As an energy broker starting your own energy brokerage, you face many challenges in today’s market: building a competitive supplier base, acquiring customers, creating efficient processes for your day. When considering all this, it’s easy to put your future business goals on the wayside.
But losing sight of your business strategy can hurt you sooner than you think. At Broker Online Exchange, for example, we frequently see brokers gain their independence, find success and begin hiring employees within their first year.
If these brokers hadn’t developed their growth strategy early, their rapid success might not have happened. Or it could have crushed them when they weren’t equipped to handle such volume.
In this post, we’ll discuss one factor that every newly independent broker should prepare for: evolving cash flow requirements .
How Cash Flow Works for Newly Independent Brokers
We probably don’t need to explain why cash flow is important.
But when starting their own firm, many brokers focus on immediate needs and lose sight of their future cash flow requirements.
Early on, you’ll probably want to close more deals with upfront commission payments so you can maintain working capital. But as you become established and you have more cash in the bank, you’ll want more residual payments with better splits.
When brokers focus on short-term commission plans, they tend to sacrifice long-term options. For example, a broker might accept an agreement that offers upfront payments but stifles long-term earnings with uncompetitive residual commissions.
So once the broker’s immediate cash flow is under control, they’re stuck with a bad deal if they want to increase long-term revenue.
The Challenges of Getting Beneficial Payment Plans
Getting upfront payment plans while still unestablished is a challenge. It’s a risk for suppliers, and why should they take that risk on a stranger?
Many suppliers who offer upfront payment plans to unestablished brokers might be small suppliers with uncompetitive rates. Or they offer splits heavily weighted in their advantage, so you’re stuck with minuscule commissions.
This puts newly independent brokers at a disadvantage at a time when they’re facing the most hurdles.
So What Are Your Options as a Newly Independent Energy Broker?
Well, you can build your reputation with a small supplier—likely sacrificing competitive rates and possibly an advantageous split—so you can eventually develop relationships with better suppliers.
Or if you don’t want to face such an uphill battle, you can partner with someone who already has a stellar reputation with major suppliers. Through this partnership, you’ll have access to better payment plans from more suppliers.
Now here’s the pitch: at Broker Online Exchange, we provide brokers instant access to 75+ suppliers. Not only that, through BOX, brokers can access both upfront and residual payment plans from all 75+ suppliers. Our splits are always competitive, so you know you’re never getting the short end of the stick.