The Forex market is always ready to unlock big opportunities for new business owners although costs are frequently a major consideration for new brokers. Are there any useful tips on how to minimize costs? What kind of effective measures can you take to stay profitable?
Necessary expenses for a new broker: what does this include?
Expenses incurred by beginner FX brokers can roughly be broken down into the following categories:
- Company and legal issues. Brokers need to set up a company and get a license in order to ensure their activities are fully compliant with legislative norms. This stage may cost from $1500 to $125 000, depending on the chosen jurisdiction.
- Software. The second important step is to integrate high-quality software that includes a trading platform, trader’s room, back office, etc. Hundreds of different solutions are available on the market, and brokers should not forget that the sphere is fiercely competitive, so traders will expect to get ultimate features. The software cost may vary from $10 000 to $200 000.
- Staff. Brokers cannot function without employees. Admins, support agents, programming engineers, analysts, and other specialists may be part of your staff. Salaries depend on a certain country, and the overall expenses may vary from $20 000 to $100 000.
- Promotion. With the ultimate functionality and best conditions for traders, your company may fail without a well-planned promotional campaign. Such a stage may cost up to $20 000.
As such, the overall expenses to run a Forex brokerage company vary from $55 000 to $450 000. Many brokers think hard about every new spending pattern. What is within reach?
How can a new FX broker reduce costs?
When it comes to cost reduction processes, imagine yourself a de-mining expert. You cut the wrong wires, and the company is going the wrong way.
For instance, newly created brokers cannot choose a cheap and ineffective trading platform or a basic Forex CRM, as their competitors will easily convince traders to switch websites and get access to better opportunities. Customer Relationship Management software is especially important for beginner brokers, as their success may mainly depend on how functional and reliable the chosen system is.
In what ways can you cut costs? New brokers may choose White Label solutions to access top-rates trading platforms and liquidity pools. For instance, B2Broker offers a set of WL services for brokerage businesses.
How does a Forex broker earn money?
When the spending patterns are clear, and business owners understand which expenses they can accommodate, and which ones they can’t, it’s high time to switch the focus onto income sources. Forex brokerage companies make a profit from fees and commissions paid by active traders. What are those fees and commissions i.e. the key ones?
- Fees for bid and ask orders. Brokers charge commissions when a trader buys and sells assets.
- Spreads. The difference between bid and ask prices also relates to the category of fees.
- Financing fee. The commission is charged for orders a trader is holding open overnight.
As such, a broker’s profit depends on how many traders join the company, and how active they are. A high-quality trading CRM is a crucial factor to cut your costs and increase incomes, making the ROI (return on investment) of your business higher.
The impact of CRM systems on the profits of a brokerage company
Why should you never ignore this component and get the most functional CRM for Forex? Let’s look through the reasons.
- This software clusters your leads and helps control the interaction process.
Brokerage businesses are interested in attracting as many new clients as possible, yet frequently rely on one and the same strategy to transform leads into active traders. A CRM system divides leads into numerous categories so that business owners can understand which promotional approach is the most effective for each group. Furthermore, you get quick access to the interaction process with every potential client.
- Active traders are also grouped in categories to retain them.
When your business has completed the process to transform a lead into an active trader, you are still far from success. Multiple new brokers attract traders and then lose them due to various reasons. This is why you need to retain active traders on your platform. CRMs enable business owners to understand what signed-up users are looking for in order to adjust the functionality and special offers to their needs.
- Most processes are automated.
Another important aspect to note is that a high-end CRM solution is responsible for the automation of most inner processes, and brokers get an opportunity to reduce their staff. Expenses are also minimized. On top of optimization, this procedure makes most inner processes more effective and planned out with the possibility of providing end-users with the very best features and an immediate reaction to any issues or problems they may have.
- Timely reports to check your company is moving in the right direction.
Many businesses fail because when owners figure out they are going the wrong way, it’s often too late. A high-end Forex back office CRM enables managers and owners to get timely reports related to statistics, active traders, their behavior, and other key statistics. When something goes wrong, you are then able to implement changes instantly, losing no time.
- Full control of rewards, payments, and invoices.
Successful brokerage businesses frequently become partners with other platforms or private traders, and this may impact on profits. CRM systems are responsible for delivering payments and rewards timely, convincing your partners to stay loyal which will help your business grow.
In summary, a Forex CRM is an effective measure to boost your company’s ROI as this system is responsible for diverse aspects related to leads, traders, and even partners. Where can you find the best-matching software? B2Core is a packaged product that combines innovative features and advanced technologies to elevate your business to new highs. You also get a set of features you truly need, so you don’t waste any money.