Despite the fact that eight out of 10 statistics are reportedly made up (if you can believe that figure), I bet your head was turned by a recent article that suggested 19% of agents in the UK were in danger of going out of business.
There have been follow-up reports debating the figure of 25,560 agents currently listed, as quoted by accountants Moore Stephens, with deliberation on what defines an agency: a company, a branch or a franchise (not to mention dual agencies).
OK, the figures maybe not 100% accurate, but they are alarming nonetheless.
Moore Stephens analysed the following to work out which agents were showing signs of distress: how long a company took to pay its bill, how long it took to get paid, how fast levels of debt were increasing, director resignations and if there has been a drop in turnover of more than 10% in a year.
I’d say these are valid business facets to examine.
If the figures are true, that’s over 5,000 agents who could become insolvent unless their trading habits change for the better. Even if it’s 5,000 branches and not individual companies, it’s still cataclysmic for the industry.
And if the figures are really wide of the mark and only 9% of agents are in distress, that’s almost 2,500 firms or branches in poor business health.
There are fears that strong brands and big franchises, who have the capacity to take the financial hit from lowering fees and are able to throw money at marketing to win business, will expose vulnerable agencies even more.
That doesn’t mean to say small letting and sales agents can’t do well in challenging conditions. Future-proofing your business should be a primary concern, especially if you’re experiencing any signs of economic distress or finding a downturn in new instructions or full management service uptake.
Areas to really focus on include: finance, to ensure money in surpasses money out and staff time, to concentrate on income-winning activities and not administration.
If you take some professional advice about strengthening your business, you could avoid being another statistic.
*Simon Duce is managing director of the ARPM Group, which provides national outsourced lettings support