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From Realtor to Broker: determining the model

When Realtors get the indie itch, the most difficult decision faced today is which real estate model to follow. There are three main options, or a combination of the three, and this very personal decision is a major part of your future success.

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An integral part of your brand’s story

When you are a Realtor with the itch to be an indie broker, one of the hardest decisions you will make is in what type of brokerage you want to build. Realizing this early on is going to end up being an integral and huge part of the rest of your story, so pay attention!

There are many number of brokerage models to look at in this choice. From mom and pop (literally, I’ve seen brokerages who are two people working out of home, a drop box for mail pieces (paper) and still have ONLY a home phone to call!), to 2-8 agents, 15-30, or the “let’s recruit anyone with a heartbeat” model with lots of overhead and expenses.

Option one: a traditionally named team

Are you planning on building a team brokerage approach where your own name is the brand (Smith Realty)?

Pro: If you already have a well known name in your area, you could easily expand on a full team and have total control of the company. No one else can build a team within your brand because it’s YOUR brand. If done correctly, there have been extremely successful companies built which produce sales like a well oiled branding machine with 1-3 local locations.

Con: This model can only take you so far, generally speaking. Remember, if the county next to you (or neighborhood) doesn’t know you, expansion may be harder and you’re climbing an already steep hill with opening a new place AND trying to show people why they should work with YOUR PERSONAL NAME. For me, Amanda Lopez Realty or Lopez Realty, just was not even an option for probably obvious reasons – it doesn’t roll of your tongue at all!

Option two: a niche brand

Do you have a specific niche that you will brand (green, über corporate, service focused, modern homes, new construction, condos, a local neighborhood name)?

Pro: while your market may be smaller, you could potentially “own” that niche and be the most sought after expert who no one else can even compete with!

Con: You run into past friends, family, clients, and fellow agents. They say to you “Hi! Its been so long! How’s real estate going?? You sell condos in that one building downtown right? I just bought a million dollar single family a few blocks away!” You: “Congrats! I do sell condos, but I’m also a licensed agent who sells all sorts of homes…”

Option three: breaking the mold

Do you have a vision of a completely different type of brokerage that you feel so strongly about and creating a name that could be scalable and taken to any market and succeed with the right tools? Perhaps there is a little bit of each of these models you like and dislike. That’s ok too! Always think outside of the box!!

Pro: You can spread your wings, not worry about convention and have no potential limits. If branded correctly or with the right timing and people around you, by creating something unique and different, you can create buzz, you could attract agents and clients that also believe in your brand and make them brand ambassadors. The sky is the limt with potential growth.

Con: You are REALLY starting from scratch!! You will most likely need a branding consultant, conduct market research, and maybe even spend more time and money into “inventing” your new company’s business model. You can easily fail if you don’t truly nurture that teeny tiny baby of a brand the right way!

Making your choice

There are plenty of franchise opportunities, brokerages that are unconventional and cutting edge, smaller boutique agencies as well as tradional companies who offer larger splits to allow you rights to brand yourself under a more corporate umbrella of safety and expenses being paid. But maybe there’s a mix somewhere you can find to fuel you as well as create something you have time and passion to grow.

There is no right or wrong. Ultimately, it’s your dream. Your passion. Go for it!

Amanda Lopez is a real estate broker and founder of Style House Realty in Baltimore, Md. She has worked in the real estate industry for over 6 years and prior to that studied advertising, branding and web design. Refusing to believe the real estate industry had to be bland and boring in design and appeal to everyone, she set out to bring some style and technology into the mix. Amanda can most likely be found with coffee that got cold, great shoes, her mind in the sky and her evernote app open.

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18 Comments

18 Comments

  1. jay Great Falls

    March 5, 2012 at 4:18 pm

    if you go indie like I did or are leaning that way you might consider a franchise or license to use a broker’s corporation and/or domain. That can be easier than starting from scratch. However franchises are expensive.

    I’m very interested in licensing out JustNewListings.com Realty out to new markets and the broker could add their IDX to a PR6 google juiced website to get property showing requests fast as part of their lead generation….justnewlistings.com/north-carolina/wilmington.php for example. I’m adding that IDX feed in 6-8 weeks.

    This model could make for a LOCAL broker dominating organic search engine rankings rather than trulia, zillow, homes or realtor.com.

