The main ingredients for success in this business They are: excellent sales skills, the ability to build a good customer base, and a great desire to work.
In the first 2 parts of this series we talked about:
And as we mentioned initially, although in this business you can earn very good money, excess optimism should not make us forget that you also need to be a tireless and very persistent worker to be successful.
your business plan basically you should consider the following 15 steps:
- Registration as an Authorized Broker. You don’t need to be a registered real estate broker and authorized to start a real estate companyHowever, doing so has important advantages that will help you better relate to the environment and thus access a larger database of clients.
- Define the services to provide. You can start with some services and gradually expand your portfolio. You can focus on rentals and rentals, purchase-sales or investment management.
- Define the sector you intend to work. residential, commercial, industrial, tourist or combinations according to your commercial capacity.
- Define how you will provide your services. You will have your own premises, you will rent an office or you will work online.
- Define what quality of services you will provide. From the beginning you must have a commercial approach that guarantees total satisfaction to your clients in such a way that they recommend you. How do you plan to compete against other agencies in your environment?
- Research who your competition is. Make sure you know the competitors in your region, what services do they offer? What are their fee rates? And above all, define what are the differential factors that will make you stand out.
- Make a financial plan or budget. This should consider how much you need as an initial investment. How much will your fixed and variable expenses be monthly and you should also consider a financial cushion to keep your company running during the lower months or to bear any unforeseen event. Also consider that the breakeven point for a starting company is approximately 3 years. Approximate period in which the initial investment is recovered.
- Define the staff you need to get started. This is very important and must be considered within the budget of initial and monthly expenses. Initially you should include: a secretary (assistant), vendor fees, your own salary as a general manager, IT support and messaging (the latter two can be outsourced for services).
- Establish a salary and commission plan for your sales consultants. It is essential that you develop a fee policy for your advisors who are the engine of your business. You must determine if you will work with a base salary plus commissions or only for commissions. This is different in each region and should fairly compensate for the sales work in order to motivate continued growth.
- Define the furniture that will give image to your agency. Image is important in any business but especially in real estate, especially if you have to deal with investors and people of high economic level. Your initial investment should include the right furniture to convey this image. You must also include the computer equipment that you will need for the proper functioning of your company.
- Create an advertising investment budget. Your promotion and sales strategy must be supported by an investment budget in media that allow you to attract clients for the properties you negotiate. It is important to have an item for advertising investment that regularly ranges from 2% to 4% of monthly sales.
- Create a sales and promotion strategy. Together with your sellers and your marketing consultant, you must constantly develop and renew your promotion and sales strategies in order to reach the target market to attract and place properties. The most common and best performing media include: shopping mall outlets, local newspaper guidelines, radio spots, magazine advertising, and mobile promotion. Within this strategy you should consider the (annual) costs of sales training and training for your staff.
- Complete all the registration procedures for your company. Whether you decide to work as an individual merchant or through a public limited company, you must carry out, advised by a professional, all the procedures related to the constitution of your real estate agency such as: commercial registrations, authorization or license to open a premises, protocol registration of the company, deposit of the initial share capital, tax and commercial authorizations of your city. It will surely be essential to process a commercial patent, prepare invoices, receipts and all the necessary stationery for your optimal performance in the environment. And if you hire staff, surely you will need to consider: registration in social security and records in the ministry of labor.
- Consider loan payments. It is very likely that at the beginning you need the financial support of a bank or savings cooperative to have initial capital. Loan whose payments you must consider within your budget of monthly fixed expenses that must include payments to principal and interest during the time that the credit is being paid.
- Define if you need to invest in a franchise. The administration of a real estate agency in essence is very similar to any other business, however one of its peculiarities is that you can start it acquiring a franchise which entails some important advantages such as the reduction in the risks represented by not knowing the business or the market and having the advice, experience and training of the franchisor. However, the initial investment to acquire the franchise and the entire operating system is usually much higher. Hence the importance of defining from the beginning the model with which you want to start your business.
As you can see, these 15 steps represent a guide so that you can elaborate in detail your own business plan according to the conditions and projections of your real estate agency project. If you have not yet read our previous articles in the series, I recommend you take a look at them to be able to deepen more about the services and business models related to real estate companies.
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