These are very tough times for everyone in real estate, regardless of location, size or profile. Few if any are making money, reserves are being absorbed, and it seems to some that there is nowhere else to cut expenses.

Unfortunately, fear can drive poor business decisions, and while it is always wise to be open to alternative business models, products or affiliations, change for the sake of change is not a panacea. It is more important than ever to be informed about industry players and what they truly provide versus what they may promise, and that comes from ongoing research, talking to those with related experience, and asking the right questions. When looking at major changes to your business, weigh all options rationally and have confidence in the instincts and experience that made you a successful brokerage. At the end of the day, unless you sell your company, the responsibility for its success will always rest with you and your management team.

The entrepreneurial spirit and skills that got you here are still there to be drawn upon. Don’t underestimate yourself. This is when great leaders are defined.

Now as at any time, we have to think creatively and explore new avenues. But changing your brand, or trying to partner with a company that has a different agenda or culture, or aligning yourself with a technology partner focused on its success rather than yours, may present a short-term fix but a long-term liability.

In this environment, great offers are being made to lure brokers to become customers or partners – offers including forgivable loans covering first-year fees, financial incentives, credit lines to pay the bills, and/or products that will magically double your business.

Whether you are considering a network affiliation, a new technology partner integral to your business, or a potential merger/acquisition partner, you’ll make sure the change is not simply a short-term fix that could cost you future profits and business freedom by asking the right questions:
  1. What is the value proposition relative to cost? Can you determine if the additional investment will generate incremental income? Are your fees based on the additional business the new program or affiliation brings to you, or on business you’ve already built? What is the partner’s incentive to perform?
  2. We all tend to focus on the best-case scenario, but what is the worst-case scenario and what would its impact be on your business?
  3. Is there a viable exit strategy, and how would that affect your company?
  4. What is the ownership and who is in control? Is it a company that is being built to be sold? Even if you are very comfortable with your contact, what is that person’s work history, how secure is his/her position and will he/she have the authority to deliver on promises? Who will be your ongoing liaison and what is that person’s skill set?
  5. If you are looking to the new enterprise to fill a gap you now have – technology or management – can you tie fees to results that actually occur? And is there another less expensive way to fill those voids in which you exert more control?
  6. What has the success of the enterprise been…how many customers do they have, and what have their results been? Talk to references and ask open-ended strategic questions like “what exactly did they do for you and how did it help you?” rather than “are you happy?” since current customers may have a stake in having you come on board.
  7. Understand what the company’s revenue model is…how they make their money. If what they seem to be offering sounds too good to be true, ask how and why they can afford to make the offer.
  8. What is the culture of the company and its leadership? How will your staff mesh with theirs? If you are combining forces, how will management be structured so that silos don’t result?
  9. Where does the company you are considering see itself in five years, and is their vision compatible with yours?
So check out all opportunities, but remember that focusing on how to enhance what you have already built may be the best strategy in this economy.

Posted By: Pam O’Connor