The things I wish I had known about opening an FX brokerage before I did
“In the last decade or so, forex brokerages have sprung left and right across the globe, with as many closing down shop soon after opening their doors and others gaining unprecedented success” – Adinah Brown, Leverate
With over 5 trillion dollars traded daily, the Forex market provides an incredibly profitable opportunity not only for traders, but also for brokers looking to profit from the industry.
In the last decade or so, forex brokerages have sprung left and right across the globe, with as many closing down shop soon after opening their doors and others gaining unprecedented success.
As with any business, opening a forex brokerage requires knowledge, skill, capital and endurance capabilities. Some folks who have set up brokerages have learned the hard way, while others have followed the example of those who have succeeded before them.
For those looking to open a forex brokerage in the near future, we expose the insights developed by those who have established brokerages in the past, and who like the best of us, become wiser from hindsight.
Focus on people, not money.
The nature of the forex brokerage lies in helping traders, but erroneously, many brokers start up only focused on getting rich themselves. No matter how much you want the money to come in, if you do the right thing and help your customers gain success, you’ll build a loyal and solid clientele and the money will eventually flow, guaranteed.
Capital is important.
While operating a Forex brokerage can be an incredibly profitable business, the expenses required to operate it successfully require money and when you find yourself lacking it, you begin skimping on things that are needed to help your business grow.
resources consumed in customer service, which is key to keeping your customers happy and building loyalty, and marketing, which is the engine of your acquisition machine. When you decide to start a forex brokerage, budget not only for start up costs, but also for at least 4 to 6 months worth of operating expenses.
Look beyond affiliates.
While most forex brokerages get anywhere between 70 and 90% of their customers from affiliates, the forex market has become so competitive that relying solely on affiliates to grow your business is a sure way to struggle.
Invest in both digital and offline marketing to fuel your acquisition funnel and pay attention to your existing clients, after all, loyal clients are worth much more that new ones and cost a lot less to keep.
Maintaining a brokerage can prove to be an expensive endeavor, but automating your marketing systems to make the conversion and retention processes more streamlined and have a lower human interaction can not only save you money on staffing costs, but help you expand your reach and reduce human error.
Invest in the right tools.
Start with selecting the right technology partner to provide you with the best and most advanced front end trading platforms and back end systems, as well as tools to help you streamline everything from billing to market research, marketing and advertising. It is essential that you make sure you have the correct tools to build and grow your business.
Guard your reputation.
FX is not exactly categorized by its good reputation. A few bad apples have unfortunately damaged the reputation of an entire industry, but doing the right thing, making sure your traders are satisfied and tending to those who aren’t, are critical to maintaining that your reputation is clean both online and offline.
One bad review from an unsatisfied customer can cost you plenty.
While it is impossible to keep everyone happy, if you happen to have an unsatisfied client, take it as an opportunity to make things right and show how much you care.
An unsatisfied customer who feels you’ve gone beyond the call of duty to right a wrong, will make sure to let the world know what you’ve done and be an ambassador of your brand.