An owner of a real estate agency will often have more in common with the owner of a hardware store or newsagency than they do with their employed agents. This is because when you run a business, you are faced with the responsibility of much more than simply managing staff and being answerable for their actions.
It is dangerous to assume that just because you are a good agent you will automatically be a good business owner, because the two roles are grossly different. As a business owner you have a raft of legislative obligations relating to taxation, workers’ compensation and superannuation, as well as those which govern real estate practice such as the Supervision Guidelines. In addition, you need to understand financial statements, manage cash flow, be responsible for trust accounts and much more.
Unfortunately, I have seen far too many high-performing agents fall into the trap of taking on ownership of a business only to see it collapse because they don’t have the requisite business skills or knowledge to operate it successfully.
“We need to prioritise the specific issues faced by real estate business owners and identify the major areas of failure. By doing this, we will then be able to develop training that is targeted to respond to the industry’s needs.”
To be successful as a business owner, you need to fully understand your obligations, realistically assess your own competencies, and then resource the areas of the business where your skills are lacking by surrounding yourself with great people who can do the things you can’t.
You also need the necessary business skills, including financial literacy. You can choose to acquire these skills yourself or outsource them, but you must be honest with yourself about your own capabilities when making this decision.
Why training is so important
It is REINSW’s view that many of the non-compliance issues and business difficulties that arise in the market today are due to ignorance and inadequate education and support, rather than a conscious decision to avoid obligations.Under our proposed partial co-regulation model, REINSW is aiming to improve education by targeting specific areas of regulatory failure and business management deficiencies. Penalising ignorance will not improve compliance or a person’s general business ability – that can only be achieved through education and a structured, supportive environment.
So we need to prioritise the specific issues faced by real estate business owners and identify the major areas of failure. By doing this, we will then be able to develop training that is targeted to respond to the industry’s needs.
Making the correct decisions for your business as an owner is in many respects like driving a car: the overwhelming majority of us can do it, providing we can look through the windscreen and see a full picture of the challenges that lie ahead on the road. But regardless of how good a driver you are, if you are blind to the challenges you will face then your chances of having an accident increase. It’s the same in business. In business you need see the full picture. You need to gather data, ensure it is accurate and complete, and from there you can make informed decisions. There is no place for guesswork when driving a car or running a business.
You need to be brutally honest with yourself and decide if remaining as an agent, utilising your skills in that area, is a far better decision than owning and operating your own business, for which you may not have the correct skills.