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SHANE SMOLLEN: Growing a successful agency

By James Mitchell and Jay Garcia
31 May 2016 | 1 minute read

Industry leader Shane Smollen spoken to Real Estate Business about the ins and outs of growing a successful agency and how to thrive in weaker market conditions.

It’s a common mistake for principals to associate scale with opening more offices, Mr Smollen says.

“The reason I say that is because moving from one office to a second involves almost all of the systems, disciplines and resourcing that moving from one to five or 10 offices requires – but in many cases, the first business hasn’t used up much of its capacity.”

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Earning income in a new area, he says, is usually far more challenging than finding the next 10 per cent of market share in an existing area.

When looking to grow a business, physical presence isn’t always necessary. Opening a local office can help with awareness and market penetration, but it will create additional overhead costs and could be a strain on culture and other resources, particularly where the constant presence and focus of the principal has been the key success driver.

“I do see a lot of principals that make more of an ego-based decision to move to other offices or locations," he says. "They just haven’t done their homework in terms of impact – not just the resources or capital required, but the effect of you being spread thinner, particularly in the case of selling principals. 

“Business owners also need to know the market and competitor data backwards. It’s easy to go to a lot of trouble, effort, expense and risk to grow into a marketplace that may have nowhere near the [same] upside as your existing key region where you’ve established the foundation of your business at this point.”

The Smollen group journey

Prior to selling his 10 franchise offices to the McGrath network, Mr Smollen had built his business over a period of just eight years into one of the largest groups in the country, with 65 agent teams, sales of approximately $3 billion and more than 2,200 properties under management. But did he start with a plan? 

“It’s critical to have a clear roadmap,” he says, “but part of the plan was unforeseen because you also need to be open to react to opportunities as they come up.”

The industry leader says one of the most valuable functions of a written plan is to help you to say ‘no’ just as much as ‘yes’.

“There is never a shortage of options and opportunity but many will take you away from the main game, which is normally building dominant market share in your core areas. There were certain opportunities, whether they were acquisitions or the ability to secure additional franchise territory, which evolved over time. Whilst we often had to rely on our instincts, every move was always backed by thorough protections and modelling,” he explains.

“The main thrust of our business and its growth over time was really consolidating and growing into every area we took on board and ensuring we made the most of our market opportunity.”

According to Mr Smollen, the early stages of fast growth will inevitably see key people and resources stretched in a multitude of ways as staff wear various hats and take on additional roles. Over time these roles will become more specialised. The challenge is to retain a small-business, start-up-style energy with the efficiency and resources of a much larger one.

“There are some great people out there that can handle many of the critical tasks better than you can, so you have to realise that attracting the best people from an operational and a leadership perspective is just as critical as attracting the best agents,” Mr Smollen says.

“Just because you are good at something or have always done it doesn’t mean it’s the best use of your time. We have to learn to effectively let go.

“Your leadership resources are actually the largest leverage point you have in the business, so your effort in terms of finding and looking after and growing those people and ensuring that they have a growth path themselves becomes just as critical as growing your sales team.”

Where most businesses fail, Mr Smollen says, is by not having an appropriate plan with financial reporting, budgeting and forecasting to support their growth.

“It’s about having that master plan to understand that profit margins will contract, and strong financial methodology behind your budgeting and forecasting is going to prepare you for that.”

And when things slow down…

“In a marketplace that has changed characteristics and is moving towards a buyers’ market, your skills in terms of how you present that property, how you communicate with the owner, how you negotiate with buyers, all need to be at a different level,” Mr Smollen says.

Conditions in the Sydney market have proven to be resilient, demonstrated by continuing high clearance rates.

“However, there is, in most markets, a contraction in listings, so the disciplines around prospecting and building high-quality, relationship-based databases has moved to a new level," he says.

“Even if the marketplace contracts somewhat, it opens up opportunities for agents to build market share, and that market share will inevitably roll into an expanding marketplace and revenue will naturally increase off the back of that.”

Where are they now?

Since selling his agency network, Mr Smollen has been working closely with the management and leadership team at McGrath, affording him the chance to stay in touch with the business he grew.

“It’s been hard to let go of the day-to-day leadership but I’ve been fortunate enough also to be in a position where I can still add a lot of value to the business by bringing in a fresh set of eyes, and be part of its growth story, so I’m very engaged,” he says.

SHANE SMOLLEN: Growing a successful agency
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