By Katrina Creer
Running a successful real estate agency requires strategy, the right people and plenty of hard work. But does performing well in one location mean you are ready to open a second office?
After putting in all the long hours to establish a business, expansion may seem like a logical next step. Setting up in another location allows an agency to tap into new suburbs, diversify risks and create leadership pathways for staff.
But is a second office simply a duplicate of what you've already built, or does it need a totally different approach or require even more hours?
Finding the Right Motivation
Ewan Morton, Managing Director of Morton, and former REINSW board member, believes business expansion works best when there is an impetus or a strategy behind it. He opened his first real estate office on Sydney’s Lower North Shore in 1996 and expanded to the eastern suburbs just four years later. Today, his network has grown to a total of eight offices across the metropolitan area.
“Each office has a different story of how it came about, but most of them have been built on the back of a property management project or we purchased an existing office and rebranded,” Mr Morton said.
“When we expanded for the first time, I was nervous - even though it was underpinned by property management - it was a new area for us, and we had to win over new clientele.”
It is not just the business that benefits from expansion, but importantly its employees.
“You can get to a certain size but if the business is not getting any bigger and there aren’t any challenges, what can happen is that people outgrow you,” Mr Morton said.
“We consider ourselves as a ‘growth business’, because I want to try to retain people, and as they learn things, I want them to have new opportunities and that strengthens our operations.”
Financial Considerations
Solid financials are essential before scaling – not just to support any acquisitions but to sustain people, systems and provide stability.
Scott Baxter from Strata Management Services believes many business owners have the ambition to expand but are worried about financial stress and added responsibility. He owned multiple offices in property sales before moving into the strata management sector. His best advice is to know your numbers and have an exit strategy, just in case it doesn’t work out.
“I am not averse to risk, but I did tend to buy at what may seem like the wrong time, when the market was down – but this is actually the right time because your competitor may be happy to sell,’ he said.
“My first love was real estate, but my interest in the business side of things came later. I didn’t have mentors, but I would just seek out people I admired for advice and would read a lot of books. Once you’ve done your first expansion it does get easier the next time.”
Strategy and Planning
Where to open a second office depends on your business model and branding.
Some owners will want a completely different suburb, while others may want to remain in their area. The latter, however, comes with the risk of offices potentially competing with one another.
“Some people would argue that you should just have one central office and use marketing to grow your brand across the households in the region,” Mr Morton said.
“Even though not many people may come to the office, the irony is that having an additional physical presence allows you to be perceived as the local expert in that area, and this creates more business.”
It is a strategy which has worked for Mark Campbell, Director and General Manager of LJ Hooker Lake Macquarie, who has four offices in Belmont, Warners Bay, Toronto and Wangi Wangi. Expansion has strengthened their brand presence and community reach across the entire region.
“Each office forms part of a connected ecosystem rather than operating as isolated businesses,” Mr Campbell said.
“For us, growth has been a natural progression of momentum rather than a forced strategic decision. It should feel like an extension of who you already are as a business – not a reaction to external pressures.”
What are the Risks?
Expansion is likely to put greater demands on the structure, processes and delegation of a business. But one of the biggest dangers is the potential impact on workplace culture. For this reason, Mr Campbell urges owners to check systems, and their cultural operating principals are solid before opening elsewhere.
“Be clear on your ‘why’ and ensure it aligns with your long-term vision, because expansion driven by ego or immediate opportunity rarely lasts,” he said.
“There is a risk of subcultures forming if values and leadership strategies are not clearly articulated and modelled. We’ve always wanted to build people before building offices.”
Mr Morton agrees that maintaining a consistent workplace culture across multiple locations can be challenging. Staff need to be properly inducted into the business ethos and empowered to act in its best interests independently.
“A visibility strategy is a good idea so that people can see you and there is a connection,” he said.
“Work has become so much more fluid – I don’t have a desk anymore. I can do a full day’s work in any of our offices, and I enjoy it.”