(Part 1 of a four-part series. See Parts 2, 3 and 4.)
The National Association of Realtors has just reached the million-member mark. Only 10 percent-20 percent will be in business five years from now. Have you ever wondered why?
Perhaps you have been following the trials and tribulations of the “Rookie Realtor.” How can this person try so hard and still not succeed? The editorial responses blame the lack of success on inadequate training, inability to connect with customers, or some sort of personality flaw that makes the Rookie unsuitable to be in the business. The Rookie is certainly not alone. What factors allow a small proportion to succeed while hundreds of thousands fail?
Many agents enter the business because they like “looking at houses” or “would like to make some additional income.” Most rookies have never been told the truth about a career in real estate, i.e., real estate is a business requiring capital investment, professional management, on-going business development, strategic planning, marketing, customer service, accounting, affiliate marketing, and sufficient financial reserves to go 6 to 12 months without being paid. Licensing schools train “real estate principles.” Sales training teaches agents how to prospect and what to say. Trainers and coaches assist agents with business planning and being “accountable.” Virtually no one, however, provides agents with in-depth training on how to build and run a successful business. Instead, most agents are under-capitalized, have no business plan, are poor at lead generation, and have no idea about how to evaluate activities, costs, and return on investment.
Whether you are a “Rookie” or an experienced agent who is struggling, the steps below can assist you in turning your business into a profitable enterprise.
1. First and Foremost, Master the Fundamentals
A profitable, sustainable business requires a firm grasp of the inventory, a mastery of presentation and negotiation techniques, as well as consistent lead generation and lead follow-up strategies. If you lack presentation and negotiation techniques, you need training. If you know what to do and you are not doing it, you need a professionally trained coach. If you have serious problems hampering your performance, you may need a therapist.
2. Imitate Successful Agents
Look at other successful agents in your market area. What are they doing that you are not doing? Select at least two activities that work for other successful agents and incorporate those approaches in your business.
3. Study Other Successful Business Models
The business principles that work for your dry cleaners, local mechanic or the local Starbuck’s also apply to your business. It pays to discover them. Study successful people from both inside and outside the real estate industry. How did they make it to the top? What business strategies did they use? What can you take from their experience that will help you build your business?
4. Get Help
Find a mentor, coach or some other successful businessperson who is willing to help you build your business. In addition to working with someone to mentor or coach you on your real estate business, look for a model outside our industry who is highly profitable. The principles that make his/her business successful will often apply to real estate as well.
5. Write a Plan, Evaluate It, and Revise Constantly
Ninety-percent of all businesspeople lack a business plan. You would never consider showing property in an unfamiliar area without taking a map. If “success” is your destination, a business plan is the map you need to reach it. For planning to be effective, you must evaluate your progress at least monthly, if not more often. Expand on activities that produce income. Eliminate income-wasters. What works in January may cost you money in July. You must be ready to change directions as the market changes.
6. Like It or Not, You Must Manage Costs
Michael Gerber’s book, “The E-Myth Revisited,” is a must-read for any businessperson. According to Gerber, “sole practitioners” must be manager, technician and entrepreneur. No one does all three roles well, yet all are necessary for business success. Most agents are excellent in managing transactions, but poor at managing their business costs. For example, you can save money by buying in bulk, shopping for the best rates on phone service, insurance and other business necessities, eliminating non-productive business activities, using e-mail rather than snail mail, etc. The list is endless. For most of us, toiling over the books and looking for ways to trim costs is no fun. Not doing it, however, can literally put you out of business.
7. Get Over the “Independent” in “Independent Contractor”
Gary Keller’s book, the “Millionaire Real Estate Agent,” provides a systematic approach to building a highly profitable real estate business. His systems show you how to treat your business as a business. The process is rigorous, but it works. The challenge for many of us who choose real estate is that we place a high value on our “independence.” This “I’ll do it my way” approach consistently produces failure. Business success is like baking a cake–if you follow the directions it usually turns out great. If you improvise, your results are hit or miss at best.
What else does it take to run a successful real estate business? Look for next Friday’s column, “Succeed In Real Estate Part 2: Business Organization.”
Bernice Ross is an owner of Realestatecoach.com and can be reached at bernice@realestatecoach.com.
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