Blog / Leadership
Chris Mercer, A Profit Map For Complete Success
I want to outline 6 key areas every business owner in real estate needs to have an action plan to build a better and more profitable business.
1. Recruitment 2. Retention 3. Packages 4. Cost Control 5. Fixed Overheads 6. Finance
Importantly all of the above areas need to be glued together with Leadership, the most significant variable within every business operation.
Recruitment and Retention
In sales, this refers to Productive Sales Agents who are the building blocks for more listings and sales. What are you doing to make your business an attraction business to your existing agents and future agents?
Retention is an important part of growth as it is the foundation of your current income and future aspirations. For property management, numbers of managements are the key; are you retaining your existing managements and either organically or through acquisition building your total numbers.?
Without growth, you are one agent leaving or a number of property management losses away from going backwards. Try to recruit before any departures.
Packages and Cost Control
Agents and Property Management staff total remuneration is the combination of not just what they are paid, but also what they consume. Therefore, if you do not have a measurement of both the pay packet and office resources that are being spent to conduct sales in your business, you are potentially leaking cash and in my experience large amounts of it, without any control or recognition of your investment.
Be mindful that when you are looking to increase agent’s structures, you have a good idea of what is being spent. There is a limit to what you can pay as a percentage rate before you have to cap what is consumed also. Owners that understand this balancing act have a strong advantage over their competitors.
Fixed Overheads and Finance
For every agency, these categories provide the capacity to do business. Think of rent and free cashflow. Ideally every business has spare capacity and cashflow. In reality this is generally not the case.
From a net profit % point of view, the less your spare capacity is, the higher the % profitability. Think of a salaried property manager who could handle 150 managements, but currently manages 80; obviously there would be more profit when the property manager was closer to 150. The balancing act however is when you reach capacity, you cannot easily grow and missed opportunities may occur. This is where free cashflow and planning for scaling of your infrastructure are important. Also remember not to get carried away. Look at the size of your market when you want to understand how big your office needs to be. It is the most objective factor for you to base investment decisions on.
To summarise, Leadership is the key to driving all of the above areas. Without your focusing an action for each point, not much will change. If you follow the Profit Map, you will have a more profitable business I assure you.
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