Introduction
Are you thinking of starting a Brokerage business? It is a great business idea to bring to life.
You wouldn’t be short of clients as the client base of brokerages is increasing steadily because more people are engaging in online trading.
Operating a brokerage is truly a profitable venture, but have you put in place everything necessary to make for a successful launch of your brokerage venture?
The number of Forex and Stock brokerages in operation today is astonishing!
A quick search on Google or any other search engine will show you hundreds of brokers to choose from.
The implication of this is that the odds in your competition are stacked higher against you launching and successfully running your brokerage business.
To ensure you are doing the right things, in this article, we’re going to present the steps on how to successfully start a brokerage firm.
Let’s make sure you’re getting off on the right foot so you don’t end up losing clients instead of gaining them.
Before anything else, though, take note of these mistakes and avoid them.
First of all, avoid these mistakes…
Many brokerage start-ups have launched and continued operating successfully, conversely, many others have failed as soon as operations commenced.
They failed majorly because of some mistakes we’ll outline below.
LiveTrader Engine offers bespoke technology and business solutions guaranteed to make your brokerage start-up a success story.
1. Not establishing a unique identity
In launching your brokerage start-up, you must decide on what type of brand image you want to build.
Decide on an image that sets you apart from the mainstream brokers.
Using similar account types, the same platform, attracting clients via bonuses or other inducements, might not set you apart.
Though you’re eager to get operational, you can’t afford to outsource your website to amateur web developers.
Enlist the top web development service that would design a website that would make your business unique from the rest.
Come up with unique features to make you stand out in an oversaturated industry.
Outsourcing to viable web developers and content creators is a long-term investment.
2. Duplicating the acquisition strategy of established brokers
Acquiring clients for your brokerage is important and is your next move after creating your unique brand image.
As a start-up, copying the strategies of already established players in the industry in client acquisition is counter-productive.
As a startup, you can’t compare your budget with theirs.
Rather, come up with your marketing plan that’s tuned to your budget and audience.
Concentrating on one country as a startup brokerage is a great way to start with a modest budget.
With that, you’ll be able to show more local presence than your competitors; you’ll get to understand the local culture, hence, your audience needs; save cost by only localizing your material in very few languages.
When you’ve garnered enough funding and clients, then you can target more jurisdictions.
3. Poor brand management
Avoid the pitfall of adopting a short-term mentality at the detriment of the long-term sustainability of your brand.
Part of your long-term brand sustainability is the use of viable web developers and content creators.
Top-notch web developers would incorporate seamless navigation with a great interface, and responsive pages.
Content creators would create content unique and relevant to your brand.
It’s also important to ensure fast withdrawals for your clients.
These are long-term investments that give your brokerage credibility and guarantee an expanded client base.
Poor navigation, bad user interface, 404 errors, and poor client support would cause your brokerage to be stamped as a scam.
4. Overdoing profit margins
It’s normal to apply a mark-up fee on the interbank price, but don’t overdo it.
Try as much as you can to study your competition’s mark-ups so that your brokerage can offer better spreads.
If you overcharge pips per trade, you could start seeing your clients go shopping for another broker with better charges. Be transparent about your commissions.
5. Insufficient knowledge of trading products
You have set up your basic services, but there are other available products at the disposal
of your brokerage business.
These products such as Copy Trading and Automated Trading are great selling points for your brokerage.
Ensuring that your sales team knows of, understands, and can sell such groundbreaking products to your clients would put you at an advantage.
Know, incorporate, and promote products on your brokerage platform such as Automated Trading, Manual Trading, Copy Trading, In-platform signals, etc.
Starting your Brokerage Firm
Having considered some mistakes that most brokerage start-ups make when launching, let’s outline the steps to follow in launching your brokerage start-up.
1. Plan your business
You probably have finished with this step, but let’s make sure that you truly have (you can’t be too thorough).
Here, you must enlist the help of a consultant to create the right plan.
You need to map out the class of people that constitute your target market; what jurisdiction you would want to operate in; how much you should charge your clients.
Consider how much you can afford to spend in terms of staff and employment costs; technology costs; marketing and risk management costs.
Choosing a name for your firm is also important.
If you can’t come up with one, LiveTrader Engine can help with name generation.
2. Company registration
This is the next step.
The jurisdiction where you register your brokerage firm doesn’t have to be the country where you are living. Nonetheless, it can still be.
In registering your company, you’re forming into a legal entity. It’s best to register as a Limited Liability Company (LLC).
Establishing your business as an LLC or corporation protects you from being held personally liable if your brokerage firm gets sued.
Typically, to operate a brokerage business, you’d need a license, though that’s not always the case depending on the country you want to operate in.
It’s safer to enlist a consultant here as well to choose the right jurisdiction and whether you’d be needing a license or not.
3. Register for taxes
Since you have registered your brokerage, this means it’s now operating as a legal and taxable entity recognized in your chosen country.
Therefore, you would need to register for a variety of taxes in your chosen country of operation before you can open for business.
Depending on which business structure you choose, there should be specific taxes that might apply to your brokerage business.
4. Set up a Business Bank Account
This comes in as another important step, of course, why not?
If your brokerage doesn’t have a bank account how would you receive payments from clients?
A business bank account differentiates your personal assets from your company’s assets.
It also makes accounting and tax filing easier.
But there’s a glitch because banking for newbie brokerage companies has become a bit more difficult especially in terms of payment methods.
This has made it all the more important to enlist a consultant such as LiveTrader Engine that understands the intricacies of setting up a banking system for your firm.
5. Set up a book-keeping system
Keeping accurate records of your various expenditures and sources of income come in handy in understanding how your firm is faring financially.
Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
6. Get business insurance
Your brokerage business needs business insurance because it helps cover the costs associated with property damage and liability claims.
Without business insurance, you may have to personally pay for costly damages and legal claims against your brokerage.
An example of a great coverage to start with as a brokerage start-up would be General Liability Insurance.
7. Partner with the right technology provider
Here is a very crucial aspect of the mix— partnering with the right technology provider.
Businesses have gone beyond existing in brick and mortar form, and your brokerage business, certainly, should not be an exception.
Businesses are increasingly going digital and establishing an online presence.
Your business is one of those that need the best digital technology most.
Making up one of the technologies required to build your brokerage is a Website.
You need to design a website; this is one of LiveTrader Engine’s specialties.
You’d also need a Trader’s Cabinet which would serve as a portal for your clients to log into and also provide your brokerage with a suite of tools that would help to automate a variety of day-to-day operations.
You’d also need what is termed ‘White Label Technology’.
This includes software such as MT4/MT5 traders, cTrader, or Condor, whatever your preference.
Your brokerage needs to have some of these White Label solutions for seamless operations.
You’d also need a CRM and Back Office, Payment Gateways and other API Integrations, Risk Manager, among others.
8. Set up a robust client service
Setting up and operating a robust, responsive client support system is a great way to retain your clients.
Some clients may find the account opening process and even the entire trading process daunting.
They might end up needing help during the account funding or withdrawal process.
If your support is easy to reach, fast, and polite, you won’t have to worry about retaining your clients. Offer timely support to your clients.
How LiveTrader Engine can help you
We hope these guidelines were useful in guiding you on how to set up and launch your brokerage firm.
We offer turnkey solutions that will put you on the right course in setting up your pet project.
You can count on LiveTrader Engine to make the entire company registration and incorporation process seamless.
We can provide you with all White Label solutions: MT4/MT5, cTrader, and more.
We can set your business up with a sturdy CRM and Back Office framework, all of that together with continued partnership and support.
Let’s help you with all the right resources to successfully launch your brokerage firm.
