Hello everyone,
I just wanted to pick your brains about this route. So do provide your input!
Thank you in advance.
I'm currently a CRE Broker and 90% of the way I generate business is through cold leads, where I would contact 2,000 owners and about 4 of them would sell through me.
I have a hunch about a strategy which is of-course a very old strategy dating back to the 1980s but I think it works today. For example, a client of mine operates a $1B RE fund, the way he gets properties is by writing up 100+ offers per month and cold outreach.
Another client I know looks at 400+ deals a week with a sales heavy team and now manages $500m in assets.
What I wanted to know was the following:
Let's say (hypothetical) I wanted to start a Wealth management fund for the Middle eastern community across the world.
Goal #1: To have $2.5B in assets under management in 5yrs.
Total Clients under management = 25,025
Fee structure = 1%
Net Operating Income after 5 yrs = $15M
Valuation = $180M
The plan to get there (assuming the fundamental service is good and not a crappy one)
1) Hire 91 salespeople from a cheaper country on a $24K per yr salary.
2) Assume 2.5M cold outreaches per year. This leads to 5,005 signed up clients. Do this consistently over 5yrs and you'll have about 25,025 clients under management and about $2.502B under management.
I'd like to hear everyone's opinion on this very simple business model.
- Can having a heavy sales team really grow your operations exponentially?
Cheers,
Are your clients owners of the properties or investors into a fund? Because there's different reasons for both as to why that may be unrealistic.
If its the former and ignoring other factors which are equally relevant, 2.5 million cold outreaches per year seems unrealistic. Considering the US has an estimated 5.9 million commercial buildings in 2018 (Source) and the US has a population of ~330 million (Source), ignoring the difference in level of development, with an estimated population in the Middle East and North Africa of ~465 million (Source), you'd be looking at around 8.3 million buildings which would mean that if each building had a unique owner you'd have cold called every single owner in the region after only 4 years.
If its the latter, you're going to find difficulty in fundraising for your own fund unless you have a strong track record already, which I don't know if you have or not. Beyond that, the number of individuals, investment funds, corporations that invest externally, etc. that have enough capital to invest $1MM on average (based on your AUM/clients) aren't a particularly large population size so you're probably going to end up running out of people to call in this case as well.
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