Exit Strategies for Your Real Estate Business
Are You "Good To Go?"
As Napoleon Hill said, we have to "begin with the end in mind." Whether you're a salesperson or a broker/owner, you should be including an exit strategy in your business plan – even if this is your first year in business.
As a NYS licensed real estate instructor, I teach a new agent program for my local board of REALTORS®. I always try to impress upon new agents the importance of having a plan: "Why are you working? What are you working for?" Your exit strategy is one of many important factors to consider before you even start working as a real estate professional.
Today's real estate business models are much different than 20 years ago when I began my career. My husband already had his broker's license when I got licensed, and we decided that the best way to earn the most money was to open our own company, hire good agents and grow a successful firm with a strong reputation that we could sell when we retired. For us, like many others, real estate was not our first career, but it would be our last.
Today, new agents are starting much younger – many as their first career – with a broader range of business models and opportunities to earn more money as agents. But the one thing most new agents don't really take into account is that, even if they are working for a broker, they still own their business.
So what are the key elements in planning that exit strategy? It's actually very simple. You have to focus on the "numbers" and know your true value from the start. With today's wide variety of digital systems and technology, it's really an easy task. Starting off with a good accounting system and consulting a professional are the first steps to take control of your numbers.
For the broker/owner, tracking the business profit and loss quarterly and annually helps to grow the business by giving insights to the company's weak spots. Are you spending too much on marketing or salaries? Where can you improve efficiency and productivity to increase your net worth? Are you hiring the right agents? Do you need better training programs?
Looking at this on a regular basis will add value to your firm when it comes time to sell. Your firm will be in demand if you have a great vision, operation and staff, but the bottom line (the numbers) is what will seal the deal when you sell it.
For the independent agent, tracking is a key, too. You need to know how much you can earn on your own. In my classes, I always recommend that new agents find a business partner. Our younger agents don't want the 24/7 business model that many of us have lived with, so partners make the most sense.
I also encourage finding a mentor in the company, who might perhaps be able to help them grow and learn the business while they can perhaps help that agent with the technology and systems that will allow them both to have more free time and eventually retire. Teams are great for this purpose and have become a large, important part of our industry today.
Perhaps you've grown your business as much as you can and it’s time to create a team to take it to the next level. Finding the right team members is the key to your exit plan. You want to team up with someone who will take over when you are ready to move on.
My other key recommendation to all agents is to take the CRB designation classes with training for broker/owners, which includes some vital info for agents, too. It will give them the needed tools, skills and information on how to treat their real estate practice as a business. Women's Council's PMN designation program will also help with planning and growing their skills for creating a successful real estate career.
You'll be "good to go" if you can consistently track your numbers, plan for the future and always be learning.
Marilyn Urso, CRB, GREEN, GRI, PMN, SRES, has been a licensed REALTOR® since 1993 and a member of the Women's Council for most of her career. She is a NYS Licensed R.E. Associate Broker and works for Better Homes & Gardens Real Estate: Atlantic Shores in Syosset, NY.
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