You should open up your own office if the following are true:
- You love managing people and you’re good at it
- You have a preference for growing a business vs. being a salesperson
- You are prepared to treat it as a 15 year project or more
- You can handle high levels of stress
- You are excellent at creating systems and having people accountable to those systems
- You are prepared to trade quality of life, and receive a lower income for the first 3 years in order to build the foundations of your business
- You see a gap in the marketplace that you can fill, and have first mover advantage that cannot be copied quickly and easily
- You have approximately 2 years cash reserves available
You should not open up your own office if the following are true:
- You are a good salesperson but a bad manager
- Your preference and natural inclination is to be dealing with buyers and sellers vs. managing and coaching staff
- You do not have a high threshold for stress
- You do not have adequate cash reserves (2 year running costs)
- You are not prepared to make very little money for the first few years
- You are not prepared to work up to 70 hours a week for the first 2 years
The 3rd Option: Become a Shareholder:
This option allows for you to continue being an exceptional salesperson but also secures your future as an agent with shareholding in an asset. This option is increasingly popular with a principal focus is on succession planning.
The infrastructure and expert knowledge in the business is already there, which means there is a significantly higher probability of success. This option is much more appealing than starting up a new office where you become another competitor.
Of course, a possible downside is that you become a business partner and the relationship between you and your fellow partners become critical. Many agents compare it to a marriage.
Becoming a shareholder has been the preferred choice by a number of businesses over the last two years. If the business was successful prior to the shareholding offer it likely to continue its success. Under no circumstances should a salesperson become a shareholder in a business that is debt-ridden and struggling. You do not want to buy someone else’s problems.
One of the observations I’ve made from networking with agents all around the country, is that a large number of agents would have been significantly better off remaining as a salesperson with in a stake in the business, rather than being a salesperson in their own business.
It is a tragedy to see real estate agents capable of writing $1 million in gross commission who have made the wrong decision. As a business owner, they end up working enormous hours, are stuck doing paperwork and managing staff problems. They struggle to write reasonable sales figures whilst they live stressful, unsatisfied and unprofitable lives.
Having said that, there are exceptions where new start-ups transform into great businesses. But generally, this is not the norm. So my advice to you is to carefully consider all the options that will help you to make a rational decision. The most important thing is thinking about how you will create the journey ahead.