    If anybody is interested find me on my website or linkedin or google+

    So sick of these 3rd party sites beating us at local search.

    j

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Business Entrepreneur

‘Small’ business was once a stigma, but is now a growing point of pride

(BUSINESS ENTREPRENEUR) Small businesses make up the majority of companies, employers, and money makers of the American economy, that’s something to be proud of.

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American small business

Prior to the Industrial Revolution, all businesses were small businesses. Independent craftsmen served communities with vital services. Small merchants opened shops to provide the community with goods. Lawyers, doctors, and other professionals hung out a shingle to offer their services to neighbors. Small businesses were the norm. Some of the most beloved American companies started out local. John Deere, Harley Davidson, and King Arthur Flour, all got their start as small businesses.

Business changes led to a attitude change

It wasn’t until manufacturing allowed businesses to scale and produce more efficiently that the idea of big business became more important. Post-World War II, the idea of a small business became derogatory. It was the age of big government. Media was growing. Everyone wanted to be on top. Small businesses took a back seat as people moved from rural to urban communities. Small business growth plateaued for a number of years in the mid-20th century. Fortunately, the stigma of small business is fading.

Small businesses are the backbone of the economy

According to the Small Business & Entrepreneurship Council, the “American business is overwhelmingly small business.” In 2016, 99.7% of firms in American had fewer than 500 workers. Firms with 20 workers or less accounted for 89.0% of the 5.6 million employer firms. The SBE also reports that “Small businesses accounted for 61.8% of net new jobs from the first quarter of 1993 until the third quarter of 2016.” Small businesses account for a huge portion of innovation and growth in today’s economy.

Modern consumers support small businesses

According to a Guidant Financial survey, the most common reason for opening a small business is to be your own boss. Small business owners are also dissatisfied with corporate America. Consumers also want to support small businesses. SCORE reports that 91% of Americans patronize a small business at least once a week. Almost half of Americans (47%) frequent small businesses 2 to 4 times a week.

Be proud of small business status

Small businesses are the innovators of tomorrow. Your neighbors want to support small businesses, knowing that their tax dollars stay in the community, and that they’re creating opportunities within their own city. Your small business status isn’t a slight. It’s a source of pride in today’s economy. Celebrate the fact that you’ve stepped out on your own in uncertain times. Celebrate the dirt under your fingernails, literally, or figuratively, that made you take a risk to do what mattered to you.

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Business Entrepreneur

Why and how to acquire a business – 4 tips for radical success

(BUSINESS ENTREPRENEUR) Acquiring a business can be a key part of your business’s future growth, but there are some factors you should consider before signing the deal.

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A meeting room with people shaking hands over acquiring a business

Growing businesses have multiple levers that can be pulled separately or in unison to continue scaling and expanding. And while many companies choose to grow internally, there’s always the option of acquiring other businesses to supercharge results and instantly expand.

Why Acquire?

Acquiring a business is certainly a complicated path to expansion, but it’s also a highly attractive one for a variety of reasons. This includes:

  • Increased market share. If you’re acquiring a business that happens to be a competitor, you can instantly increase your market share. If you currently own 20 percent of the market share and the competition has 15 percent, you suddenly catapult to 35 percent. That might make you the industry leader overnight!
  • Expansion into new markets. Sometimes you acquire a business outside of your industry or niche. In this case, it allows you to expand vertically or horizontally. This can improve top-line revenue and/or reduce costs and benefit profit margins.
  • Advanced tech and IP. In some situations, an acquisition is about acquiring a specific piece of technology or intellectual property (IP). This may prove to be the final boost you need to accelerate growth and initiate further expansion.
  • Talent acquisition. One of the secondary benefits of an acquisition is the opportunity to welcome new talent into your team. Whether it’s a seasoned executive or a highly effective sales staff, this is one benefit you can’t ignore.

Mergers and acquisitions aren’t the correct solutions in every situation, but they often make sense. It’s ultimately up to your team to sit down and discuss the pros, cons, opportunities, drawbacks, and possibilities of pursuing this option.

Helpful Acquisition Tips

Should your business choose to move forward with the acquisition route, here are some essential tips to be aware of:

1. Assemble a Talented Team

Don’t do anything until you first develop an acquisition team. This is a very important step and should not be delayed. (Many businesses make the mistake of starting the search and then forming a team on the fly, but this results in missed opportunities and foundational errors that can compromise an otherwise smart acquisition.)

