there are two options to decide between. The first option is to join a group, either by taking on a franchise arrangement or joining a marketing co-operative. The alternative is to go it alone as an independent or boutique agency.
The branding part of the decision should be pretty straightforward - it’ll be based on the type of person you are and your experience in the location you are considering. The real question is; how much control and responsibility do you want and how much risk are you prepared to take?
Let’s face it; setting up a small business is hard and expensive in any industry. There are a lot of things involved to get up and running. Critically, in real estate you need to start listing and selling houses as quickly as possible and that means you need brand credibility.
If you already have a strong client base in the area you may decide your reputation alone is enough to get the ball rolling. And even if you don’t, you might still prefer to start from scratch with a name no-one knows anything about, good or bad. This will be a slower process and you will likely need deep pockets to fund the business while you build credibility, but the trade off if you go it alone is you get to retain control and independence.
If you’re looking for a potentially easier start, trading off a known brand could be the best option for you. If you choose this option, you will obviously need to make sure whichever brand you choose will deliver the impact you’re looking for. And the immediate effectiveness of any brand will vary from area to area.
If you choose the path of joining a group you can choose one that just provides a brand, or one that provides a brand plus all the other solutions you’ll need for your business - such as technology, training, data, information and business planning. Between the two extremes is every shade of gray.
Firstly, marketing co-operatives are fairly straightforward and are generally a flat fee arrangement. In this model, otherwise independent agents join forces under the same umbrella brand for the sole purpose of driving their branding and marketing.
Franchises can vary dramatically both in what they cost and what they provide. Some are flat fee and some are based on a percentage of turnover. Some provide a full suite of support services and training and some provide almost none.
It’s clear there are many decisions to make once you’ve decided to own your own real estate business. The boutique versus brand one is really a question of how many of them you want to make yourself.
The actual money you will spend if you are joining a group should theoretically come back to you in increased turnover. If you choose a group with additional services, the higher cost should deliver cost savings due to group buying power on things like ad rates and consumables as well as subsidised or even free training. Your group should also be your safety net for compliance, ensuring you are aware of legislative requirements and any changes you need to make in your business.
Even more importantly, you should be getting some form of strategy and vision for your money, leaving you free to focus on the day to day running of your business. Many who choose the group option say the most valuable part of being part of a group is the leadership they get teamed with the mentoring and support they get from other members of that group
Conversely, the freedom of choice you will get as an independent can cost you more for all the same reasons. But in return you get to make every decision every step of the way. Although this level of responsibility can be an unrealistic and overwhelming burden for many people starting a business for the first time, there are many successful independent real estate businesses throughout Australia. There are even independent groups like franchises without a brand - you can pay to be a member and get resources other than a brand like standard forms and other intellectually property.
The key to success is being realistic about your strengths and weaknesses and weighing up all the available options carefully.
Making the wrong decision can be costly so it’s worth putting the time and effort in upfront and making a decision that will really work for you as an individual. As there will be costs and benefits whichever way you choose, best to find the hat that fits best up front.
