Many a successful salesperson has walked into my office exclaiming, ‘I’m ready to start my own office’. Many do start, but not all survive. It’s not uncommon to hear a new principal declare it is not what they thought it would be and ‘I just want to sell again’.
Firstly, I do not think selling and being a principal are mutually exclusive. Secondly, just because you are a great salesperson, it doesn’t mean you should own your own office.
SHOW ME THE MONEY
Just like talking to established principals about opening a second office with a key person, or bringing in a salesperson as a shareholder, one of the first questions I ask the individual involved is around their motivation for wanting to be an owner of a real estate business.
If the answer is associated with simply wanting to grab a greater share of the sale commission, I would almost guarantee that the salesperson will not be a successful principal in the first office they open. They may survive, learn from their lessons, give it another go later in life and make a success of it; but I cannot think of anyone with this motivation making a go of it with their first office.
You will not earn as much in the first year as a principal as you did in your last year as a salesperson.
The best salespeople who take the leap and successfully open their own office will typically have some type of itch they need to scratch or burning desire they need to satisfy. Usually when I ask their motivation for opening their own office they will respond with something like:
- I want to make a difference
- My customers deserve to be treated better
- I pride myself on training team members in the right way to do things
- I am embarrassed by the industry and I want to show others how to do it with professionalism and ethics
- I just want to be the boss
- I want to grow a rent roll for my future
- I’ve had enough of selling but am driven to create something of my own
- I’ve always had the idea in the back of my head
LIKE A BOSS
One of the biggest motivations is actually around control and just wanting to ‘be the boss’. Frustrated high-performers see decisions made in the office and often don’t agree with the decision or how it was implemented, and sooner or later want absolute control.
Unfortunately, the reality for many principals is once they are the boss they end up feeling like they have even less control. Their time is often consumed with keeping the team happy, engaged and motivated.
RIGHT HERE, RIGHT NOW
The right time to start your own real estate business, whether it is a franchised operation or independent brand, is when:
- You have proven performance consistently over the last three years, even in the tough times.
- You already operate as a business within a business; maybe you have one or two assistants or sales associates already helping you with your sales.
- You have saved or can access enough cash for six months’ worth of your estimated monthly expenses, assuming you are paid nothing for the first six months.
- Your profile is already established and known in your target market; you can grow this without the cost of opening your own office.
- You can articulate what your vision is for the business, what it will look like now and three years down the track.
- You have a clear point of difference in the market that will make you stand out from the crowd and differentiate you from your competitors.
- You have already thought about the costs of operating your own business; of course others can advise, but if you are serious you need to start yourself.
- You are prepared not to earn as much as you did last year; it is important to accept that you will not earn as much in the first year as a principal as you did in your last year as a salesperson.
But probably the most important trait of a successful new principal is appreciating that sales are vanity, profits are sanity and cash is reality.