Practicing your license as an independent broker is different from working with a team. With your own brokerage, the workload increases. If you’ve never managed a small business before, running your own brokerage might be a challenge. Fortunately, you have options.
Franchise vs. Independent Brokerage
Starting a long-term career with a brokerage presents you with two options: you can choose to be a franchise brokerage or be an independent one.
Franchise brokerages give you leverage in business. With an established brand name and proven marketing strategies, investing in franchise brokerage would be advantageous . A downside to this may be the cost, and not having complete control over your management style.
Since you’re working as a franchise, the parent company will have a set management style they’d want you to implement. Additionally, working under a franchise means you can’t use your own brand. If you want credit for your own work, franchise brokerage may not be your best choice.
An independent brokerage, on the other hand, allows you freedom to develop your brand.This freedom, however, comes at a cost.
Starting out as an independent brokerage means you’ll start from scratch. You have to build your agency name slowly and discover management strategies that work for you, instead of following a proven one. Another point to consider is getting clients. When you don’t have brand value, it might be harder to secure clients and get them to trust you.
Once you’ve selected the type of brokerage you’d want to run, you have to determine its legal structure. Determining the legal structure lets you know of your financial liability, taxation, and ownership. You can choose from from five legal structures:
- Sole proprietorship
- S-corporation (S-corp)
- C corporation (C-corp)
- Limited liability company (LLC)
For independent brokerages, an LLC structure works best. This structure separates the tax and financial burdens of the company from your expenses and properties, protecting you from bankruptcy and legal action.
The Business Plan and Expenses
As a brokerage, you’d have to think of ways to keep tabs on all the documents you’re handling efficiently. Investing in contract management software from trusted platforms, like ServiceNow, automates your processes, lightening your workload. Digitizing how you handle your paperwork, from contracts and deeds to mortgage documentation and bank transactions, will ensure accurate reports and speedy services for your clients.
Of course, no technology is going to be effective without a solid business plan. Your business plan provides guidance; it’s your blueprint to what you intend to do and how you’re going to do it.
On this document, include a summary of your services, who your prospective clients are, and explain your target market for at least five years. This serves as the backbone of your business as you grow. Setting your mission, vision, services, goals, and target audience at the beginning helps you keep track of where your business is going.
Finally, any business can succeed with expert help. Whether you bring in consultants for your independent brokerage or rely on the franchisor, use the available support. With sufficient guidance, your real estate business can make it.