Whether you’re laying the foundation of your real estate career or preparing to wind things down, a strong succession plan belongs at the core of your business. As your business grows – along with your client list, referrals and team – it becomes an asset with long-term value. A well-structured plan ensures you can capitalize on that value when the time comes.

Why succession planning is essential for team leaders
For real estate team leaders nearing retirement, succession planning is key to protecting the business you’ve worked hard to build. Done right, it turns your operation into a sellable asset that can help fund your retirement and serve as a safeguard in case of unexpected events. On the other hand, if you’re looking to expand your business, acquiring a well-run operated real estate team can be an exciting opportunity – especially one with consistent performance, strong client relationships and organized systems already in place.

When to start planning your exit
Whether you’re just starting out or considering retirement in the near future, it’s never too early or too late to prepare your business for succession. Your strategy should influence the way you build and run your business today. Having a plan ensures that, should you wish to retire, or should the unexpected happen, your team and your bottom line remain protected.

What makes a strong succession plan?

• Keeping your database clean and segmented
  Your client database is the heart of your business. Keep it updated, organized, and clearly divided into key categories – active clients, past clients, referral sources and industry partners like stagers, lenders and other agents.

• Measure what matters
  Tracking key performance indicators (KPIs) gives you a clear picture of your business’s health. From average commissions to lead sources and annual sales, this data shows potential buyers the value and growth trajectory of your operation.

• Stay financially in tune with your business
  A successful transition starts with financial clarity. Create annual budgets, track monthly profit and loss (P&L) statements and monitor your revenue and expenses closely. Buyers are drawn to businesses with a strong, consistent financial track record, and you want to be able to show that your business is scalable and profitable.

• Standardize your systems
  Document your workflows, from lead generation and conversion to listing management and client care. Clear Standard Operating Procedures (SOPs) make your business easier to understand, run and scale, increasing its appeal and value to prospective buyers.

• Prioritize cultural fit
  Cultural alignment is often underestimated but incredibly important. A business focused on first-time buyers won’t seamlessly merge with a luxury team, and a collaborative culture may clash with a hierarchical one. Buyers are also looking to retain your team, so aligning values and work styles matters.

Determining the value of your business
Valuation usually comes down to a multiple of your net income averaged over the past three to five years, with unusual years (like those during a pandemic) excluded. Multiples typically fall between two and five times your net income, with the strength of your systems, team and brand affecting where you land within that range.

How and when you transition also influences your valuation. Sellers who walk away right after the sale may get a lower price. By contrast, staying on to support your successor over a few years can increase your business’s value and ensure a smoother handover.

Finding the right successor
Start by having a conversation with your brokerage owner or manager – they can often connect you with potential buyers and offer valuable insight. They understand the local landscape and may be aware of other agents or teams looking to expand.

You may also want to look internally. Often, the ideal successor is already working with you. Promoting someone from your existing team ensures continuity for clients and staff and can shorten the overall transition time.

Planning a smooth transition
Most successful transitions happen over two to five years. This allows enough time for the buyer to fully adopt your systems and build relationships with your clients and team. For buyers, a longer transition means more stability and client retention. For sellers, it offers the chance to maximize the sale price while still earning income during the transition.

The role of your brand in succession planning
The brand behind your business plays a big role in a smooth succession. Partnering with a respected company that offers training, tools and experienced leadership can make the transition easier, and make your business more attractive to buyers.

With Royal LePage®, you have access to a wide network of high-performing professionals and experienced brokerage leaders who can help facilitate a successful sale. We also offer national support and resources designed specifically to help real estate professionals plan and execute a seamless succession.

Planning for tomorrow starts today
Succession planning isn’t just about exiting your business – it’s about building something that lasts. By getting ahead of the transition process now, you’ll protect your legacy, support your team and create a clear path to long-term financial success.