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But what happens when they don’t? What happens when the consistent and predictable business you have built becomes anything but that thanks to outside factors such as, I don’t know, a global pandemic? Then what?
All of a sudden your numbers are all kinds of messed up. Leads are harder to come by, and calls are more difficult to convert into appointments. Generally speaking, people are less motivated. On top of that, the business you have and will convert is even more difficult to get to the closing table than it was just a month or two ago. Business that was largely done in-person and at the residences of strangers is currently limited by shelter-in-place policies. These are unprecedented times.
At that point, consistent and predictable isn’t enough. Your business needs to be impenetrable. It has to be built to withstand the storm. We find ourselves in a position where our businesses and the people involved need to be as resilient as they have ever been.
Let me backtrack for a second: It’s going to be ok. Things are kind of a mess now, but we really don’t know how the market is going to respond. We could all be pleasantly surprised. The best thing we can do right now is to stay positive, work hard and love our neighbors.
Regardless, we need to build an impenetrable business for today and tomorrow. The following questions will help you to evaluate the resilience of your business.
Do I have enough cash reserves to ride out a dramatic change in the market?
On a recent economic policy briefing held by the Hoover Institution at Stanford University, a key point that they drove home was that the stabilizing effect of having cash on hand is largely undervalued. Small businesses are failing right now if they don’t have enough cash on hand. In an era where we have access to unprecedented amounts of information and technology, we overlook this simple safety net.
This is a problem on the individual level as well. The median savings account balance in the U.S. is $4,960. Stated differently, 50 percent of American households have less than $5,000 saved and readily available to them. That won’t get you far if you lose your job.
A sound goal is to have three-to-six months of personal and business expenses saved. If you’re not there, it’s time to adjust your budget to make cash reserves a higher priority in both your business and personal life.
Having cash reserves gives you freedom and flexibility. It positions you to analyze your decisions and make sound investments into your business rather than being forced to cut back. You may still choose to do so, but you save yourself from having to decide between maintaining your pay-per-click budget and putting dinner on the table.
Can my business, as well as the individuals involved, adapt to the challenges of a new market and industry environment?
Flexibility and adaptability are not traits the average agent holds in high regard even if they say they got into the industry because they think no two days are the same. They want their business to be one size fits all. They want every lead and transaction to fit into a nice, neat box. Many agents conduct their business in a certain fashion simply because that is the way it has always been done.
For your business to be impenetrable, it takes flexibility. On a normal day, this looks like a willingness to make minor course corrections and find quick solutions to problems. Consistently evaluate what is working and what isn’t, then adjust accordingly.
Then there are those days, weeks and months that are anything but normal. What happens when you can’t perform some of the foundational tasks that seemingly make your business and the industry go, like the ability to meet in person or show property? What happens when people are allowing any number of different fears to drive their decisions? What do you do then?
You have two options: you can wait until the market adjusts to fit your business or you can adapt your business to fit the current reality of the industry. You can try to ride it out and hope it returns to “business as usual” so you can do the same old things the same old way, or you can find a new way to do business.
When it became clear that COVID-19 was going to dramatically impact our industry for an extended period (how extended we still don’t know), we got to work. Our team began to tinker with our phone scripts and our approach to phone prospecting as a whole. We produced and re-designed marketing materials to be able to effectively conduct initial consultations over video calls. We developed strategies to generate scarcity and urgency for our listings in this unique market, on top of figuring out the best way to show properties virtually.
None of this happens without the right people in place. It’s ingrained in our team that we are not going to blend in, fall in or phone it in. We pride ourselves on being different and innovative, so when this challenge presented itself, a number of us dove in head-first to figure out how we can adapt. Adaptability and flexibility should be a trait you look for as you’re bringing staff and agents on board. It shouldn’t take a global pandemic for you to innovate.
Perhaps the most exciting part of this forced adaptation is that we may just develop and implement strategies that add value to our company and clients well after the craziness of COVID-19 passes. There is little you can’t overcome and grow from when you and your team are committed to adapting and innovating. Make lemonade.
