It appears to be the well-trodden path of progress in our industry – to reach a certain level of gross commission as a salesperson and then float into business ownership ‘because you earned it’ and no longer wish to pay any of your commission to a higher authority.
However, as great and as lauded as GCI success is in the industry (!!), the impressive pay cheques do not come with a Matrix-style download of knowledge required to run a successful, efficient business.
Nor does it grant you a divine right to an amazing culture…or understanding the language of the tax man…!
What this leads to is a lot of businesses in our industry that are held together by sticky tape, and/or business owners that are completely fried from the position they’ve got themselves into.
So, where are the major issues stemming from?
1) Education
The current set-up in the industry makes the path to business ownership a relatively easy one, i.e. if you can afford it, and have a Cert IV (or equivalent) in whichever state you operate in, then you are apparently ‘qualified’ to open your own Real Estate business.
It has been a while since I completed my Cert IV in Victoria, but outside of trust accounting, I can’t seem to recall one element of my qualification that provided me with any greater understanding of running a business.
The qualification (understandably) focuses purely on the operations and legislation of the industry. Still, there is no foresight within the current structure to ensure that there is sufficient business acumen in order to cope (from a knowledge perspective) with business operations.
Now, this is where franchises offer that level of support to help nurture these agents into solid business owners.
However, because agents don’t get to see what it actually takes to run a business beforehand, you could argue that this is one of the main reasons as to why the traditional franchise model is under so much scrutiny because that is where a lot of the value sits within their offering.
It’s a glaringly obvious issue that needs to be sorted out ASAP at a formal level, but access to the right person with the right approach is needed desperately.
I was chatting with Renée Lodens the other week (Renée is the calm in the Gavin Rubenstein whirlwind – top human, strong coach), and said to her that if she offered the ability to transform and transition sales people into owners then she should become one of the most in-demand coaches in the country right now!
2) Time
Building up to a level of gross commission takes a lot of effort, and a lot of time. 60-odd hours a week of chasing, negotiating, presenting, prospecting, inspections.
It’s a huge amount of commitment required to get to the numbers that have agents wondering if their own business is the way to go.
But if this new business is going to be reliant on the revenue that the agent is generating, then how much time do they think they’ll need to run a business…?
Sure, they hire a PA or a buyer agent, and although that may carve out an extra few hours a week, the net productivity of the unit naturally decreases because the agent hasn’t cloned themselves.
The net revenue position is likely to drop a little if they are planning on spending the extra time running a business as opposed to increasing their sales output.
The result? Agents commit to a business based on a revenue that isn’t sustainable as an owner, they end up panic-hiring which doesn’t work out (partly because of desperation, partly because they’re not educated in the field of recruitment), and things turn…quickly.
It’s either that or they continue to write their numbers, but then have no time to nurture and train talent which makes it really difficult to retain any of them.
It’s that classic saying that entrepreneurs always quote – ‘I gave up my 9-5 in order to be free, but ended up working 24/7!’, except in this case, unfortunately, these agents would need to fit in 2 jobs-worth of work into a 12-hour day because not many houses get sold at 1 am!
3) Support
Unless they have a strong existing relationship with a mentor who knows their way around a P&L (profit & loss account), and is willing to hand-hold through the first 12 months, then running a business is really lonely.
Not only that, but everyone’s problems become your problems, which is not what these agents signed up for!
The mentality of a leading salesperson does come with a degree of prioritising themselves (which clearly varies from agent to agent!) It has to in order to stay focused and driven on the task of closing as many deals as possible.
So when a staff member comes to them with a problem, however big or small, what do you think the internal reaction’s likely to be if they’re in the flow of bringing deals together?
It’s the opposite of a lead agent’s standard operating platform – they work hard to be first, but as Simon Sinek points out in his book…leaders eat last.
You can bring recruitment into this part of the conversation too.
Finding the right people can be a full-time job in itself, but they only remain the right people if their support is reciprocated.
‘I’m one of these agents, what should I do?’
If this has you freaking out, either because you were planning on making this jump or already have, not all is lost! You can definitely make it work out well.
Here are a few actions that you need to take so that you put yourself in a much better position to win.
1) Pick the brains of experienced operators
It’ll be a huge help if you can learn from the battle scars of those who went down this path before you.
Investing a bit of time and taking a few experienced campaigners out for lunch or a coffee will save you thousands of dollars in mistakes that are easily made but readily avoidable if you know that they’re coming.
Make sure that you write down all of the questions that you want to ask before you go, and don’t be shy about telling them that you want to pick their brain (they’ll probably get a kick out of that anyway!).
2) Get an outside voice to help
Whether it’s a paid coach or a trusted mentor, you will absolutely need someone that’s on the sidelines giving you subjective advice as you put all of this together.
If you want/need to keep listing and selling at the current rate, then you will need another pair of eyes who can look at the whole picture while you operate on building revenue.
If you don’t have someone like this in your corner, then the efficiency of your business will drop with mistakes, leakages, and missed opportunities elsewhere.
This means that you’ll be left with a lot less of that ‘gross’ revenue than you think, and it will cost you way more than having a coach on a monthly retainer.
3) Get back to school!
Knowledge is power, and even if you’re insanely busy already, you will need to spend some time understanding the intricacies of your business.
Remember when I said that you can’t sell houses at 1 am? Well you can certainly open a book, YouTube clip or podcast & start learning! My suggestions for key topics that you need to focus on are:
- Basic business operations – processes, operations manuals
- Recruitment & team integration (onboarding)
- Financial management – including how to run and read a P&L, budgeting and forecasting
- Basic branding & marketing – learn this or just pee money down the drain by doing the same crap everyone else does!
- Leadership fundamentals – setting boundaries, expectations, and lines of communication
You could go one better and sign up for a business management course, but even if you spend time Googling these topics, you’ll gain a wealth of information.
4) Set a performance timeline
Like setting goals & KPIs, but make sure that you set check-points through your first year that remind you to track your progress.
It’s so important (especially when starting) that you are regularly checking each element of the business to ensure that the early days of the business are setting off in the right direction.
On that, there is a balance between perfection and progression and you don’t want to become paralysed by indecision.
However, when we’re talking about the foundational components of our business, it is so important to make sure that they’re solid because you’re going to be building your entire business on top of them, so they’d better be strong!
