04.08.21
The Inevitable Crossroads For A Successful CRE Broker
If you’re someone who feels like you’ve reached the top of the CRE broker mountain, first, my congratulations. I know you didn’t get to this position without hard work. Right now, you’re high-producing and well-compensated, you’ve built out a small support staff or additional junior broker-partners, but your career and prospects for growth can feel stagnant. While you want to continue growing your business and your brand, you feel that you have “maxed out” at your current firm.
So you will find yourself at a natural crossroads. I’ve been there and so have many of my peers. This crossroads has three directions: 1) Stay where you are, 2) leave for another firm where you see greater potential or 3) start your own company.
The problem with No. 1 is that you’ve already reached the limits at the current firm and are not satisfied. The problem with No. 3 is a crucial difference between “brokerage” and “the business of brokerage.” In starting your own brokerage, you will also have to take on the tasks from managing staff and other brokers to establishing workflows, which leaves you with less time to devote to what you do best — sales.
This leaves option No. 2: Switch to a different firm.
When I found myself standing at the crossroads in 2004, the idea of switching to another firm frankly made me feel a little nauseated. Competitors had been trying to recruit me for years with offers of better splits and lucrative signing bonuses. Even if upfront, more money wouldn’t solve the underlying issue and nobody could show me a situation better than I already had. I really didn’t know what I was looking for; I just knew I didn’t see it. After 26 years of doing this business, I now know what I should’ve been looking for.
I should have looked for a company with an established track record that was making changes to prepare for a period of expansion. I wouldn’t have been attracted to a “get in on the ground floor” opportunity because that would have been the same risk as starting my own company. However, I could have looked for an established company showing signs of entering a vertical growth phase or an inflection point.
When researching, look at the company’s reputation, culture, market strength and support offered to brokers. I detail these further in a previous article. Also, make sure it is a fit for you and your business. (I’ve also written about that.) These articles provide advice for measuring how solid a brokerage firm is, but neither addresses the signs a company might be headed toward an inflection point.
The problem is that you won’t find a company advertising on their website, “We’re getting ready to go vertical! Come join us! We’re at an inflection point!” Many times the leaders of the company themselves don’t even realize they are at an inflection point — it just begins to happen organically. Other times, the company is strategically planning its trajectory.
Regardless, here are some key indicators that a company is approaching an inflection point and headed for a growth stage. If you’re going to skim through these next few bullets, please note the last one is particularly important.
• Does the company have a higher support-staff-to-broker ratio relative to other companies its size? Many times you can tell if something is in the works because you see more positions, disciplines and people in non-broker roles at a company than its competitors. Sometimes this is an indicator that a foundation is being built for supporting more brokers.
• Is there a brand repositioning? Is the company considering or exploring adding additional product types, services or verticals?
• Are there changes in technology at the company? Are time and money being spent on systems, databases or proprietary technology?
• Is the company’s marketing evolving? Is their digital marketing footprint upgrading? Do you hear their brokers talking about SEO, website redesigns and other new marketing efforts?
• Has the company developed a system for onboarding and training new hires? (While this may not be directly important to an already successful broker, it will be critical to your own potential to hire additional support or team members.) What does this system look like? Will they show it to you?
• And perhaps the most important factor: What is ownership doing? Nine times out of 10, you’ll be analyzing a company still owned and controlled by the founder(s). Is the founder still actively involved in the day-to-day of the company? Are they still running the entire company themselves or have they recently established any upper-level management positions usually associated with doing this (i.e., CFO, COO)? If the company is bringing in new people to run the company, it could mean one of two things: 1) The founder is planning to begin retiring or exiting, and they want the company to keep running without them, or 2) the founder wants additional bandwidth to focus on growth and expansion and is bringing in people to help run the company and others to create/implement the strategy for going vertical. Obviously, look for situation No. 2. Find this out by asking people you know and trust at the company to tell you how active ownership is and ask questions like “How many hours per week does [Founder] work?” If so, the best indicator of a company at an inflection point is most likely a founder still highly active but also bringing in additional high-level staff.
Other indicators that a company is at an inflection point may be less obvious. Sometimes you can identify indicators with simple research. Sometimes you find indicators by talking with people in the industry or at the company you’re analyzing. Other times you won’t know any of the inside scoop until you’re actually interviewing with the company.
After becoming a power broker in the industry, you will find yourself at this inevitable crossroads. I wish someone had been able to give me this advice when I was standing there scratching my head.
