High Street Estate Agencies: Impact on a Budget
We were recently featured in The Negotiator alongside other forward-thinking estate agents on how to grow on a shoestring. It’s a real insight into how directors have taken a hands-on approach to getting from that initial A to B stage. Here are some of the key takeaways from the piece:
Finding the opportunity
As with many things in business, a gap in the market is integral to finding a platform for growth. Our co-founders Ian Preston and James Baker opened up in October 2008, following the Northern Rock collapse and around the time Lehman Brothers was collapsing.
Ian said of this time: “There had been a 75 per cent reduction in transaction numbers since 2007 so it was really bleak… We did a deal with [Countrywide] and if it (the market) hadn’t been so bad we wouldn’t have had that opportunity. So it was a mixture of circumstance and consistency."
Achieving a high budget look as a startup
Foxtons are often looked at as the agency that sets the bar but they have a much larger budget. Morfitt Smith director Paul Batty spent around £8,000 creating his first Hillsborough office after developing an empty premises in 2013.
It was similar with our co-founders, they said of opening the first two offices: “While it is quite scary, you just have to get stuck in. We did all the demolition, painting and decorating ourselves. We were there on Sunday nights painting.
“For the first two offices, opened within 12 months of each other, the fit out costs were less than £10,000."
Be thrifty with furniture
In the early days, it’s not so much a case of finding the right furniture but just some that is up for the job. At Preston Baker we bought second-hand and reclamation, Batty says he went to Ikea and it was similar for all startups.
Gareth Jones from Kit Out My Office says: “In Amazon’s early says they recycled doors and attached legs to make frugal desk spaces.” The rise of online businesses means that today office desks come in at less than £100, making things a little simpler, though.
Attracting the right staff
When Morfitt Smith opened, it was set up on just £30,000 of working capital but making offices nicer is a trend of many agencies. Since then, Batty has spent more than £20,000 on the additional offices.
We often look at fit out budgets in the region of £30,000 but is it worth it? Ian believes that while they’re three times more expensive, that value isn’t necessarily recuperated but he says “I think as an advertisement when a member of staff walks through the door and thinks ‘do I want to work here?’, it has helped. As a staff attraction tool nice offices really do help.”
Cashflow over office spend
The key takeaway from all directors - including Alex Tarry from Best Estates in Suffolk - was that, as Tarry says, “there is so much more to it than saving money on the fit out”. Aside from a welcoming environment for face to face communication, the focus has to be on funding cashflow until the pipeline is developed.
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