Do I have diversity in my lead flow?
On our team, we advocate for having a three-pillared business. Each of our lead types falls into one of three categories:
Team-generated business (inbound marketing, radio ads, referrals, etc.).
Agent-generated business using team leads and resources (home search leads, home valuation leads, open houses, expireds, FSBOs, etc.).
Sphere of influence.
You probably consider certain lead sources to be your “sweet spot.” You convert them at a high level, and they consistently produce ideal clients. Other sources may contribute a couple of deals a year and still represent a solid return on investment. Those are great to have too. They all work together to build a consistent and healthy pipeline.
Playing in multiple different pools and getting exposure through a variety of sources provides stability that being all-in on one source doesn’t. What happens if that one source goes away? What happens if your reputation is injured and your sphere doesn’t produce? What happens if radio ads or pay-per-click become too expensive to justify? What happens if Zillow hoards all their leads? You just never know.
Those challenges will sting if they come to pass regardless. If you’re prepared, you can turn the knob up on one source when you’re forced to turn the knob down on another. If our team is having trouble getting quality pay-per-click leads, we can invest more in radio. If home search leads are not yielding the sellers we want, we can put more effort into home valuation leads, expireds, and FSBOs. To be able to make those changes, you need multiple knobs.
Do I have multiple people who can step into different roles if asked to do so?
Agents come and go. Many are not known for their loyalty to their team or brokerage. Much of that is the fault of the industry, but brokers and team leads deserve their share of the blame for not providing value to their agents. Regardless of the reason, agents move and quit a lot. The end.
To guard against the inevitability of agents moving on from your team and leaving vacancies, we need to hire and recruit well. That means we bring on talented individuals who can contribute in a number of different ways.
The easiest way to protect against this is to hire multiple people to hold the same role for every role where it makes sense. On our team, we specialize by having marketing specialists and buyer specialists. We obviously want multiple of each because having one and losing one means our entire business either comes to a screeching halt or requires a dramatic restructuring. Neither are ideal scenarios. Having just two can feel like you’re playing with fire.
Sometimes it just means placing a premium on versatility in hiring. Hire talented people who can adapt. This positions you to transition a person to a new role entirely if necessary. We have had team members slide from one position to another seamlessly when we have lost somebody.
Other times, thanks to the versatility of our team members, we have reallocated responsibilities to the person best equipped to handle the vacated responsibilities. Don’t put yourself in a position where someone is absolutely indispensable because no one else can do what they do.
With that said, there is nothing wrong with having really talented people who love running in their lane and do it at a high level. If you have some of those folks, create an experience within your team to where that person can’t fathom being anywhere else.
The season we find ourselves in will test your resilience, but you can come out of it stronger. Consider these questions while we are still likely on the front-end of a challenging season. For more thoughts on building an impenetrable business, re-visit a previous Members Only Call where we discussed this concept in great detail.
Keep grinding. We are going to make it together.
One of the draws to building a career in real estate is that no two days are the same. Is that really true though? When you get busy and your business is growing, every day may look a little different, but you’re largely filling it with the same activities. You should be prospecting every day, training every day, seeing clients and prospects every day and working deals every day.
It isn’t the same kind of monotony that comes from staring at the same spreadsheets from nine to five Monday through Friday, but you can start to feel like you’re in the rat race nonetheless. If you’re not careful, you start to go through the motions. You forget the big reason you’re in the business. You fail to identify shortcomings in your business. You keep running hard, but you may not even notice whether or not you’re going in the right direction.
There is irony in the fact that some agents treat a client’s problems like they are life and death, making themselves available at all hours to put out fires that aren’t even really there. Yet we can be so passive about addressing the problems in our businesses. We overlook issues and sweep them under the rug rather than giving ourselves the margin to deal with them.
