Posts Taged business-planning

CONTROLLING YOUR INCOME

Being able to control the income is really where agents get into trouble. Too many agents’ pay comes irregularly.   A Champion Agent’s income comes consistently. It enables them to control it better, save more, and invest more to create wealth. It is not what you make, it’s what you keep.   I have met too many agents who make $300,000, $500,000, even a million dollars a year and are broke. Part of their problem is their expenses. The other part is in their personal and business system of controlling the income. I will share with you a simple plan to help you control your income and become wealthy.

Your business checking account is merely a holding tank. Don’t keep large amounts of money in there. When a commission check is received, put it all in the business checking account. Set up a business savings account and deposit 10% of your gross commission in there. That is your rainy day fund, dividend fund, and source for the future. You can build up a lot of funds through this method. At the same time, set up a tax savings account. Deposit 20% of every check to the tax savings account. This method guarantees you have the funds available when quarterlies are due.

Create one last account for your investments savings account and deposit 10% in that account. This account can be built up to fund your retirement accounts, 401K, simple IRA, whatever vehicle you use. I am a firm believer that as a business owner we need to take advantage of these tax free investment opportunities. You can save the money to buy property. The more you can segment or even hide money from yourself, the greater the chance you can avoid wants becoming needs. When the money comes in bunches, wants can easily become needs.

If you are unable to put 10% in each of these savings accounts, start with 5%, 2% or even 1%. It’s the habit that we are trying to establish. The habit will lead you to wealth.

Collect a significant monthly personal compensation out of the business in salary and dividend that you can segment or hide your money again. You want to pay yourself enough to cover your personal expenses while at the same time, saving and investing in your future as well. I have used the 70/10/10/10 way of managing my money for years. It’s a simple approach, I don’t have to budget extensively and it works. The seventy percent is what my family gets to live on. Joan and I can spend it any way we would like. There are usually long discussions about that in our home. We give 10% of our income to charity. For us, it’s our tithe to our church that equates to that 10%. The blessings have been awesome since we make that commitment to bring in the whole tithe years ago.

We save 10% in a general savings account for emergencies, property taxes, family fun, and large purchases like a new car. I am not a believer in debt, whether car or credit card. My view is the only debt I will accept is appreciating asset debt like real estate or possibly business debt. Because we have been doing that so many years, we rarely pull money out of savings for anything. It’s just another area to create wealth.   We then save 10% for investment. This can be real estate investment or after tax investment of stocks bonds, CD’s or any other source we choose. I am not professing that I have created the perfect system, but it works for me and works for thousands of other people I have taught it to, both inside and outside of real estate.

When I started this system well over twenty years ago, I was not able to do 70/10/10/10. I had too much month at the end of my money due to debt and lack of income. I wanted to do 70/10/10/10, but couldn’t, so I started with 95/1/2/2. That quickly became 90/3/3/4. Within twenty-four months, I was able to do 70/10/10/10, and my life has never been the same.

The real skill of a Champion is to control the resources and money they have to create the quality of life they desire. We all need to live within our own means to make sure our future is secure. I believe that you won’t be blessed with more unless you wisely use what you have now. People who acquire wealth learned to control small amounts well before they acquired large amounts. Control what you have now and more will be granted to you.

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FOUR CORE PLANS

There are four fundamental plans that any Agent needs to construct to increase their production and quality of life dramatically. It doesn’t matter where you are on the success continuum; you must construct and execute these four core plans or models. Whatever level of success you at in your career today is because of where you are in relation to the construction of these plans. If you are a new Agent, you have a lot of work ahead. If you are inconsistent in your production and income, you might have a rough outline but few details. If you are consistent in your earnings, you have filled in a few of the details, but the big growth for you will come when you complete the construction. If you are already a Champion, you are in the fine-tuning stage. You must be vigilant in your focus to execute and tweak your four core plans. The four plans each Agent must have are time management, business management, personal management, and activity management.

Time management is always ranked as one of the top three problems in surveys we conduct with Agents, Brokers, and Real Estate Companies. I get asked to speak on time management more than any other topic. The implementation of a solid time management plan alone will increase your revenue by well over 30% in the next year if you are a new or inconsistent Agent.

A business management plan is essential to determine the results of your efforts. What does the financial score board say about your business? Too many Agents run businesses that are only marginally profitable. That’s bad enough. The worst part is that they don’t even know it. They don’t have a system of checks and balances to monitor the business results. As you expand your business and include more people, marketing, and advertising, you must be able to monitor the physical and financial results of your team’s efforts. You must have clear standards and practices to evaluate performance and results.

