October 19, 2020
I meet so many people in real estate who just want to do more deals — get more contracts, close more deals. If only they could do more deals, everything would be fine.
Sounds great in theory.
Yes, more deals closing is the goal. As long as they’re good deals, because putting in hours and hours of work to make $100 isn’t worth your time. More GOOD deals closing, and that means the total costs involved from finding the deal through closing it. This is where you have to monitor the pulse of your business, know your numbers, budget your expenses — monitor your Key Performance Indicators (KPIs).
Most of us like the end numbers that can come out of real estate transactions. After all, making money is one of the reasons we’re in this industry.
But are you really making money? Or are you just robbing Peter to pay Paul?
As your business grows, it inevitably becomes more complicated. You hire employees, buy software, venture into different areas, add different types of transactions (e.g., wholesaling and flipping and rentals). You have more people wanting your attention, you are now more of a manager than doing the hands-on work, and you are being pulled in 20 directions at once.
This is where the momentum of building a business can overwhelm the solopreneur (the person who started a business). The road to becoming an entrepreneur has many forks in it, and a few roundabouts to get stuck in. This is where businesses grow, only to die on the vine.
You started this business knowing everything that was happening, and you made all the decisions. If something happened, or didn’t happen, all you had to do was look in the mirror to know who was responsible.
Now you may feel like you don’t have a choice in what decisions to make, almost as if someone else has set your company down a path and you’re racing to catch up. Things are happening, but you don’t know why, or you feel like you’re constantly putting out fires and slapping on Band-Aids to keep things moving. Despite your best efforts, despite all the things you try, you feel like this car is driving itself without a destination, as if you just go to work and triage whatever pops up that day.
Your business is running you.
It’s difficult to admit, but the first step to solving the problem is recognizing and admitting that it exists. The good news is that you can take back control.
The first thing you have to do is know your numbers. Frankly, this can be the least enjoyable part of running a business for many, many solopreneurs and entrepreneurs alike. We like to do deals and get things done, not read reports. Knowing your KPIs is absolutely critical information to both survive and grow. Nothing will improve until you know your numbers.
Why? Can’t you just monitor the bank account? Or number of deals closed?
I wish it were that simple. As a business grows, so too do the opportunities to bleed money. Wasteful spending on employees, rent, marketing, software, supplies, bad deals, etc. can blow a hole in your bottom line. Your closing ratio, profit margins, employee payroll and expenses, all can work against your success if you aren’t setting standards, implementing policy and accountability, and keeping focus on the business’ goals and ideals. ANd it can sneak up on you slowly, silently — a little here, a little there, another cold caller, another database purchase, and suddenly your expenses doubled, which directly affects your bottom line.
This is where training can make a huge difference. There’s an old maxim, “You don’t know what you don’t know.” Take it quite literally: If you don’t know how to manage employees or motivate them to perform to a certain standard, how would you know whether they are? How would they know? Who is taking responsibility and accountability for training them and then tracking it?
Your KPIs will tell you. You can set standards of performance, goals for each person to achieve which measures their work. The numbers are tracked. For example, you may want your cold caller making 50 calls per day. Your acquisitions person may need to offer 10 contracts a week.
It’s one thing to set targets; quite another to properly train, motivate and encourage your team to achieve them. This is where investing in masterminds, investing in training programs, and becoming educated in specific areas can equip you with the tools and strategies to make your business boom. The right training also incorporates responsibility and accountability, for both you and your team. You don’t want to have to be standing over your employees to make sure they’re doing their jobs. You want them to want to do their jobs, be good at doing their jobs, and enjoy doing their jobs. And it is training that will enable you to solve the chronic issues which cause all the brush fires in your business, will help you close more transactions with less drama, and show you how to hire, train and keep the best employees.
Notice I said “invest” in masterminds and training. Yes, good training costs money. You’re a business owner, you know that valuable things aren’t free, and that quite often free things turn out to not be particularly valuable.
Investing in masterminds and training can enable you to exponentially grow your business far beyond what you paid. Can you figure it out on your own? Sure. All the information is out there. However, masterminds and training will both speed up your ascension to entrepreneurship and will relieve stress and frustration from not having good systems in place.
The real question is where are you going, and how fast do you want to get there? I can ride my bike across the country, but I’ll get there faster in my car, and much faster in an airplane. My bike is free (only I have to put in a lot of effort), the car costs money and it’s still a several day drive, and a jet airplane costs the most but I’m there in time for lunch.
Take back control of your business. Identify your weaknesses (those things you really don’t like to do and are giving you the most trouble), invest in masterminds and training, and apply what you learn. It may be tough at first, because you may need to replace some of your team who simply don’t want to get with the program. You may need to change the way you have always done things, and change can be difficult. You may even change the focus of your business, once you have thoroughly and honestly examined it.
In the end, change is hard, but change is necessary. When you think about it, isn’t growth simply change? A seed grows into a tree by changing, not by fighting to stay a seed. The difference is a seed knows how to become a tree. Your business does not.
Go learn how to grow. Go be a tree.