Blog / Leadership
Warren Campion, Business and Performance Management
Where are you at?
Over the past 12 years I have had the pleasure of visiting many agencies across Australia, New Zealand, South Africa and England. Covering over 250 real estate operations from large cities to country towns, single operations to national franchise networks, investigating how people list, sell and more importantly (for me) how the office is run and what profits it produces. Profile does not necessarily mean profit. Owners of real estate businesses have a great asset surrounding them and I often liken it to owning a V8 racing car. With it you can go fast, you can have fun but it costs money each time you place the key into the door and similarly it is so easy to run off track and have no result at the end of the day. My research has found agency principals often have less profit left in the company each year (when not counting their own direct input) than what the lowest earning salesperson made.
Real Estate, whether being a salesperson or owning an agency, is a great lifestyle once mastered and should deliver financial rewards for you and your family. The business needs to be understood and managed and this is one area which needs developing for the advancement of our industry and the ultimate realisation of great real estate business models which can produce calculated returns and be used across Australia. A real estate office is a business and as such should by definition create profits for the owners of the business above the salaries required to run the operation.
In the early nineties a training company in Sydney started the national growth in home grown sales trainers and took our training events to a new level and this development gave new salespeople the platform for our industry to be global leaders in real estate sales performance.
Today’s sales training events cover in depth ‘in the field knowledge’ and provide workable solutions for the mastery of; listing presentations, prospecting methods, negotiation strategies, time management, buyer network marketing and personal profile building. Yet a lack of education and training in business acumen for; financial modelling, leadership training and human resource management skills has left our business management methods back in the 80’s.
The industry is mastering the art of marketing and listing. The internet has been learnt and is gaining momentum in its knowledge pool, yet attention to constructing sustainable business models or control systems which generate regular income (without the input of those who own the business) is often spoken about but with little or no follow up action.
Business owners will need to address this issue and search for solutions or continue on the well worn pathway of dwindling profits and accelerated monthly costs forcing principals to list and sell just to keep the business afloat. Principals should and take a quiet moment and consider these questions and then decide to implement action:
- Do you have a business; or is it just a place where you pay bills and at times earn a great income due to your own listings and sales rather than theagency’s productivity as a whole?
- What is it you expect to gain from
- owning a real estate agency? Financial
- rewards, lifestyle, freedom of choice: if
- so to what level?
- Has your cost base risen and profits
- reduced over the last decade; what
- action can be taken to change this
- before 100% is going out?
- What return on investment you are
- after? Will more staff / selling agents
- increase profitability or just increase
- costs?
I have found there are seven areas that cause the most confusion and frustration:
- 1. Business Model - which to operate under and what are the strategic foundations that make it work.
- Database - implementation and creating leverage from its use.
- Systemisation - employee and technology / system alignment.
- Recruitment - A sustainable pipeline and induction process.
- Agency management, reporting and accountability.
- Marketing / brand / internet strategies.
- Cost control and commission percentages payouts.
Managers / business owners get caught up in doing day to day activities and accepting how the business is running and market conditions. The speed of each week and the pace of every month seems to fly by stealing our time and focus away from looking at the path we are on. In setting up a starting point for performance management an organisation may consider the following:
1. Yearly Targets: - Most agencies operate on a calendar year cycle and have a yearly target for gross income, yet few can tell you in advance where the business will come from each month and what the budgets are for listings each month based on seasonal fluctuations and staffing levels through out the coming year. What should occur based on the past history this year? How does it look and what is required to fill any gaps to meet this years targets?
2. Income v Team Size & Performance: - Looking at gross income predictions for 2010 what are the number of sales required? After finding out the list-to-sales ratio in 2009, what are the number of listings required to meet the sales target which will generate the desired income? Now compare this with the team and what they did in 2009 and what they want to achieve in 2010. Is the business in need of recruitment or training or performance management to reach its 2010 financial goals? Is the business on track already or already behind? If behind - PANIC NOW! Better to raise the alarm with 10 months left and get in front than wait for another quarter to slip on by.
3. Listing Source / Marketing ROI: - Where did the last 12 months listings come from? What marketing methods or prospecting produced the best results? Can these be amplified? What areas are not being covered? Is your agency database set up to record the listing sources? Where do your buyers find out about your properties? Are the stats in place for each salesperson and the team for: average listed price, average sales price, average days on market, average buyers new to the market per month, average buyers per price range?
4. Area Listing Map: - Do you have an area map which shows the agency’s erected signboard placements? This highlights the agency’s physical footprint on the landscape and more importantly highlights areas of no presence or transit corridors which are not displaying the agency brand. When a farming area is hit with a marketing wave, is this being reflected in more signboard and quality listings?
5. Database Use: - What method do you have in place to monitor and stay in contact with all the past buyers of the agency listings? Do you have a multi level approach with the information you send out or does your agency’s social network get the same, regardless of having moved into a property 6 months ago or 6 years ago? And whilst we are talking about databases, can the office segment the future prospects into lists of when the salespeople have a ‘feeling’ the property may come on the market? Having a large contact list is important, but knowing the activity ‘hot spots’ and potential selling zones is the magic that makes the data dance.
6. Systems and Office Audit: - Is your office full of systems which gather dust? What changes need to occur to have the electronic office management system aligned to work in partnership with printed forms, salespeople prospecting methods and data collection processes? This area alone can create the largest profit growth area with minimum cost. All it requires is a simply desire and dedication on implementation.
7. Business Performance Management: - What KPI’s are set for your business model? What is the break even point, minimum profit level per month and yearly vision in profit. Does the office have a set of actions which must occur each day like: obtaining an exclusive listing, negotiating a sale, erecting a signboard, distributing marketing material, contact / prospect list prospecting? How many listings are booked in over the next 5 days for the team? How many are booked in today?
Many real estate business models operate with little return to the shareholders of the company. A monthly drive for listings and sales with little energy placed on strategic implementation of better, effective, more sustainable business practices and procedures. Our service is selling, the product vehicle is our people and for the service and vehicle to have fuel for supply and marketing, the business needs to have a financial structure in place which creates wealth for both agency and salespeople. The decade of commission percentage splits rising, like oil prices, is not sustainable. The current real estate agency business practices in the area of financial structures, lead generation and reward systems must change if we want to do more than just survive.
To book Warren for an in house business health check or consultancy, contact Real Estate Academy on 1300 367 412.
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