- About 212 separate tasks are involved in getting a client to the closing table on time.
- Focus on the process numbers. This is your business fuel.
- One of the greatest ways to make money is not to spend it.
From the outside looking in, real estate looks like it could be pretty easy. All you do is show a few homes, whip up a contract, negotiate a bit — and poof! Payday! From the inside looking out, we know there’s more to it, which is why we see real estate teams popping up all over.
There are approximately 212 separate tasks involved in getting a client to the closing table on time. When a team of individuals is involved, it makes the process more efficient. But even still, 212 tasks is a lot to juggle.
For the client, we know it’s an emotional process because there’s a lot going on with their process too. It’s a balancing act between the clients’ daily needs, the generation of new business at every turn, time management strategies and the countless transactional details with the deals in progress.
How do you become financially consistent in this crazy, yet fun field? It’s in the numbers! Give some serious attention to these four numbers.
1. Process numbers or results numbers?
Which numbers are you reviewing? If you are looking at volume and transactions for your success barometer, then you are looking to feed your ego. Those numbers are good numbers to understand, but they are not going to predict profitability. We call those “results numbers.”
Instead, focus on the “process numbers.” This is your business fuel. For example, figure out the amount of authentic conversations you want to have on a daily basis (more on this later). Those add up, and if met, breathe life and attainability into your long-term goals.
What are your key performance indicators? Remember, the activities you perform today will have an effect 90 days from now.
Is it understanding how many qualified families you refer to your listing division? Is another measurable number the amount of pre-qualified buyers you and your lending team can produce?
Shift your focus to the performance factors that lead to next level activities. Then you’ll understand why the desired result is or is not materializing.
3. Backward design your version of success
As you work backward, the final result is the last thing you should be thinking about, yet you should address it first. The first question becomes: How much revenue do you want to create on a monthly basis? Knowing this becomes your foundation.
Work backward (be honest with your capabilities), and ask: How many closed contracts do you need to have to produce that type of revenue?
As sobering is it might seem, you’re not done yet. Then honestly ask: How many appointments do you need to have to produce that many contracts? Finally ask: How many daily conversations does it take to set the amount of appointments you need?
This is a formula based on Gary Keller, founder of Keller Williams Realty, and these are the numbers you need to examine to achieve the highest levels of profitability on your real estate team.
When my team went through these exercises, we realized our team members needed to have six authentic conversations per day to reach the company’s annual revenue goals.
4. Expensive numbers?
One of the greatest ways to make money is not to spend it. Obviously, generating revenue is the easiest way to become profitable, but watching your budget is equally vital.
It’s so easy to add expenses and “monthly payments” to the bottom line. Marc King, Team Leader at Keller Williams, coached us extensively on smart money management strategies as a team and business owners, and he delivered a powerful message of profitability that excluded frivolous spending.
What works is implementing revenue generating strategy — not just talking about it. What expenses can you cut?
Building a profitable company is easy when you understand the numbers. There’s daily numbers to run and numeric checkpoints on the way to success. Measuring your numbers against the successes and challenges you face as an entrepreneur keep you cognizant of the next numbers that will keep you honest.
Maybe those numbers are budget-heavy numbers or maybe they’re just daily reminders of what numbers and activities got you here in the first place. You are the only one with the power to modify the results. Follow these four numbers rules as you build your business.