A personal management system is probably the hardest area to work on. This one takes dead aim at you. It is where you are personally in your journey of success. Are you investing in your largest business asset . . . you? Are you holding yourself accountable enough for the things you need to do? Are you able to look at yourself and your performance with a discerning eye?

Champion Rule: A Champion Agent is honest with themselves about where they fall short.

 I am not saying that a Champion is in a constant state of self-deprecation. They just have the willingness to be able to see their shortcomings and work to change them. If they feel they are not as strong on the listing presentation as they should be, they admit it and work to improve it. The people who are Champion Performers are most honest with themselves. They are able to ask themselves this series of questions on a regular basis to create urgency and change.

  1. What are my strengths?
  2. What are my weaknesses?
  3. What new behaviors do I need to embrace to achieve a higher level of success?
  4. What are the key abilities I need to possess to unlock my true potential?
  5. Why am I not taking the action I need to take?

 

These are all the questions a Champion would ask themselves at least quarterly to see how they are progressing. The goal in life is progression . . . moving forward. Earl Nightingale defined success as “the progressive realization of a worthy goal or worthy ideal.” Your progressive journey to the Champion level of income, quality of life, business, and family is worthy. It’s worthy of the investment of time and energy.

I want to share with you my favorite question for Champion Agents. It’s focused on improvement but also on the fact that there are priorities. The question is, “What’s the one thing that, if you mastered it right now, would make the biggest difference in your life?” That is a Champion question for a Champion Agent. It focuses us on our most significant barrier to greater success. We have to look at what creates the biggest return for us if we are willing to change. This question makes us recognize that we could change but might select a less valuable area to change. This lower-priority area would produce a diminished result.

Champion Rule: A Champion focuses on removing the limiting step . . . now!

 Through years of coaching top performing Agents, I have come to realize how powerful removal of the limiting step can be. Each one of us is faced with a bottle neck. It’s a choke point right in front of us that we need to remove. Until we remove the limiting step or choke point, our improvement and change will be minimal. You will make strides of improvement, but it won’t be explosive, exponential, or vast improvement. Major breakthroughs in business and life come from removal of our limiting step. We are all facing one right now. We have to be willing to find that one and remove it.

For example, a few years ago, I was working with a successful Agent in Champaign, IL. He was the top Agent in the marketplace. The challenge was his profitability could have been a lot better. He was a veteran Agent who worked mainly by referral for over twenty years. We traced his problem to over-expenditure in marketing, advertising, and personal time invested into each listing. We didn’t stop there because that wasn’t the limiting step. We traced it back to the fact that his days on the market average for properties was much higher than the board’s. This longer marketing time increased his expenses. It also influenced his average list price to sale price. On average, he had to do 2.35 price reductions on the 123 homes he listed each year before they sold.

His limiting step was his price counseling segment of his listing presentation. The Sellers talked him into taking the home for more, even though he was the #1 Agent in the market, worked for the #1 company, had over twenty years of experience, and did mostly referral business. Mastering that one area in the next few weeks dramatically changed his business and life. He netted over $5,000 a month more, cut his days on the market by 50%, and increased his list price to sale price ratio by 7% in just a few months. He also enjoyed the business more because he was spending less time getting price reductions and had happier clients because they were not set up for failure.

What is the one thing that, if you mastered it now, would make the biggest difference in your life?

Lastly, we must construct an activity management plan. This is where each day’s activities are monitored, counted, and measured compared to your results. There is clearly a cause and effect relationship between activity and results. The question is what are the ratios of connection. What can you expect the return to be?

I was working with a client in Detroit, Michigan. Because the local economy had been affected by the automobile industry, the market had toughened substantially. By reviewing his activity management plan, we determined that the number of leads he was generating through his marketing efforts and prospecting efforts had dropped. In three months, his leads per thousand mail pieces had declined by 33%. His conversion ratio on those leads had dropped another 18%. So he was getting fewer leads overall, but the lead quality and conversion rate had also declined. His telephone prospecting leads didn’t drop as much but still showed degradation at a 21% drop in lead generation and an 11% drop in conversion.

