Written by Andrew Trim

“If nothing changes, nothing changes.”

Many real estate business owners struggle to make a profit from their sales department.

Although the market is often blamed, our experience is that a leader who does not make a profit in a ‘tough’ market often fails to make a profit when the market improves. These leaders do not have an ‘eye’ for profit.

The real estate industry is notorious for focusing on turnover. Franchises charge 8 percent of turnover, and salespeople are paid anywhere between 40 percent and 95 percent of turnover, depending on the system used. Whatever is left remains with the office, which still must cover all of the expenses before the leader can earn any profit.

Traditional real estate training focuses on ways to bring more money into the office, to increase turnover. But turnover is not profit. While revenue is important, it’s how much you KEEP of your gross revenue that dictates the success of your business.

An eye for turnover must be replaced with an eye for profit.

Why are you in business?

It should be to make a profit.

Remember, if nothing changes, nothing changes. If you are not happy with your agency’s profit, we urge you to develop your eye for profit and do things differently.

Expenses

Cut expenses. Begin with non-performing salespeople. This is the biggest expense an agency incurs, but it’s often a hidden expense. Even commission-only salespeople who are not performing cost the agency hugely. Think about the listings they lose through their incompetence. You may not be paying them a salary, but if they lose one listing a week, at today’s selling fees such a salesperson could be costing the agency over $500,000 a year.

There are two types of expenses in a real estate agency – fat and muscle. Muscle expenses help you win business – marketing for example. Cut a muscle expense and you will cause the agency to lose more in selling fees than the expense you cut.

Fat expenses are different – cut them and you won’t lose business. Little expenses add up, too. That water cooler might be costing only $20 a week, but that’s $1040 a year, or $10,000 over ten years.

Team Size

You don’t save money by keeping your sales team small. You will cost yourself profit by doing this.

Look upon good salespeople as an investment and not an expense.

But you need good salespeople. If you say you cannot find good people, this mindset is the problem. You can find good people if you have an effective recruitment process. There are many people out there who would love a career in real estate. If you want a winning team, you have to go looking for them.

Smartre Training can help you with this, but whether or not you take us up on this offer, make building a team of WINNING salespeople your top priority.

Training

It amazes us that leaders try to save money by not training their people. Have you heard the saying, “If you think education is expensive, try ignorance”? How true!

But don’t just train your people, TRAIN YOURSELF TOO.

Salespeople attend sales training. But if you are a business owner, you need business and leadership training. Many business owners don’t feel they need this type of education, but considering 90 percent of businesses go broke in the first five years, you can see how short-sighted this thinking really is.

If the team trains in their discipline – sales – and you don’t train in your discipline – leadership – you will lose your best team members. Regularly. The ones who train grow apart from those who do not train. Fact.

Think profit. Develop an eye for it. Constantly seek ways to make more profit. This is why you are in business.