Adam Hergenrother is the founder and CEO of Livian. He believes that business is nothing but a conduit for personal growth and embraces the company’s vision to Love How You Live. When he’s not leading and growing his organizations, you can find Adam either in the mountains or out in nature with his wife and three children.
It’s no secret that the real estate industry has experienced some really interesting activity over the past two years (bidding wars, low inventory, homes selling for more than $100,000 over asking price, rising interest rates). Real estate has been fast and furious.
Two years ago, we pivoted when we didn’t know how the pandemic was going to affect the real estate industry. Real estate professionals rallied. They adapted. They thrived. They are entrepreneurs at heart, and that’s just what they do!
And now, it’s time to do that again. The real estate winds of change are blowing. The beauty of the industry that we are in is that it’s really simple. But we often overcomplicate it by looking for distractions that keep us from just doing our job, which is to build connections, grow relationships, and negotiate the best deals for our customers and clients.
Remember, simple, but not easy. Now is the time to start battening down the hatches, refining your daily routine and systems, and making sure you have a strong foundation for the next real estate market to maintain profit and continue to grow.
Now, for those of you who got into real estate after 2010, the shifting market may feel very different than what you’ve experienced over the past few years during a rising market. That’s fine. Don’t let your mind wander to things you cannot control.
This new market is likely going to require you to work more than before. Make peace with that. Understand the market and then take action. By doing so, you’ll come out of the shift in an even stronger, more successful and more profitable position than before.
Here are three ways you can maintain profit during a shift.
Cut expenses by 10% each month
Building profit and wealth isn’t just about how much you make, but about how much you keep. This is where extreme expense management comes into play. And it will be even more important during a shift.
Not to mention the fact that the inflation rate is around 9 percent right now (while a generally acceptable inflation rate is 2 percent). To maintain profit, you will need to ruthlessly review your expenses and start making some cuts.
Start by creating a simple one-sheet of all of the expenses you have to run your business. Evaluate each one. Is it providing an ROI? If it isn’t, then eliminate it. Whatever isn’t bolted to the floor, get rid of.
Now, I’m not necessarily talking about salaries and staff. Team members will most likely be your most valuable asset during a shifting market. But everything else is fair game. Many of your expenses you may not even realize you are paying, and you won’t even notice when they are gone.
Measure everything and reduce, renegotiate contracts, or eliminate them all together.
Make it a game! How can you get creative and cut 10 percent of your expenses month over month for the next 12 months? If you are experiencing a lot of growth like our company is, then consider choosing a profit margin that you are comfortable with.
And then after you’ve gone through the exercise of cutting expenses, anything over that profit margin percentage should be reinvested back into the business. This forces you to maintain growth and profit.
Focus on production
Everything matters. But not everything matters equally. During a shifting market, production (putting deals together) will require an unequal amount of your time and energy. If you don’t already have a production playbook, I would recommend you create a clear and actionable plan that you and your team can follow.
We keep it simple for our agents:
- Did you show up and participate in the team huddle?
- Did you hold two appointments this week?
- Did you sign something, sell something, or set an appointment today?
- Did you add five contacts to your database this week?
If not, nothing else matters.
That’s it. Go back to focusing on those activities until they’ve been hit. Knowing how to unequally allocate time to putting deals together is what matters. And when the whole team rallies around this playbook, you will be able to maintain profit.
Partner with full-time professional real estate agents
During a shift, to maintain and grow profit, you will need to make sure you have exceptional team members by your side who are willing to go the extra mile for the next few years.
Some will make it, and others won’t. This applies to agents and staff members. It will be your job to focus your time and energy on the agents who understand what is required of them to succeed.
These are full-time professional agents who treat their business like a business. They show up. They do the work. And they see results.
Our agents have agreed to show up Monday-Friday and participate in a morning huddle, as well as attend team events (such as call nights or team meetings). They have agreed to report their numbers five out of seven days each week.
They have agreed to hold two appointments each week. And they have agreed to add five contacts to their database each week.
In return, our company provides them with the operational leverage and support (transaction management, listing management, marketing), coaching and training, systems and software, playbooks, community and culture, and more so they can focus on what they do best.
To maintain profit during the shift, you will need real estate professionals who accept the responsibilities of having a career in real estate. It’s an incredible career, and those who will come out ahead are those who consistently show up, follow a playbook, and spend whatever time is necessary on the activities that matter most.
Remember, the best way to combat uncertainty is to become certain on your habits and daily activities. What expenses can you cut? What does your morning routine look like? What part of lead generation do you do really well? We all have a natural way we connect with clients. Double down on that. Who are you surrounding yourself with on your team? How do you end your day?
Get clear. Get purposeful. Stay consistent. When markets shift, opportunity soars.
Adam Hergenrother is the founder and CEO of Livian, the author of The Founder & The Force Multiplier, and the host of the podcast, Business Meets Spirituality. Learn more about Adam’s companies and culture here.