Have you ever thought of becoming your own brokerage firm? Read more below.
If you are an energy salesperson selling for another broker or using another broker’s platform, you already know there are many good reasons why you should become your own broker! Some of the few benefits are:
- Build your equity – Ensure that all of your hard work is an investment in your future, not someone else’s.
- Exit plan! Owning your own business with a potential exit plan is vital to many. If you are interested in cashing out or leveraging your asset to grow, being your own broker is the route to success.
- You are the broker of record! Payments are made directly to the broker of record. Additionally, most suppliers recognize the broker of record and will not provide pricing or work with other brokers on the account.
- Developing direct relationships and trust with retailers – When you have a direct relationship with your suppliers, you are assured that you are getting pricing directly and your commission payments are going directly to you and not through another broker.
Do you have fears of becoming your own broker? While the benefits are clear, you may be unsure whether you are ready to take on the tasks and responsibilities associated with this independence. Rest assured, many brokers have felt this way initially but quickly and easily overcame their concerns.
3 Easy Steps to Become a Broker
The process of becoming a broker is very straightforward.
- Get your state licensing (if applicable) – Energy deregulation occurs at the state level.. Specific to the state(s) that you intend to operate in, the state Public Utility Comission determines the licensing requirements for an energy broker. Some states do not require licensing while others may be quite involved. Need help? Enerex can direct you to people who can!
- Get relationships with suppliers – To sell energy to your customers from suppliers, you will need direct agreements that allow you to receive a supplier’s pricing and issue contracts to your customers. Need help? Enerex can introduce you to any Supplier you’d like!
- Organize your business – If you are a 1-person business or plan to hire 100 sales agents, you should have a solution to help organize your business. Sparkplug can help! Key areas you will want to have under control are:
- Implement something scalable from the beginning – provide the tools necessary to succeed and the clarity your team wants.
- Automated business processes – deploy tools that automate the lead-to-quote-to contract-to-commission reconciliation and payment process.
- Secured data – Your data is your most important asset so make sure it is controlled and not available to anyone who could be a competitor to your business.
- Reports – Too much data can be confusing, so ensure you have simple views to represent information that is vital to your business.
How much does it cost to become a broker?
- This depends on the state. Some require bonds while others require local office space or minimum advertising spends. Some states allow you to become a broker by completing an online form at no cost while others require $2,000-$3,000 per year per state to keep up to date with your license.
How long does it take to become a broker?
- This will vary anywhere from a few weeks to a few months, based on the state and the direct supplier relationships you intend to secure.
Is it easy to get upfront payments from suppliers on deals I sign?
- No. Suppliers typically provide upfront payment plans to establish brokers that have a solid book of business to support potential clawbacks. However, there are factoring companies that can help accomplish similar revenue models.
Worried about the cost of Sparkplug? Did you hear about our new $100 / month entry point?
The Enerex Team knows that starting up your own energy brokerage firm can be a risk. We have introduced a new $100 / month entry point to Sparkplug with variable fees to allow a lower cost and to scale together. Interested to learn more?