By Dave Robison
How many times have you heard it? You are your very own business owner in real estate. You are an independent contractor, you incur and write off expenses, you spend your own marketing dollars and you work your own hours. You own a business.
It definitely sounds like a business.
Years ago, I was convinced I had a business, but what I realized was my business was really a job — it was unprofitable and I couldn’t sell it. It was unprofitable because I was paying myself all the money it made. I couldn’t sell it because if someone bought it they would have to hope my friends and family would use them as a REALTOR®. Also, who was going to buy my business when what they’d really be buying is a job. Who wants to buy a job?
Why is it not a business? Because it was missing 3 things.
Here’s the difference between a job and a business: A job is when you have to do the work yourself to get paid. A business pays the employees market wages while giving owners a 10-15 percent profit off of gross revenues. A business allows the business owners to be able to go on vacation and not have to answer sales calls. A business should be able to be bought or sold. It would be nice to sell your company and retire, right? Or maybe you want to stay involved after retirement but pay someone else to run your business operations. How many agents do you know who truly have a business or can sell their business? I would say it is extremely rare in our market.
So, you want to own a business? Here are the three things that will transform your career/job into a saleable business.
1. In order to sell a business you have to pay yourself a market wage and make a profit. You can’t be paying yourself $30,000 a year and take $90,000 in dividends and claim it’s a $90,000 profit. You have to pay yourself what it would cost you to replace yourself. If you need a good salesperson to replace you, then you need to be paying yourself whatever the market wage is in your area. Let’s say the market wage is $120,000. Now everything you make above that would be profit. So if you are bringing in $150,000 in commissions and spending $30,000 in expenses…you wouldn’t have a profit. Your goal would be to have a profit above that. Create goals and structure your company to help achieve this.
2. You need to have lead generation other than your family and friends. This includes your value proposition. You can’t be selling to just your family and friends. No one wants to buy your mother-in-law or your friends. They want to buy a brand/company that has business day-in and day-out, whether your mom is buying a home that year or not.
3. Have systems in place so tasks are accomplished when you’re not there. Most agents do everything themselves. That doesn’t work. The sign has to be installed, pictures have to be taken, and phone calls have to be answered — no matter where you are. And no matter who calls in sick, tasks should still get done. New leads have to be coming into your office every day. The way those leads are handled — all the way to closing and beyond — should happen the same way every day.
The awesome thing about our industry is that this is achievable. Our industry is a breeding ground for agents to do just this because we have become a commodity. The window of opportunity is now. Work on these three things and you will begin to transform your job into an actual, profitable, saleable business.
Dave Robison, known as “Utah Dave,” is broker/owner of UtahDave.com Neighborhood Experts.