We concluded that he needed to double the amount of contacts he was making in the mail and telephone lead generation areas to make-up for the marketplace change. I can tell you he wasn’t excited about having to do it, but he could clearly understand why he needed to do it. That’s the value of a good activity management system.

Champion Rule: When performance is measured, performance improves.

 If you want to become a Champion Agent, you need to measure your performance. You need to count, track, and calculate your daily, weekly, monthly, and quarterly numbers for contacts, leads, appointments, listings, and sales. The sheer act of measuring raises the awareness and improves the results you achieve.

Champion Rule: When performance is measured and reported, performance improves faster!

 As Champions, we want to move beyond the awareness level of improvement. By reporting your performance to your Broker, your spouse, another Agent, or your Coach, you increase the speed of change. You increase the speed of your income and earnings. You must have a way to report your performance and efforts to someone who will help you or hold you accountable for what you need to do.

That is certainly a role that we at Real Estate Champions know well since we are one of the longest running, most established coaching companies in the real estate industry. The vast majority of Champion Performers had coaches or at least mentors at one time or another. I firmly believe that, as an Agent trying to achieve Champion level performance, you need to consider a Coach. I would encourage you, before you make a decision on a Coach, whether internal (through a Coach inside your Real Estate Company) or external (through a coaching company), go to our website www.RealEstateChampions.com to really understand what coaching is and isn’t. There are many imposters who are selling basic training or marketing programs dressed up as coaching. We have the tools to help you construct the four fundamental plans to increase your production and quality of life significantly.

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DISCIPLINES OF A CHAMPION

Start each day focused on the daily success of your business. You want to begin each day by reviewing your business plan. Focus in on the daily activities that will lead you to the successful result you have set forth in your plan. Long-term success is built on top of achieving daily performance standards – for weeks and months at a time. If your business plan is not broken down to the daily activities or daily performance standards, you should take the time to do so now. I call these daily activities “The Disciplines of a Champion”. We each have activities that, if left undone daily, will cause our business to suffer.

Some of the Disciplines of a Champion could be:

  • Prospecting for a specific time period daily
  • Doing lead follow-up
  • Contacting a certain number of past clients
  • Spending time in personal development
  • Practicing scripts and dialogs

 

The Disciplines of a Champion are quantifiable and trackable. They are a specific amount of time or a specific number that must be achieved. To have power, the disciplines must set the timeframe or the quality. It is too easy for us to opt out and not accomplish our goals without concrete parameters.

Next, you need to evaluate whether you are ahead or behind for this week. Then create the strategy to catch up if you are behind or focus on maintaining the current strategy and direction that has kept you on plan or ahead. Too often, we know we are behind and let it go for too long without a change. You must react and change quickly to catch up. We often do not raise the level of our intensity or increase our work output until it is too late. If you get too far behind and are spending tremendous amounts of time inflicting wounds on yourself, change the plan.

Always have a Plan B. There is no embarrassment to working a Plan B. Often Plan B is the better plan because you can invest the mistakes you made in Plan A. Edison tried over 10,000 different elements in his light bulb before one worked. What would have happened had he stopped after Plan A?

Zero in on your area of success. People are paid very well on the few things they do very well. That is one of the best things about the field of selling real estate. There are so many ways to earn an outstanding income. Do what you do very well. We coach our clients to develop three to four areas of specialization in the real estate field and work to project their skills in these areas. Do not be a generalist in a specialized world. The jack-of-all-trades is also the master of none. You are highly skilled in a few specific areas of real estate sales. If you have only one or two areas, you need to begin to learn and add another area or two to give you balance. The possibilities are truly endless when you become a specialist.

Here are some ideas of specialization:

  • Expired Listings
  • Out of Area Owners
  • FSBO’s
  • Relocation
  • Tenant Occupied Properties
  • REO Bank Owned
  • Multiplexes
  • New Construction
  • Investment Property
  • Empty Nesters
  • 1st Time Home Buyers
  • Prospect Divorce Attorneys

 

There is an endless supply of opportunities to become the recognized expert in your area in a few categories. I could list three pages of categories, but you get the idea.

Your success in your real estate career must be built from the ground up. Pour a solid foundation of daily disciplined goals and activities. These daily disciplines, or Disciplines of a Champion, will set you on the path to success in your career. Review and analyze your progress daily. Do not be afraid to adopt a Plan B if needed. Create a few areas of specialty. Decide what you enjoy doing and do well. Then zero in and take dead aim for the target of being the recognized expert in your area.

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