The real estate industry thrives on driven individuals. Property practitioners hone their skills, build their networks, close deals, and become trusted advisors. But for some, the lure of entrepreneurship can be irresistible. Eva August, Century 21 South Africa's National Operations Manager and Head of Business, says taking the leap into owning a real estate business can be one of the most rewarding decisions a practitioner can make. This is especially true for those who have been in the field for many years.
The perks of going solo
"Practitioners in search of personal growth will find it when launching their own agency," says August. "It is often a natural pathway for a successful estate agent who has reached a glass ceiling in their territory."
A lack of partnership prospects is another reason that drives practitioners to have their names put on business cards. "Sometimes practitioners can reach a limit to what is possible in their own agencies," says August. "When the chips fall, many practitioners will count growth and significance more important than commission."
Business opportunities and risks
The good news is that South Africa's entrepreneurial profile remains positive. Despite challenges like a tough economy and high interest rates, business ownership is still a viable path. The Global Entrepreneurship Monitor (GEM) 2023/2024 Global Report says two in five adults know someone who has recently started a business. Over this, two in three either see good opportunities to do the same or consider they have the skills and experience to start their own business.
"There are some challenges aspiring practitioners should keep in mind," cautions August. "The financial risk is the greatest followed by talent retention. Real estate has a high turnover in the sales force and this is where leadership will be tested."
"While the offering of a real estate brand helps with retaining top practitioners, the leadership style and forms of remuneration, however, will always determine the attrition rate," she adds.
Must-haves to make the change
With over six years of franchising experience, August has seen the smooth transition of several practitioners into the role of business owner. "Having the mindset of a leader is the greatest requirement in becoming ready for the position. It also helps to have a mindset of selfless service; prioritising the needs of your team and organisation above all will service you well."
Striking out on one's own can be a massive shift. August cautions practitioners to think carefully before making the move. "I would encourage anyone interested to first take on a leadership role in a position that carries less risk for a period of two to three years. This can help you develop the skills, qualities, and experience that it takes to succeed before you embark on an outright business owner journey."
From a legal and operational perspective, August says one of the business owners will need the relevant qualifications with the PPRA (this being an NQF Level 5 or equivalent). In line with legal requirements, the firm needs a fair status and representation to qualify for the required BEE level in South Africa.
Rounding off the requirements, August highlights the importance of having finances in tip-top shape. "At Century 21, we outline the details of financial requirements and profit and loss projections for the new firm. This ranges from R900,000 to R1.4 million. Along with this is a particular flight plan to reach a point of return on investment within a particular time frame," she says.
Choosing the franchising route
Practitioners have the option of starting a new independent venture or franchising with an established brand. August believes the latter has proven to be a better option. "It takes many years for an independent venture to create trust in the marketplace with an unknown name, therefore one reason to partner with a known brand is that it has built up equity.
"As a franchisee, you can also leverage the systems, economies of scale, and support already put in place by your chosen brand. In essence, you get a head start immediately without having to start from the ground up by yourself.
"The biggest factor that contributes to most businesses failing in five years is that the entrepreneur does all tasks and runs all departments themselves, without all the skills. As a world-renowned franchisee, Century 21 has proven its business model for more than 50 years. It is easy to follow the franchise model and also easy not to follow it, with different outcomes seen," she says.
Practitioners exploring their options can reach out to August for a no-obligation discovery session. "It will give you an understanding of what it truly takes to start a real estate business from all avenues. I conduct a thorough needs analysis to avert failure and even prevent a business from starting in the first place."