Since leaving a nationally known brokerage company to start my own firm in 2005, I’ve learned many lessons about business, relationship and management — and that even after learning such lessons, things still happen that you just can’t predict. In the last 13 years of running a multifamily brokerage firm and remaining an active broker, five key lessons I’ve learned ring true.
1. Don’t confuse brokerage with the business of brokerage.
I naively thought that because I was pretty good at selling apartment buildings, I would be good at owning and running a brokerage company. Shortly after opening my own business, I realized these were two entirely different things — and the skills that made me good at one were not necessarily relevant to the other.
Fortunately, I had a very good partner who was exceptional at running a business and taught me the ropes as I continued being a broker, and over time I developed good skills of operations, marketing, bookkeeping and management. If you’re a successful broker and considering opening your own firm, find a mentor who has done the same thing and ask a lot of questions about the business of brokerage.
2. Roll with the punches.
No matter how well you plan, things will still go sideways. People change, markets change and business plans change. Since I opened my business, I’ve had broker turnover, staff turnover, an anomaly economic disaster, personal and family issues that distract and more. Sometimes there simply isn’t anything you can do to change a situation.
When this happens, roll with the punches and keep going. Trite as it may be, keep in mind what they say: “It doesn’t matter how many times you get knocked down, it matters how many times you get up.”
3. Create a path to profit-sharing or ownership for rockstar brokers.
Our business is tough, competitive and attracts Type A people. Too many times it is only about the split or the money, meaning as soon as a more attractive offer or split surfaces, your broker(s) will leave for it. An alternative to consider is creating a path to profit-sharing and/or equity so that your brokers have an incentive to look out for the company as well as for themselves. By creating an incentive program, brokers know they are building something together with you and are more interested and incentivized to train new people, support company initiatives and stay at the same firm for their whole career. It has been transformative at our company.
4. Always be recruiting to build your bench.
Your brokerage company is only as strong as the people there. Creating the incentives described above will help with retention, but life still happens and sometimes people’s needs changes. There is nothing you can do to stop turnover completely, so you have to mitigate it by constantly recruiting, hiring, training and building your bench.
Brokerage is a tough business that leaves new brokers without income for at least a year. Always take care of your current people first — be conscious of their business plans and support them by bringing in new brokers who augment or compliment your existing brokers instead of detracting from your current brokers’ success. At the same time, know that at any point in time some of your key people may have unexpected changes and need to leave your company.
5. If your plan isn’t working, change it … quickly.
When you have several people complaining about the same thing, listen. When you see a problem, fix it. If you have started a methodology that isn’t panning out, change it. Sometimes, though, you have problems you cannot fix: When you see someone exhibiting antisocial behavior and negativity and you cannot fix it, fire that person. That in itself becomes the fix. Remember you are concerned with the entire organism as well as all the individual parts.
I’ve learned this the hard way when I was, at times, stubborn about trying to fix something that couldn’t be fixed. The cost of being stubborn is significantly higher than the loss of an employee, keeping someone disgruntled who poisons the well or inefficient procedure. You don’t have time to be stubborn.
Entrepreneurship is at the heart of any successful real estate broker and any broker looking to start their own firm. Always remember that one set of skills doesn’t necessarily translate to the other. If you’re just getting started with your own firm, I wish you the best of luck. It has been gratifying to me.