Running Your Own Business Part 2 - Revenue

As promised in my last column, I will begin to address the three important principles of running your real estate career as a successful business in order for you to achieve a solid bottom line.

PRINCIPLE 1 – Keep Revenue Up

First, I want to make it clear that revenue goals can be achieved in two ways...

  (a) Maintain and improve production
  (b) Maintain and improve mark-up

Improving production is easier said than done, especially if you are already working 14-hour days and trying desperately to balance work time with quality family time and recreational time.

Do I have good news for you! Did you know that it is possible to improve revenue without having to make more sales? This can be done by observing an age old fundamental business principle that, in my days as manager of a large department store, was drummed into my head over and over again – "IMPROVE YOUR MARK-UP" or "CONTROL YOUR REDUCTIONS". It became indelibly imprinted on my mind, and I put it into practice in my real estate career. Unfortunately, this key principle is not observed by most real estate agents today.

Sometimes we are misled by sales volume. It is possible to have good volume BUT not profitable volume. This usually results when additional volume is achieved by reducing price or, in the case of real estate, cutting commission. It is a trap that is so easy to fall into. It is especially damaging in poor market conditions and in the face of stiff competition. You must guard against it with determination!

I'm sure that you have observed Salespeople who have excellent MLS stats but are not popular with their banker! Any salesperson can sell "sale" or "reduced" merchandise. However, it takes a quality and skilled salesperson to sell value for money that justifies a full commission.

SO WHAT MAKES THE DIFFERENCE?

When your competition is doing business for less reward, you are left with two options. You have to prove that your service is worth the difference or, if you are not able to do that effectively, you have to join them.

It is all a matter of marketing skills. Good marketing always has been, and always will be, the "name of the game". People will always choose to pay the price for good service. If this was not true, why are there so many Mercedes automobiles on the road? Why do you have to make reservations for good restaurants? You have to know your strengths, especially your unique strengths. You have to explain the benefits of your service. You have to be able to say… "Measure me and then measure others against the measurement that I provide you with". There should be no contest. Price becomes an issue only when there's inadequate marketing. If the normal service you provide is...

  (a) Put it on MLS
  (b) Put an ad in the paper.
  (c) Do an occasional open house.

...you are probably offering no more service than the discount house. It is your responsibility to establish that you are over and above the norm. Your income will be directly proportionate to your ability to market your special features of service and their benefit to your client. What is your marketing presentation like? Is it well groomed and polished? Are you confident that when you do a presentation you will come away with a commitment? You can not "wing" it and resort to cutting your reward – you will just increase the clients doubt.

Next we will take a look at the second important part in establishing a healthy bottom line and that is… controlling expenses.

Good marketing to you!

Coach

Next week: Part 3 - Costs