Thinking of starting an agency? One principal’s experience
Dan Lee is known in the Queensland real estate industry for his comedic videos. He’s carved out a niche using the enjoyably crazy videos to sell property.
The fun videos mask a more serious side to starting and running a business. It requires sacrifice and hard work, but success can reward those who stay the course.
Lee began his working life in a large franchise company as a sales associate and ‘graduated’ to an agent’s role in 2009. He was good at what he did.
Lee worked hard and was very motivated. He started Plum Property in 2016 when he felt he’d maximised where he was going within the franchise company.
Tips for starting an agency
If you’re beginning an agency as a sales agent, Lee says his advice is you should ensure you have a good market share of an area or suburb and suggests a gross figure of $600,000 in commission.
“Because that’s your revenue, right?” he says. “That’s how your business is going to survive and you’re going to pay yourself and pay a staff member or two and then have some money left over to invest in the business. So, when you first start it’s all about just making money.”
Growth will cost money as well
“Every time you grow that little bit and you put on an extra staff member, that extra staff member needs a new laptop, and that extra staff member needs more space, and then more space means new premises, and then new premises means a receptionist,” Lee says.
“So what I would say is you need to have a consistent amount of income to be able to do that. And you really should only be taking that step when you have already got market share; and when you are confident that you can go out there in your first year and you can make enough money to pay for yourself, to pay for the business and to pay for that next year’s growth.”
Many principals will tell you about how their businesses started from humble beginnings. Lee spent the first 12 months operating out of his own two-bedroom apartment. He cleaned out the living room, installed some desks and it was just three of them with laptops, phones and a website.
Plum Property now employs 35 people. Lee says if you’re starting an agency on your own, or with one other salesperson or with a business partner, it’s likely to initially be a small crew.
He says it becomes more challenging when the team grows. In his case, he now juggles a full-time sales role and his own sales team while giving time to all the staff in the business.
It’s common for agencies to be divided into teams. Lee says that, in sales, a person who has a team is someone who has reached capacity and now needs assistance.
He says agents appointing people to their teams need to define who they need – do they need admin assistance or a sales associate who can help list and sell?
Agents who reach capacity and need help are often too busy and it becomes ‘too hard’ to invest time in appointing someone. So they don’t.
“And then you get through the busy time, a month passes,” Lee says. “All these properties are sold. But you’ve done no prospecting this time because you’re so busy selling.
“You’re worn out and then you’re back down the bottom again – you’ve got two or three listings. And at this point, you’re freaking out a little bit and you go: ‘I’ve got no listings. I need listings.’ ”
Lee suggests this is the moment to appoint someone to help as there is time to advertise for the position, interview potential employees, appoint someone and train them in the way you do things. But he says many agents don’t because at that point they’re not busy, and don’t think they need help.
Want to hear more? Listen to Rob Doorey’s full interview with Dan Lee on the REIQ Property Brief podcast.