Australia thrives on small business. It is what makes our country go round. So the reality of the number of small business that fail to succeed is definitely a cause for concern. According to the Australian Bureau of Statistics, more than 60% of small businesses cease operating within the first three years of opening their doors.
How Can You Reduce Costs for Your Start-Up Real Estate?
We see the answer to this question lies in planning. You can have the best business idea in the world, yet without a solid business, financial and marketing plan, you are setting yourself up to be a statistic. The reality is that running a real estate agency is an expensive business. There are a lot of upfront and ongoing costs to manage. We have seen many agencies cease to operate in their first year – and it came down to poor planning.
We have outlined some high cost areas and suitable alternatives to consider when starting out. Remember, you can start small and grow big. Living within your means is a great start to ensuring you get through your first year of business.
Office rents are one of the biggest drains on your bottom line. With the trend of remote offices growing every day, it is now the norm to work from a virtual office. With so much technology allowing remote access and video and teleconferencing with staff and clients, considering a virtual or shared office space will save you thousands. Benefits include reduced overhead costs including rent and running costs such as electricity, water, gas and heating.
Hiring staff is one of the biggest decisions you will make as a business owner. However, one of the biggest mistakes you can make is hiring above your means. We have seen clients hire staff they didn’t have the income to support. The business was bringing in $3,000 per month and property manager was costing $4,000 per month. Outsourcing your staffing needs in the start-up phase is a great way to evaluate your financial position whilst still getting the job done. Check out our previous blog on the benefits of outsourcing your trust accounting. If running a virtual office, you can utilise a virtual receptionist to take your calls and forward them to you.
Doing your research before purchasing software for your business is crucial. There are many programs available on the market. You need to find one that matches your business needs – for the right price. Shopping around can literally save you hundreds per month in subscription fees for capabilities you may not need. For more advice in this area, check out our blog on 10 Questions to Ask When Considering a Trust Accounting Provider.
Real estate marketing platforms can gobble up your marketing budget very quickly. Negotiating the best rates you can with the big online real estate players will help keep those marketing costs down. Establishing your own facebook, LinkedIn and Instagram networks will enable you to market your properties without the big price tag. Better yet, recoup those costs with better negotiation with your clients as well.
Knowing your compliance obligations right from the start will help to avoid any breaches within your first year. Unfortunately, we see many clients jumping right in and running before they can walk – relying on guesswork as opposed to research and copping some hefty fines. The majority of these fines are from the Department of Fair Trading – which is not want you want to receive in your first year. So take the time to do your compliance homework to avoid unnecessary and costly fines.
Take a reality check before you head into Officeworks and buy up costly equipment such as photocopiers, shredders and scanners. Decide what equipment is essential to get started and work with that until you have a good cash flow to expand. Once again, consider a shared office space that usually includes the cost of these items in the rent.
Having access to the services, memberships and industry tools is all very well and fabulous – but do you really need them? You may have used them in your previous employment, but remember they weren’t starting out and probably had a bigger cash flow. Start small. Make a wish list and work on introducing them as your cash flow increases.
Researching the right insurance and paying it monthly may cost you a tad more in the long run, but will be of great benefit to your cash flow as payments are spread out over an entire year. Understand what the mandatory level of cover is applicable in your state and any additional add-ons that could be good business practice to protect you from risks outside of your control such as cybercrime.
So there you have it – some hot tips to help you save some cash and survive your first year of business. For any additional help guiding your business through its first year, contact our friendly team of Angels.