The key to doing team expansion right is to spend the time and resources to establish a foundation of administrative services, operations and lead generation that can scale.

This July, Inman’s editorial theme is Teams — what it takes to build and join one, how to optimize your team for summer 2020, and even when to consider leaving one. And if you’re not already a subscriber to our Teams Beat email newsletter, sent every Thursday, sign up now.

I’m not much of a coffee connoisseur, but I like to grab a Starbucks coffee now and again just as much as the next person, especially when I travel. My usual travel schedule is pretty much nonexistent at the moment, but generally, whenever I travel to a new city, I inevitably grab a venti dark roast on my way to speak or to a meeting.

Whether it’s a Starbucks in Vegas or a Starbucks in Vermont, the coffee is the same. You know what I’m talking about here, right? Your Starbucks experience is exactly the same no matter where you go. And that’s exactly how consumers like it.

Hell, that’s even how baristas like it. A great barista in my small Vermont town could still crush it at a Starbucks in NYC. Why? Because the system, models, tools, culture, etc., is established, transferable, teachable and duplicatable.

This sounds a lot like real estate expansion. Expansion is nothing more than a system, model, tool and culture that can take a real estate business from one market and transfer that success to another market. Expansion (which we originally called “duplication” about eight years ago) is when real estate business owners expand their business and network outside of their local market. Think of expansion as a team without geographic borders.

It’s actually not a new concept to other types of businesses. Franchises like Starbucks or Orangetheory Fitness, or other businesses like Apple, Verizon or Toyota have been “expanding” for years. It’s not even a new concept for real estate brokerages (Century 21, Keller Williams, Coldwell Banker, to name a few). However, it’s a relatively new idea for real estate teams.

Why and when a team should expand

What happened for me years ago, and what’s happening for other agents, is the desire to get out of production and start to build a sustainable and scalable business that doesn’t rely solely on one individual having a job.

Selling real estate was an entry point for me into the business world. It fueled my entrepreneurial spirit and gave me a framework for building wealth, which I then translated into a building a business.

I actively sold real estate from 2006 to 2011. However, because I was in a geographically challenged area (read: a wonderful, but small state), I would always be limited to a certain size business. We have approximately 2,700 real estate transactions per year. Yes, you read that right — 2,700 transactions for the entire state of Vermont.

I don’t like to be limited, so when Gary Keller, founder and CEO of Keller Williams Realty, introduced me to the idea of expansion and floated the idea of expanding my team beyond the borders of Vermont, I was in.

The key to doing this is to spend the time and resources to establish a foundation of administrative services, operations and lead generation that can scale. And yeah, it’s not easy (or cheap).

If you’re starting from ground zero with nothing but your entrepreneurial drive and your database, then it’s going to be a five- to seven-year journey of building, breaking, failing, failing again, iterating and building some more before you finally break through. But it can be done!

How to do expansion right

People get into real estate for the freedom, but it’s actually the freedom that causes them to fail. Real estate teams offer an alternative to individual agents, allowing them to plug into a proven system and model that will accelerate their success (discipline, even “forced” discipline, equals success).

Expansion businesses, like mine, take it one step further and offer an alternative to a leader or real estate rainmaker that allows them to plug into a massive network and system that also accelerates their growth and success — just at a different level. It allows these leaders to build a business within a business.

I have partnered with some incredible CEOs who are leading and growing our expansion network in 27 different locations nationwide. They get the benefit of years of research, trial and error, and a proven platform to plug into. I get the benefit of building a business by building other leaders. The real estate industry is varied, and expansion offers yet another option for entrepreneurs (and intrapreneurs) to succeed.

For me, being an agent was a means to an end: building leaders, who would in turn help me build businesses. What about you? Who are you? Where do you find joy?

If you’re like me, and it’s about building leaders, then at a certain point, you will start looking to grow a team, hire administrative staff and sales professionals, and begin to leverage your way out of working in the business to working on the business. Great! Now, the real work begins.

And whether you want to expand outside of your current city or state, dominate your local market, or just try expansion and realize that it’s ultimately not for you, the foundation is the same.

Master the basics first

Big is better, right? That’s not always the case when it comes to business. I see too many people just adding agents to teams (I learned from this mistake, too), opening a new location where they like to vacation, or expanding into the next state over while their original location is still not profitable or running at full capacity.

Just take it one step at a time! I’m speaking from experience (and a lot of failing forward) here. Why not learn from my mistakes and grow faster?

The No. 1 thing you must do, whether you ever expand, is master the basics of business and build a solid foundation. The Millionaire Real Estate Agent (MREA) is the bible of team building. Don’t reinvent the wheel. Success is simple (follow the model in MREA), but not easy.

Entrepreneurs get, well, too entrepreneurial. They think they should get creative, that it’s different in their market, or that they’re going to try it this way. Sure, go ahead. Give it a try. But ultimately, it will just slow you down.

Building your team slowly and methodically is not that fun. It’s actually really boring sometimes. Master the boredom! Put one foot in front of the other. Hire administrative help. Hire a buyer’s agent. Maybe two or three. Add additional operational support. Leverage to a listing agent. Lead.

Once your team has proven production (without you doing the majority of transactions); has duplicatable and scalable operations, systems, marketing, and lead generation; and has maintained a 20- to 30-percent profit margin, then, and only then, should you start looking into where to take your business next.

And maybe you’ll reach that level of working on the business and decide to take a sabbatical, or start a property management company, or focus on launching your nonprofit. When you’re working on the business, you have options. But you’ve got to master the basics of business first.

Where are you at in your real estate business? New to real estate? Looking to leverage? Ready to grow your team? Interested in expanding? Get started right. Slow down (just a little), and start putting the building blocks in place to build a profitable and sustainable business.

Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies, the author of The Founder & The Force Multiplier, and the host of the podcast, Business Meets Spirituality. Learn more about Adam’s holistic approach to business here.

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