Business Model: a design for the successful operation of a business, identifying revenue sources, customer base, products, and details of financing.
Simple enough, most of us knew that basic concept even before we all went to some sort of “busyness school.”
The Broker Model: A broker brings together buyers and sellers, and usually takes a fee or commission on successful transactions. Brokers are active in business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) or Peer-to-Peer (P2P) markets.
Again simple enough and that has not changed for the most part since when…maybe ever.
And the old saying goes “if it ain’t broke don’t fix it.”
What about this “if you don’t break it there may not be anything left to fix.”
Fundamentally let me ask you this, how does a brokerage make money? By bringing buyers and sellers together and charging a fee to do just that correct?
And that fee structure is defined how and by whom? The brokerage correct?
Why, when and who decided that was how it should be?
Let me ask a better question. From those fees that are charged, how does a brokerage actually make money?
I’m not talking about generating revenue, I’m talking about making a real profit.
And the answer is…
“None of your business…”
“Slim to none…”
“We are UGE and make so much money I’m telling you, just ask everybody…”
“It’s a pipeline to generate money for our other profitable businesses…”
“We scale our deals out and try and make it work off of volume…”
“If we just cover our expenses all the better because we are all about servicing the client beyond the deal…”
How many times have you heard all of the above or maybe you haven’t heard any of these at all because it’s kind of one of those unspoken rules of #CRE. Never talk about how much or how little money you are making at brokerage…if at all!
Is that a fair assessment in your opinion?
If it’s not fair, then please, by all means, chirp up and tell me I’m wrong…but before you do there is one simple thing you have to reveal to me. Your TRUE profit and loss statements for the last five years. Those last five years by all metrics have been robust and frothy as many would say so why not show me just how you are CRUSHING IT and making BIG $$$.
Not willing to be that transparent? Fair enough.
Maybe you might be willing to help the rest of the world and show them how incredibly difficult it actually is making money running a commercial real estate brokerage.
Don’t want to admit your struggling…in a BOOMING marketplace?
I understand…believe it or not I’m on your side…yes I am.
Let me ask this simple question, how much have you spent on space management technology this year?
Space Management? WTF does that have to do with making money for a commercial real estate brokerage?
How about back-end deal and pipeline management software? How much? How much this year? The system you have (if you have one at all) is the latest and most advanced solution out there today?
How about something as simple as DocuSign? Nope, not even? I think the founder went to Purdue (Boiler Up!) and it’s a must-have on the resi side or you are not in a deal.
Do I even need to bring up a CRM? No I don’t do I, look all over this site, they are trying anything and everything they can to help you and you still do it how?
“But…you say but…my brokers don’t…” want you to make a dime and let’s be honest they don’t really care. They go out, find it, kill it, eat it, and go to the bank. And all the power to them. What happens if you decide to take more of a cut to make sure you stay in business? They will jump brands it a millisecond for a better split. And that’s the way it should be.
So, is there a way to stem this never-ending drive to the bottom? Yes, of course, there is.
CHANGE THE MODEL!
The Automation of All Transactions!
In other words Total Transaction Management.
From Discovery to Payout!
Just do it or continue to do what?
If your brokers don’t want to do it then encourage them to go start their own shop and let them figure out how to survive on their own.
Take control of the entire transaction.
And do it with technology and the software made to do just that.
Otherwise, you are doing yourself, your brokers and everyone’s clients a disservice.
You are sure as hell not doing yourself any great service by just hanging on.
How hard does it really need to be? If you have been in this business for any amount of time it should be easy to do.
Just break down every piece of the transaction and when a human has to touch it stop and think “how can I eliminate that step?”
Keep eliminating until there is no one left.
NO ONE and at what cost?
Or Possibly More Efficient and Stable Profitability!
How does that sound?
And while you are sitting there trying to figure out how to pay the bills and keep those hotshot productive brokers under your roof you should be automating your business and running it like a tech-savvy profit making software using machine.
So I asked…What Is Your Business Model Today?
And also asked…What If It’s Completly Wrong?
I think I have the answer.
You may not think so but…
One of us is right and one of us is wrong. (I don’t have to be right)
You are just betting your entire working life on it!
+1 Billions and Billions of $$$ betting on #CRE and #TECH, why not take advantage of it all!