I was asked by some real estate brokers that work with our company “we know how to help agents plan but how to we help them to stick with it so they can get exponential results?” Here is a blog post that I wrote last year that helped them and I hope it helps any other real estate agents that are looking into their planning for 2023 and wants to go to the next level of profitability!
Real estate is one of the strongest business opportunities these days. Yes you read that right! The explosive growth of new technologies and software has led to a boom in not just virtual real estate brokerages but a resurgence of brick-and-mortar agencies that specialize in everything from property management, to leasing and sales, to commercial and of course residential home sales.
What has changed is how to be successful in this dynamic field. You’re going to need to think like a business person growing a company and not a sales person chasing commissions! You’ll need a business plan that truly lays out what you want to accomplish and how to do it. There is good news and bad news. The good news is that there is no shortage of great brokers out there that will help you plug numbers into a business plan worksheet and tell you what other have done to succeed. The bad news is that historically does not work for most agents in the business. They either plan to fail or fail with their plan. Yes, that quote has been retrofitted just a little from what you have heard in the past but it is completely correct, ask around!
So how do you make sure that your plan will work for you? Here are 4 guidelines that your plan must approach and solve so that your business plan is actually that, YOUR business plan!
Don’t think business leads think real estate closings!
Real estate agents and the companies they pay generate a lot leads. That is because your potential customers are everyone who wishes they could sell their house, lease their condo, or find the perfect new home within your market. That is where the problem starts. If you spend time and money creating opportunities that are low to medium quality and you do not have the resources or systems to nurture those opportunities it not only causes a drag on your business it redirects it! Work from the KPI’s of units sold needed and then work backwards through your system to determine where the gaps are in your workflow before you start your “leads” planning.
This is a perfect case scenario but it will help illustrate the point. If you want to make $200k a year and your avg net commission per closed unit is $10K you need 20 units right? Now imagine how much better your customer service would be if you only had to focus on 20 clients and their 20 transactions! Yes, I know that is unfathomable but that should be the goal. The highest quality lead, plus the best service, plus the best skills, equals less “drag” on your time and resources. When you are planning your lead generation strategies focus first on what will offer the best quality client and conversion, only then should you start planning how to generate a higher quantity of leads.
Know your cost and expenses not just your commission split!
I was once talking to a real estate agent at a dinner after a mastermind workshop who was a top agent in the brokerage he worked with. He brought up a conversation that he had with a broker that he had just left and the conversation according to him went something like this “I am your top agent and other brokers said they would pay me 100% with only a monthly desk fee and per transaction fee and I don’t want to move but your only paying me a 95% split, so the right business decision was for me to leave”. I asked how much was the per transaction fee and the monthly fee for his “desks” (because he was on a team) and we did the quick math and I said “so you’re now on an 84% split before you pay all your own expenses, right?” I am not kidding when I say he literally looked at me for about 3 seconds turned away and started talking to someone else. He did not speak to me the rest of the night. Moral of the story is clear right? There are almost countless agents that have huge amounts of commissions coming in every month/year but do not run profitable or scalable real estate practices. They are just commission-based employees seemingly stuck in a “job” they created. How can they escape, it starts by knowing your numbers not just your commission split. Here is a quick litmus test; at the end of the year how much profit did you have after you paid yourself as an employee of your real estate practice? If the answer is zero then read on because this article is going to help you tremendously.
This is another place where a great broker will really be able to help you grow. They can show you the difference between cost and expenses, fixed and variable , and most importantly revenue and profit!
It’s not about tools and systems it’s about business solutions you will implement!
When you first get started, you’ll probably spend most of your time doing research, reading business books, and attending seminars. However, the sooner you shift your focus to the solutions you will implement, the sooner you’ll be earning revenue and building a successful business. You may want to consider hiring a coach, mentor, or business consultant who can help you stay focused on developing your plan and making sure you stay on track. With the help of a coach or consultant, you can work through your initial research, identify your target market and ideal customers, set business goals, and create a realistic business plan and timeline for moving forward.
Talk to agents who are like you and NOT like you and see what they do!
One of the best ways to look at the business of real estate is to get out of your head and out of your office. Go somewhere that allows you to sit quietly and just think about where you are and where you want to be in the next 6 months, 12 months, and 3 years. Once you have a really good idea about that go back to your office and ask your broker who in your office fits where you want to be in those increments. Then ask who has been at the same production level or dropping for 2 or more consecutive years. Talk to all of them. Not at the same time but over a very short period of time. Have a set group of questions to ask them and although you can talk about more than those questions you cannot talk about less than those questions. Talking to agents who have been in business for a while—no matter what stage of their career they’re in or you’re in, you will benefit from the experience’s others share with you.
Plan for flexibility and change
We all know that real estate is a dynamic industry, so that means there is a need to stay nimble. A properly though through business plan is going to help you navigate challenges and stay on track, all while helping insulate you from unexpected issues. Don’t get me wrong it will not stop them from happening but it helps you quickly get back on track after they come up. It helps your solution stay aligned with what you ultimately want to accomplish. With the right plan, the right broker, and the right mindset you will be able to plan properly which will ensure a greater the likelihood that you’ll succeed no matter what the future holds.