Two things end more new brokerages than regulators do: running out of money before the first clients arrive, and spending the marketing budget on channels that do not convert. This part sets out how we plan the finances of a brokerage and the channels that bring clients, in the order we would spend on them.
Finance: plan to the break-even point
The regulator's minimum capital is the floor, not the budget. A brokerage must fund itself to its break-even point, and we plan that in months of runway rather than in round numbers. Separate the money into two books from the first day:
- Operating expenses: the licence and its annual fees, the office and staff, the technology leases, the liquidity deposit, the legal and audit fees, and the marketing budget.
- Trading expenses: the spread and commission paid to the liquidity provider, the swaps, the payment-processing fees and, for a dealing desk, the losses a run of winning clients can cause.
Both books are reported to management daily. The six lines a brokerage's plan has to answer:
- Capital: enough to meet the regulator, the liquidity provider's deposit and the first months of operations, with the source documented for the licence application.
- Assets: the equipment and systems the staff need, bought or leased.
- Operational expenses: forecast monthly and revised quarterly against the actual figures.
- Technology leases: platform, bridge, CRM and hosting, revised as volume grows and renegotiated when it does.
- Revenue: forecast from the volume per client, the spread and commission per lot and the number of active clients the marketing plan can realistically deliver.
- Profit: the share reinvested in the brokerage's development, decided in advance.
Secure the first months. A brokerage that has funded itself to break-even before it opens is the one that survives a slow first quarter.
Marketing: know who you are selling to
Before any channel, write the buyer persona: the location of the traders you want, their occupation and demographics, their interests (expert advisers, automated trading, a VPS, indicators), their behaviour (which brokers they trade with, which forums and review sites they read, whether they hedge or trade size) and their challenges (a lost trust in brokers after regulator warnings, worries about negative-balance protection). Everything you offer, from the account types to the learning library, is an answer to that persona.
The channels, in the order we spend on them
Content and search
Three to five articles a month on the website or partner sites, each targeting the keywords the persona searches for and each ending in a call to action to a landing page. Search advertising runs beside it: ten to twenty text-ad variations, tested and pruned, with keywords and bids chosen with care because forex is one of the most expensive categories to advertise in.
Affiliates and introducing brokers
The channel with the highest conversion, because an affiliate guarantees a lead in exchange for a commission. Affiliates send traffic to the highest bidder, so the payout (per acquisition or per lead) has to be competitive, and the landing pages have to convert: a US$300 payout at a 5% conversion rate beats a US$600 payout at 2%. Offer a sub-affiliate and introducing-broker programme so partners recruit partners.
Social, display and retargeting
Build a following and cross-promote between channels; run three to five banner variations across display networks, retargeting and programmatic buying; measure every variation and stop the ones that do not convert.
A newsletter to the leads that have not converted, external sends through partners and introducers, and an automated workflow for everyone who completes a form on a landing page.
Sales: attraction, then acquisition
Leads are attracted with time-limited offers: a higher leverage for a period, a commission rebate, a tighter spread on a pair. They are acquired by the product and the people: better spreads, lower commission, faster execution and more instruments; a sales desk that can consult, convert and bond with clients; and a support desk that watches trading activity, answers questions and fixes technical problems. Because the market trades around the clock, sales and support run in three eight-hour shifts.
What comes next
Part 6 closes the guide with the company structure, department by department, and the twenty-one steps from the business plan to the first revenue. The payment side of the plan, the gateway and the providers that accept brokers, is covered on the payments and PSP pages.
Sources
Topics
- Forex brokerage
- Finance
- Marketing
