Michelle HammondFollow on twitter www.startupsmart.com.au
Starting over after a business failure
Operating in a highly competitive industry like real estate often requires lateral thinking and the ability to approach the market from a different angle.
But for Gary Braams, it took a business failure in order for him to make this necessary shift to succeed in the sector.
Braams is the brains behind Clik International, a real estate agency which, as a point of difference to other agencies, offers all licensed real estate agents the opportunity to sell multi-listed property across Australia.
“Real estate agents can access stock listed anywhere in Australia and share in the commissions available,” Braams says.
“The commissions to total per sale can be as high as 5.5% [or] even higher depending on the motivation of the vendor.”
“The more agent members, the more opportunity to sell the product, the more demand on commission can be achieved. Each member has a database to call on.”
Clik was named Best Startup Product at the 2012 StartupSmart Awards, but it’s been a long time coming for Braams, who lost everything back in 2000 whilst operating as a builder developer.
“Most developers come from a trade background or a building background – they don’t have a PhD in economics,” Braams says.
“They disregard the matrix of all the numbers... They get someone else to do the feasibility and go ahead.”
“At the end of the say, they sign with one agent or they sign individual agreements with lots of agents. Those lots of agents are then competing against each other to sell [a property].”
Braams says he made the mistake of relying on one real estate agent to sell off the apartments he was developing.
“I had $25 million of stock and one agent saying, ‘It sells when it sells’,” he says.
“[However,] he couldn’t sell enough in time. In fact, he sold none of the project that was completed. I lost all my equity and went bankrupt.”
Rather than crawl off to lick his wounds, Braams’ fall from grace inspired him to re-enter the industry and do things differently.
He developed an online system to manage every agent, and is currently in the process of raising capital in order to roll out the concept via a franchise network.
“To progress the business as a concept, we sold the IP for a phenomenal price to a public company and we have 70 million shares under issue. We’re doing a capital raise,” Braams says.
“That capital raising will be issuing 20% of the business to raise $1.5 million.”
“The money, when we raise it, will be spent on franchising, documentation, marketing, and growing the database of agents internationally as well as nationally.”
According to Braams, the goal is to sell 124 franchises, which should raise anywhere between four and six million dollars. A handful of franchises have already been sold.
“The system I’ve developed will be to franchise around Australia, but eventually the platform will be able to do international transactions,” he says.
“I want to raise the money to create a platform that allows any country to participate and take on a master franchise... That’s where this is heading.”
In addition to being named Best Startup Product, Clik International appears 10th in the 2012 StartupSmart Top 50, with revenue of $3.64 million. However, it doesn’t directly employ staff.
“Everyone is commission-based. We have people who have taken on regions as caretakers, looking after certain areas,” he says.
“When the franchising documentation is finalised, they sign off as fully fledged and have their own staff.”
“The idea is not to have hundreds of staff but to have hundreds of businesses with their own staff.”