With fewer deals to go around, many markets experiencing a downshift and more agents than ever, it makes business sense to reach for the fundamentals. That’s why at Inman, we’re going Back to Basics with curated throwbacks to some of our most-read stories as well as new insights from agents in the field — all culminating in Inman’s Playbook for the Fall Market, a two-day virtual event that you should make plans to attend.
Is your business poised for growth or is it headed in the wrong direction? There are leading indicators that act as confirmation that your future is bright. These leading indicators can also act as warning signs that you will need to make some changes in your business before it is too late.
7 warning signs your business might be in jeopardy
Warning Sign No. 1: Your database is not growing
A growing database equals a growing business. A stagnant database equals a dying business. Do you have a steady and consistent flow of leads coming into your business? If not, now is the time to put systematic plans in place to bring a consistent flow of new leads.
Start with the basics.
- Do you have every one of your current and past clients in your database?
- Are your friends, family, past coworkers, and everyone else in your sphere of influence in your database?
Once you have the foundation in place, that leads to warning sign No. 2.
Warning Sign No. 2: You only have one source of leads
Even if your database is growing, without diversification of lead sources, your business is at risk. Over the years, I’ve had lead sources that were extremely profitable for a while that become irrelevant over time.
Early in my career, local newspaper ads predictably generated leads. Then there was a season when posting listings on local Facebook groups or Craigslist was effective. Targeting very specific clients on Facebook was another lead source that became less effective when they changed their ad targeting guidelines.
Change will come. Lead sources that are effective now will be less effective in the future. Mitigate the risk to your business by diversifying your sources of leads as soon as possible. Continue leaning into any lead source that is working now, but make sure you are not dependent on just one source.
If you’re looking for additional lead sources, this is an article that shares 22 ways to generate leads.
Warning Sign No. 3: You’ve stopped making outbound prospecting phone calls
The day you stop making outbound prospecting calls is the day your business begins to decline. Are you waiting for the phone to ring, or are you purposefully making outbound calls to engage with prospective buyers and sellers?
Real estate is a contact sport, and the number of transactions you close is directly proportional to the number of conversations you have. The average real estate agent will generate one transaction for every 50 real estate-related conversations.
For example, if your goal is to close 36 transactions this year, then you will need to have 1,800 (36 x 50) real estate-related conversations this year. That breaks down to 150 per month or just over 37 per week.
Do you have 37 people calling you every week asking about the market or requesting you help them buy or sell a home? If not, you must make up the gap in conversations needed to meet your goal by making outbound calls to prospective buyers and sellers.
Make the calls. Have conversations. By doing so, your business will thrive.
Warning Sign No. 4: You’re living beyond your means
Real estate is a cyclical business. There will be seasons when the market is good, and your income is higher than normal. There will also be seasons when the market cools down, and your income is lower than normal. The tide has turned, and the market that has been extremely good over the past few years could present challenges in the coming months or years.
One of the first questions you should ask now that the market has turned is, have you been living beyond your means? Long-term business success is not determined by how much you make, but by how much you keep. Do you have savings put back for a rainy day? If not, put a plan in action today. It is not a matter of if it will rain, but when and for how long the rain will fall.
Now is the time to evaluate every dollar you are spending. Ask the question, is this expense needed? If not, then eliminate it.
If it is needed, can it still be effective if I reduce the amount I spend on it? If so, reduce the amount you spend on it. Become diligent about controlling your expenses.
If you’re living beyond your means, your business and your personal finances are at risk.
Warning Sign No. 5: You believe your business is bulletproof
Don’t let your ego tell you that your business is bulletproof. The market that made so many of us look better than we were the past few years could also make us look worse than we are at some point in the future.
I’m speaking from experience, not from theory, when it comes to believing my business was bulletproof. In 2005, I made over $1 million adjusted gross income selling real estate. The market soon crashed, and in 2009, I found myself in bankruptcy court with $500 cash left to my name.
A few reasons I found myself in that position are because I failed to heed the warning signs mentioned in this article. My ego blinded me to all the warning signs, leading me to believe nothing could slow my business’s growth. I lost focus on serving others, and somewhere along the line, I began to focus on serving myself.
No matter how good your business has been, every business has weaknesses and vulnerabilities. The root of continued weaknesses often points back to the ego of the business owner.
Ryan Holiday, author of the book, Ego is the Enemy, says this about ego and success:
“While the history books are filled with tales of obsessive, visionary geniuses who remade the world in their image with sheer, almost irrational force, I’ve found that if you go looking, you’ll find that history is also made by individuals that fought their egos at every turn, who eschewed the spotlight, and who put their higher goals above their desire for recognition.”
Humble yourself. Actively search for vulnerabilities in your business and yourself. A constant self-evaluation of your business is a pathway to success.
Warning Sign No. 6: Communication with your database is inconsistent
The size of your database is much less important than the depth of the relationships with the people in your database. Trust is earned over time and through consistent communication. Do you consistently add value and communicate with your database?
If you are not communicating with the people in your database, odds are another agent is. The communication should be a mix that includes the following:
- Automated property updates via your CRM or MLS
- Monthly newsletter
- Check-in texts once a quarter
- Phone calls regularly depending on the relationship and timeframe for future business
Communication leads to conversations, and conversations lead to contracts. You’ve worked hard to build your database; make sure your efforts are rewarded by consistently communicating value to this group.
Warning Sign No. 7: You’ve stopped growing personally
You are either growing, or you are dying, and your business success or failure will mirror your personal growth or lack thereof.
- Are you learning new skills?
- Are you searching for ways to better serve your clients?
- Are you growing through reading, watching videos or listening to podcasts?
If the answer is no, heed this warning. Your personal growth is the fuel that powers your business. Your innovation and execution on new ideas are the key ingredients for future success. Your creation and refinement of systems for your business lead to a higher level of service for your clients, which leads to referrals.
The time is now to lose that 10 pounds you’ve been needing to lose. Now is the time to learn a new skill like how to implement video into your business or how to generate more leads. How long has it been since you read a book or became a student of real estate best practices? Now is the time.
Start with growing yourself, and your business will follow.
I have some good news. If you read this article and identified a weakness or two, there is still time to chart a new and more prosperous future for your business. The positive changes you make today are the ones you will be thankful for in the future. Be bold, and take action.