So you’re a successful salesperson; you really know your stuff when it comes to listing and selling property. You’ve been regularly making high commissions for some time and are now starting to think about the future. The next obvious step is to become a principal. Or is it?
There are some common mistakes good salespeople make in their thinking at this point. Firstly it’s in making the assumption that being good at real estate sales is what being a successful principal is about. The reality is it’s not. Running any business successfully is a complex operation and you need to have a solid structure to start with along with a comprehensive business plan. Success requires a specific skill set, including the ability to analyse and understand key performance indicators, knowledge of marketing and public relations just to name a few.
On top of that, real estate is a people business. Perhaps among the most important responsibilities of being a business owner include the ability to recruit, train and mentor a team.
Critically, make sure you have enough money before you start and keep a close watch on your costs. You can read a good article which goes further into the importance of good cash flow by clicking here. Focus on making a profit, not just breaking even. A common pitfall on the financial side when starting out is having an insufficient tax plan - many businesses hit the wall when they receive their first unexpected tax bill.
Another common misconception is that as a principal your goal is to employ a team of superstars. As much as it would be nice, it’s just not likely to happen in the real world. Teams are generally made up of different personalities and abilities and will invariably be a mix of top salespeople, average performers and rookies. All of these people will require different levels of support - and that’s after you’ve managed to recruit the right people. You can find lots of good articles about recruiting and managing people here in the recruitment section of this website.
Before you even begin planning, carefully consider the reasons why you want to open your own business - if it’s to operate an office with multiple salespeople you will need to be more than just a salesperson yourself. You will need to have good systems and processes and know how to drive them. This will become even more important in the future as more and more integrated products are brought into the property sales process, like mortgages and insurances. The turnover of tomorrow’s real estate businesses will be fuelled by volume and can only gain momentum as the number of people in the business increases.
Becoming a principal requires an important mind shift - striving to be the one in the office selling the most could well prove counterproductive. In fact, passing leads to your team and helping them manage those leads is a great way to get them to improve their own skills.
The good news is that the key personal attributes like enthusiasm, energy and drive which are essential to being a successful salesperson are the same attributes of a successful principal. And the even better news is, the other skills critical to success in real estate business ownership can all be learned. The key is to be aware of which skills are lacking before you start out and then to take the necessary steps to fill in the gaps.
If you’re part of a franchise group, your franchisor is likely to run specific courses to address the need for these skills and they should help you understand how to run a good business too. If you decide to operate independently there are plenty of external courses you can proactively enrol in which will still achieve the desired outcome.
Consider your reality carefully. Avoid joining the ranks of competent salespeople who turn into incompetent businesses and instead with some simple planning continue your career success, becoming an effective principal of a profitable business.
This is a very interesting and truthful article. I liked it.