Going solo and starting your own agency can be as daunting as it is exhilarating.
You have the chance to do things ‘your way’ and build an asset that can not only enables you to live your dream lifestyle now, but sets you up for the future as well.
But for every success story you’ve come across, you’ve no doubt heard a tale of woe.
So, where do you start when setting up your agency? And more importantly, how do you ensure you create a legally sound entity with a solid foundation?
Let’s break it down into a handful of simple steps to ensure you start off on the right foot.
1. Joining forces
The first thing you need to decide is whether you want to fly solo or take a flight crew along with you, and what it might look like if you choose the latter.
If holding the reins and keeping a tight grip on them is what you’re after, then starting an agency solo might be the perfect setup for you.
It will mean you wear all of the risks, but you’ll also reap all of the rewards.
Another option is to take on a business partner or employ staff either right from the get-go or further down the track as you grow.
Alternatively, you might decide to belong to a larger family and join a franchise or licensing model. But whatever you choose, you’ll need to have a few ‘rules’ in place.
Of course, no one wants to think about business relationships turning sour before they’ve even begun, but a shareholders’ agreement is a must for peace of mind.
Think of it as a safety net under a tightrope. The aerialist wants to make it to the other side without falling but is under no illusion as to the danger involved.
A shareholders agreement should cover a whole range of things, but some of the basics include:
- Clearly defined roles and responsibilities of each partner
- Who can make what decision
- Conflict resolution and what happens if you disagree
- What happens if someone wants to leave the business (or dies)
- How other business partners can be brought into the agency
- What happens if someone is not performing
- How dividends/profits will be paid
I once had a client who found a free shareholders agreement online and, while it was great that they had some legal agreement in place, you really do get what you pay for.
The shareholder’s agreement didn’t cover roles, responsibilities or performance, which meant when they wanted to remove a business partner that was not performing and losing clients, they were faced with a long, distressing and expensive process to dissolve the business.
2. Corporate structure
Now that you know who is in your agency, you need to think about your corporate structure. You would have heard of companies, trusts, partnerships, joint ventures and other flash terms.
But it’s important to know which is the right one for you. It will largely depend on whether you’re looking for good asset protection or tax minimisation.
And while you might be tempted to set up your agency as a sole trader and restructure later, I have two points of caution:
- As a sole trader, you have high levels of liability, and you should only go down this path if there are no assets in your name.
- If the agency grows and you transfer it to your new entity, you could be facing hefty levels of capital gains tax.
You also need to devise how you want to run it on a day-to-day basis, down in the trenches.
A business without a business plan is like a traveller without a map. Or, to quote another of my favourite sayings, if you fail to plan, plan to fail.
A business plan doesn’t need to be lengthy, one page will do, but it must be targeted and to the point.
Think about your goals and pair these with measurable targets and timelines. Establish, and stick to, a budget, define your must-do tasks and prioritise them.
And don’t forget about the systems and CRM you’d like to use. I recommend keeping your list of tools simple in the beginning until you work out what you really ‘need’ as opposed to all of the shiny ‘nice to have’ options.
3. Licensing and legals
This might seem basic and a bit of a no-brainer, but it’s imperative that you triple check the licensing requirements for your state or territory. If you don’t already have your full licence, make sure you’re eligible for it and know what you need to do to obtain it.
There’s a whole bunch of other legals you will need, and it’s essential you don’t cut corners because, while it may appear to make things easier now, you could be creating a big mess for later.
Everything you send out to the world reflects you and your brand, so while policies and documents may seem boring, a cut and paste job just won’t cut it.
Not only will you be breaching copyright laws if you cut and paste, but you also have no idea whether the person or company you’re copying from has got it right and is compliant.
I once had a client who received a privacy complaint after a potential buyer handed out their details at an open home but became disgruntled when the agency repeatedly emailed them about other opportunities.
Other things you’ll need to organise include an ABN, TFN, insurances and registering for GST.
Agents often tout that real estate is about people, not property, and I have to agree.
But just as you would focus on building strong relationships with your vendors and buyers, you should first ensure you have future-proofed your relationships with your business partners and staff.
Ensure your employment agreements protect you correctly and that you’re treating your team well with the proper award classification and setting up their commission structures.
Don’t forget to protect your intellectual property and database as well.
When you’re engaging with your clients, ensure all the correct agreements are set up and don’t take shortcuts and copy and paste from someone else.
Make sure your agreements reflect you, your brand, what you stand for and how you do things.
You’ll have a better business for it.