Mistakes Brokerages Make: How You Can Avoid Them
The success or failure of a business often comes down to the little things. In our experience, many businesses fail to thrive not because they made one “big” mistake but instead a series of small mistakes that compounded their business stress. Often it’s not because an idea was bad or markets weren’t right, but rather because of small errors that could have easily been avoided. Whether you’re just starting up a business venture or are already in the process, it is important to take heed of the warning signs and steer clear of these pitfalls. Below is some guidance from what some leading business minds have shared on how you can avoid these common mistakes and benefit from the experience of others.
Careful with delegation
Revenue generation is the lifeblood of any business, so you have to draw the line between delegating and abdicating control. As an entrepreneur, it’s your job to maintain a vision for the company and that naturally requires you to be hands-on. If you fail to do so, you run the risk of allowing your employees to dictate the direction of the company when it comes to revenue generation. If you delegate that fundamental responsibility as a real estate brokerage, you may find yourself on a path you don’t want to be on. To be clear, delegation is critical and you can do it to help grow revenue but you cannot abdicate your responsibilities. Think of yourself as the CEO not the marketing department!
Speaking of diversify in revenue
It’s great to have a product that people want to buy like a house, but you need to plan for the opportunity to receive revenue (and profits!) from more than just real estate commissions if you plan to survive. Trends come and go, and it’s important to be prepared for them and have alternative streams that are not under as much pressure as real estate commissions. This one thought process alone can save you from crippling losses in the event that your unit sales drops due to market conditions. Think about diversifying your revenue streams now so you don’t have to scramble later. If you’re just starting out, it’s best to go with ancillary services that are low-risk and will work hand in hand with your transaction count. Later use your capital to grow even more diverse streams so that you become less dependent on unit sales and commission dollars and more reliant on capital investments growing your cash flow.
Hiring the wrong way
If you hire the wrong agents, hire more than you can support, or less than you need you are going to find yourself in a sticky situation. The wrong agents will not only be unhappy and less productive at work, but they will also cost you the business if they’re not a cultural fit. A great way to avoid hiring the wrong agents is to make an avatar of who wins in your organization now and what/who you’re looking for going forward. Make sure those match! This way you can make sure to ask the right questions, check values thoroughly, and listen to your team! The more prepared you are for a hiring decision, the less likely you are to hire the wrong agents which saves time, money, and reputation.
Just because you can navigate the market doesnt mean that your agents can
Markets change, and you’ve got to be careful to avoid the trap of thinking that agents that have done well for you in the past will continue to do so. While some agents will last for years, others will need to be trained up or phased out to avoid negatively impacting your brokerage. It’s important to be on the lookout for which agents are struggling and which are thriving. As the broker it’s your job to understand both sides of this situation and help agents properly navigate to success. Think of agents as revenue streams in the beginning of market shifts to help understand what warning signs you need to be on the look out for.
Letting success mask your bad habits
We all know that bad habits can really hurt your business, but to begin with they might not have any obvious signs. That is why it is crucial to self-reflect and check in with your staff regularly to see if you’re falling into any habits that could be detracting from or hurting your business. One example is procrastination. If you’re not careful, you’ll find yourself putting off important tasks like recruiting, coaching, and relationship building with your agents. This can of course lead to hurt client relations, poor work product, and most importantly a fractured culture in your office. You do not want to become known as the brokerage that tries to appeals to everyone because in the end that means you appeal to no one. It’s often hard to see our own bad habits. A great way to catch them is to ask people who you know and trust “what do you see”? The key is to know that it’s important to make time to reflect on your work and see if there are ways you can improve.
Too often, we hear stories and see first-hand that the success or failure of a business often comes down to the little things. In our experience, many brokerages fail to thrive because of the little things that go unannounced, undone, or even unnoticed. Often it’s not because of lack of knowledge of how to fix the situation or the desire to make things better. So whether you’re just starting up a business venture or are already in the process, it is important to take heed of the warning signs, steer clear of these pitfalls, and be intentional with your focus on growth.