The decision to make the move from real estate salesperson to business owner is a big one.
It’s daunting, and for good reason. There’s plenty to do!
But while each step is an important one, like with anything in life, knowledge is power.
O*NO Legal – The Real Estate Agent’s Lawyer Founder Kristen Porter says if you arm yourself with the right knowhow, going it alone can be an exciting and worthy move.
Here are seven key things you need to take care of.
- Brand protection
It’s one thing to come up with the perfect name and logo, but without protection, anyone can get their hands on it.
Before you get too attached, do trademark, business name and Google searches to see if you’ll be able to register it. Don’t spend thousands on branding before you do this, or you could lose that hard earned money and have to start again.
Once you have locked it in, you’ll need to protect it. In Australia, registering a business name is not proof of ownership. It is best to register a trademark to give you the ultimate protection so that no one steals your brand.
- Corporate structure
Going into business is not as simple as going into business. You have choices – companies, trusts, partnership, joint ventures and other fancy pants structures.
But how do you know which is right for you? It all depends on your objectives and whether you are looking for asset protection or tax minimisation as your end goal.
Many start-ups kick-off as a sole trader and then ‘think about’ structuring later. But it’s risky business. As a sole trader you have a huge amount of liability.
Only go down this track if you have no assets in your name. Not only that, but if you have grown your agency, then when you transfer it to your new entity there could be significant capital gains tax to be paid, but seek advice from your accountant on that one.
- Shareholders and partners
Another big decision is whether or not to go it alone, or take a partner with you. If you do bring in partners, it’s critical to nut out the partnership rules from the start.
We all hope that we never need to pull the rules out, but you can bet if things turn south in the relationship, it’s easier to have the rules agreed on from the beginning.
The rules should be included in a shareholders’ agreement (or partnership agreement, depending on your structure) and cover things like who can make what decisions, what happens if someone wants to leave the business (or dies), how other business partners can be brought in, what happens if someone is not performing and how dividends/partnership profits are to be paid.
- Contract templates and policy documents
Think about these items in terms of your brand, not just as words on paper. Everything you put out in the public domain, or get your clients to sign, is a reflection of your brand, so get this right and make it sound like you – that’s why a cut and paste job from someone else won’t cut it (copyright infringement aside).
- Buying a rent roll versus organic growth
If you’re thinking about operating a property management business, have you thought about whether you will grow your rent roll organically, or should you buy a ready-made rent roll?
Both have their upside and successful agencies go for both. Start-up land can be hard and a ready-made rent roll can ease the lumpy cash flow burden by providing a steady stream of income.
- Licensing and legals
If you don’t already have your full licence, make sure you are eligible for it and know the steps you need to take to get it. And always triple check the licensing requirements for your state or territory before jumping ship.
When it comes to running your trust account, find someone that knows what they are doing and has done it before to help you out as this is an area that a lot of start-ups get caught out with.
For asset protection and tax reasons you may look at setting up a company to run your agency through. From there you will register for an ABN, TFN and GST and sort out your insurances. Your lawyer and accountant can help with this.
Relationships are critical in real estate, they’re the life blood of the industry. Because they’re so important, we need to future proof our relationships with our staff, business partners and clients.
Make sure your employment agreements protect you properly. This will include getting their award classification right, setting up their commission structures and protecting your intellectual property and client database.
If you do join forces with others, be clear from the start what your expectations are and talk regularly about this to keep you both on track. If you are joining a franchise group, make the most of it – use their support and systems to launch your new agency into the future.
Most importantly, engage with your clients but make sure you protect yourself in the process by having the right agreements in place. Don’t cut corners or copy someone else’s. Your agreements should reflect you, your brand and the way you do things.
Ready to get started? Tune into the free webinar at a time that suits you to super-start 2023