A good acquisition team should include an experienced mergers and acquisitions advisor, a responsible executive, an attorney, an HR professional, and an IT expert. You’ll also want to bring on a public relations professional as soon as possible. This will ensure you control the messaging that customers, investors, and even employees hear.

2. Do Extensive Due Diligence

With the support of a talented dream team, you’re equipped to find the best acquisition opportunities. As you narrow your targets down, you’ll want to identify and implement a very detailed due diligence process for acquiring a business. This may include an extensive, objective analysis that consists of a letter of intent, confidentiality agreement, contracts and leases, financial statements, tax returns, and other important documents.

3. Make an Initial Offer

If the due diligence checks out, then it’s time to work on formulating an offer for acquiring a business. While the first offer almost certainly won’t be the offer that gets accepted, it’s the single most important offer you’ll make. It frames the transaction and sets the tone for the rest of the negotiations. It’s generally a good idea to offer no more than 75 to 90 percent of what you’re willing to pay. It should be low enough to leave room to inch up, but not so low that the other party could potentially see it as an insult.

4. Negotiate

Your first offer won’t get accepted. But unless you’ve totally insulted the other business, they should come back with a counter. Now is where things get really interesting. Negotiations ensue and it’s time to counter back and forth. The offer consists of a variety of elements – not just a price tag – so consider all of these variables in your subsequent counters.

Adding it All Up

As valuable as an acquisition can be, the process is often filled with friction. It’s up to your team to make the transition after closing as smooth as possible.

It’s very important that you respect the products, services, employees, and customers that the acquired business has. If you come into an acquisition and attempt to shake things up on day one, you’re going to get backlash. There’s nothing wrong with making changes – you now own the business – but be diplomatic and patient. Build trust, work together, and gradually introduce changes.

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Business Entrepreneur

Should you use use confidentiality clauses in your severance agreements?

(BUSINESS) Confidentiality clauses and NDAs have long been tied to severance agreements – but is that notion becoming outdated?

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severance agreement

Severance agreements and their ilk have long included confidentiality clauses, often comprising an exhaustive list of actions former employees may not take should they desire to keep the benefits listed in the agreement. Carey & Associates P.C.’s Mark Carey breaks down the knowledge you’ll need to successfully incorporate a severance agreement – including a stern warning about the future of confidentiality clauses.

There is a long list of things you’ll need when curating a severance agreement, but we’ll start with Carey’s honey-do-nots.

Carey’s primary recommendation is avoiding a non-compete clause where, previously, there wasn’t one.

“As employment lawyers, we see this tactic used every day, but you do not,” he says.

This is because most employment lawyers will advise that a non-compete agreement is largely unenforceable, which sets a poor precedent for an otherwise airtight document.

Carey even recommends against reviewing prior non-compete clauses for the same reason.

He also eschews what he calls the “21 days to sign – or else” philosophy, and he advises that employers should loop themselves into the non-disparagement clause so that employees cannot be blacklisted – something he refers to as “a very real phenomenon.”

What a severance agreement should include is a non-admission provision, a payment provision, a release of all claims to cover any feasible scenarios regarding employee disclosure, a challenge to agreement, a “no other amounts are due” section to release the employer from future responsibility, and a mandate to return any company property. This is a truckload of information, so you’ll want an employment lawyer to help you through the process.

But what Carey warns against is the future of confidentiality agreements, or NDAs. While these provisions have long accounted for employee silence in the face of abusive or corrupt employers, Carey posits that, one day, “confidentiality provisions in employee severance agreements will be banned as a matter of statute and public policy.”

This assertion comes in the wake of the #MeToo movement and the uncovering of the manner in which powerful people were using NDAs to buy silence from the people who suffered under their direction. Carey points out that it’s a non-partisan issue; corruption isn’t aligned with one specific political party, and the option to come forward with allegations of misconduct is a courtesy that should be afforded to all.

Whether or not confidentiality agreements are ethical is a moot point, and Carey does recommend continuing to use them when necessary – but, sooner or later, one can safely assume that the landscape of severance agreements will change, arguably for the better.

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