Statistics on Independence
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could i get a breakdown of expenses from the indies? i’m seeing 3500-5000/month. my own calculations are 7000-10000 in monthly expenses if i go indy. big difference and could certainly influence my decision. are you splitting expenses with other broker(s) to minimize costs? are you including your own health insurance/benefits?
DB,
I do share expenses with others in a professional office setting. I joined a professional office and pay rent, plus a pro-rated share of expenses, such as telephone, fax, copier, printers, etc. My numbers also include health insurance (I have only a catastrohpic policy that doesn't cover anything until a $1,000 deductible is met. On the other hand, I only pay $215/month for family coverage). The advantage of renting space from a professional office is that they often have extra idle office space that they are willing to offer very cheaply (I pay $450/month), and you can usually set up a nice cross-referral system. Examples of professional offices where this works well are attorneys, CPAs and property/casualty insurance operations. Obviously splitting expenses and/or an assistant with another broker could help a lot also.
Here are some monthly expense approximations: Advertising-$300, Auto (mileage reimbursement)-$250, Health Insurance-$215, Disability Insurance-$120, Office supplies-$200, Postage-$120, Assistant (P/T-shared), $1,500, Rent-$450, Telephone (including Cell)-$225, Meals & entertainment-$180, Satellite TV-$60, Office services (include utilities, R&M, internet & use of office equipment)-$200.
I haven't included any E&O or LPL system charges, as that comes out of the 15% that they take before I see my checks.
That's pretty much it...feel free to point out anything you think I am missing, but I just pulled that right from my financials, so I don't think I am missing anything or significance. The difference is probably that you are in a higher rent area than I am and/or are eating all of the expenses alone.
Every business is different. Some spend more on advertsing than others.....while others will go for a high priced location with big rent.
It is very reasonable to assume that 60-65% of your gross commission will be your takehome pay after all expenses are netted out.
EX:
60k gross (about my average month)
80% payout after all ticket charges and various bs fees = 48k net
Office overhead will vary but with 1 f/t assistant and 2 p/t (benefits to f/t) 2k per month rent plus other typical expenses is about 9k per month.
I also started spending another 2k per month in advertising and various marketing activities. I could cease these at anytime and also let my part time people go if need be. so I am running at 11k per month right now.
so that's 37k net..or abour 62% net/net. Obviously, If I give up my part time people and most of my marketing that will drop my overhead back to 9k per month (or less) which puts me back at 65% net/net. This net/net figure will INCREASE if I have a big month or DECREASE if I do under 60k.
When your running an indy office, you have to manage expenses. I've always taken the approach that if the business is going ok..everything else will work out out. So far, so good.
It's pretty obvious that actual expenses depend a lot on the type of business you run. Zacko has the Cadillac and I'm driving a Chevy for now. I think clients understand that when you strike out on your own, you may not start out with the best, but you should always be presentable. One place I didn't skimp was my office and my computer system. Between the furniture and my computer, I spent right at $15,000 just in my office. I reasoned that I wanted to present a professional setting and These were expenditures that if done right, shouldn't have to be soon repeated. The furniture should last at least ten years and I don't figure on replacing my computer for at least 3-4 years.
Also, these two posts should tell you that it makes a lot of difference where you are set up and how large your business is. If I consider my shared assistant's total payroll, it's right at $36,000. I've also started paying her 2% of my net as a bonus. I don't know how that compares, but she's happy, I can tell you that. That difference in assistant pay is probably a function of geography and cost of living.
As my production rises, so too will my operating expenses, but the bottom line is, I am at least partially in control of how and when they do.
Either way, it beats renting the Taurus--like those of us that are still working for The Man; or at least giving him 60%+ of our revenue.
There are some reasons while people wouldn't go out on their own, but keeping twice the revenue (gross) and the controlling your expenses makes it clear you come out well ahead financially when you do! Personally, I don't see how the Keep 60% Firms will be able to keep anyone over time, since technology and product commoditization aint going away.
I agree. I’m seeing more and more wire and RBD brokers heading towards the indy side.
People stay at the wires for a variety of reasons mostly out of fear.
Think about this...if you knew you could increase your takehome pay by 50%, own your own business, and have better technology and more products to offer....and you KNEW THIS FOR SURE...why would you stay at a wire or RBD? Answer: You wouldn't
The uncertainty or fear is what holds most people back. Fortunately there are many who have made the leap before us, so there is plenty of reliable information out there on what to expect when making the move.
[quote=zacko]
People stay at the wires for a variety of reasons mostly out of fear.
Think about this...if you knew you could increase your takehome pay by 50%, own your own business, and have better technology and more products to offer....and you KNEW THIS FOR SURE...why would you stay at a wire or RBD? Answer: You wouldn't
The uncertainty or fear is what holds most people back. Fortunately there are many who have made the leap before us, so there is plenty of reliable information out there on what to expect when making the move.
[/quote]
All I can say...it's good to be free from the daily stream of BS that comes in a WIRE channel....the money is just icing on the cake!!!!
[quote=zacko]
Every business is different. Some spend more on advertsing than others…while others will go for a high priced location with big rent.
It is very reasonable to assume that 60-65% of your gross commission will be your takehome pay after all expenses are netted out.
EX:
60k gross (about my average month)
80% payout after all ticket charges and various bs fees = 48k net
Office overhead will vary but with 1 f/t assistant and 2 p/t (benefits to f/t) 2k per month rent plus other typical expenses is about 9k per month.
I also started spending another 2k per month in advertising and various marketing activities. I could cease these at anytime and also let my part time people go if need be. so I am running at 11k per month right now.
so that’s 37k net…or abour 62% net/net. Obviously, If I give up my part time people and most of my marketing that will drop my overhead back to 9k per month (or less) which puts me back at 65% net/net. This net/net figure will INCREASE if I have a big month or DECREASE if I do under 60k.
When your running an indy office, you have to manage expenses. I’ve always taken the approach that if the business is going ok…everything else will work out out. So far, so good.
[/quote]
Zacko,
If you are doing so well, why do you have to spend so much on advertising and marketing costs? ($24,000 grand a year.) Seems to me, at your level, you should be cloning your best clients, i.e. referrals.
Maybe you should spend less time on this forum and more time calling your best cleints and asking them for a referral.
BPD
P.S. How many households do you have?
BigPayDay...........you suck.....I am still waiting for you to show us if you have any class and put your money where your mouth is..I am still waiting for our bet?
That 24K sounds like my bar bill last month........
BigPayDay, about spending time effective have you ever figured how screwed over you are getting atr 38%, bend over rover................kiss GP's A77...and you might get to 45% this year and you still couldn't afford to invest 24K into your business, oh excuse me, you don't own it, do you?
bigpayday:
This will require you to take off the blinders Jones has put on you. But, if you dont work for a firm with a cookie cutter office on every corner, advertising actually works. It works for two reasons:
1. If done correctly it shows the commitment of a local business to its community. Sponsoring local events and fund raisers with my local business actuall makes it look like I care about their success. Sorry, but throwing the EDJ logo out there just doesn't have the same impact.
2. My advertising dollars aren't diluted by half a dozen other offices in town all operating under the EDJ name. My dollars go to advertise me, and my firm only. You'd be suprised how rewarding building your own local brand can be. Those checks are easy to write.
[quote=Player]
That 24K sounds like my bar bill last month........
[/quote]
Player,
You father any kids in south texas in the early '70's. I've been look'n for my dad and we have way to much in common for coincidence.