It’s March. First-quarter production is basically in the books as your next properties to go under contract will likely close in April. It’s a great time to step back, get out of your business and work on your business. On our team, there are two ways that we like to do that.
Quarterly planning is something that every agent, team member, and broker should look forward to. It’s a chance to get out of your business for a day or however long you deem appropriate to take a look at what your business has looked like over the last quarter and how you want it to look over the next. You’re giving yourself permission to just stop and think.
You should accomplish a few things during this time. We went into greater detail on this in a previous article. First, you should take the chance to remember why you’re in the business. What drives you to do what you do? What are the values that you hold dear that make you (and your business) who you are?
This part probably isn’t going to change much from quarter-to-quarter, but it is something that you need to re-visit. The last thing you want is to allow yourself to drift from your core values and purpose in life and business. The consequences for such a misstep go well beyond just your business.
Once you’ve spent some time reviewing and thinking about the big picture, you should start to put together some more tangible goals. But first, let yourself dream a little bit. Let your mind wander into the future and consider what you want your life and business to look like. If you don’t step out of the rat race for a day or so, you’re going to have trouble getting the clarity you need to look ahead to what you really want to achieve.
Then start to ask yourself what you need to do this year, quarter and month to make that happen. Establish firm commitments for what you need to do to get there. You could blow right through this if you want and just throw numbers and simple ideas on the page, but that would be doing a disservice to yourself.
Dig deep. What could you add to your business or calendar that would really move the needle? Again, a huge point of getting away for quarterly training is to get the space to think outside of the box. Let yourself kick around new ideas and explore if they’re something you should implement. Just empty your brain onto the page.
This will look different for everyone. Figure out what you personally need to do to get out of your business for a day or so. Maybe it means posting up at a coffee shop for a few hours. Maybe it means getting out of town altogether. Maybe you need to go for a walk, listen to music, pray, read, meditate, run, fish or whatever. Just clear out the mental clutter and intentionally think through what you want the next quarter to look like.
At least once a quarter, you should carve out some time to sharpen the ax beyond your normal daily and weekly training. This may seem more obvious for teams, but it is equally valuable on an individual level.
As you work through the quarter, you will likely come upon a new challenge to address, a new script to work on or an area of your business that needs some extra attention. These should specifically be important, non-urgent items that you want to work on. Your quarterly training day is a great opportunity to address those.
How you address those items will depend on your team structure. For a team, build out an agenda and plan out who will lead a discussion on each topic. Put in the work on the front end to make sure you and your other team members are bringing good content to the group. Like with your planning, be intentional about your training. Pick pertinent topics and bring useful information to your team.
If you’re a solo agent, you’re not off the hook. Consider coaching, a mastermind group or an event. If that doesn’t work, collect those important and non-urgent topics that you need to step out of your business to focus on. Put together a game plan for the day to find good articles, books, podcasts, and videos from established experts that will help you to grow in those areas. Dive in deeper than you would during a run-of-the-mill block of training time.
It’s a good idea to step back and consider the big picture on a training day as well by reflecting on core values, company history, and achievements. Work in some fun and camaraderie, specifically if you’re a team. It should be an encouraging day that leaves you and the rest of your team feeling refreshed.
Give yourself permission to get out of the weeds. For just a couple days out of the quarter, take the time to put the needs of your business as a whole over the needs of the individual deals. Rest assured your clients will be there when you get back. To build a healthy business that is in it for the long-term, you have to get out of that business.
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Looking around our office these days is a lesson in deferred gratification. It feels like we are signing clients at a blistering pace so far this year. For that, we are both proud and grateful. However, we won’t reap the rewards of that significant influx of new clients for another 30, 60, 90 or more days. That’s life in the world of residential real estate.
On top of that, closings aren’t happening at the same clip as signings right now. We have spoken ad nauseam about seasonality, so I will spend minimal effort talking further about it. Fewer people were thinking about real estate in November and December, so fewer are closing in January, but now people in January are thinking about making their move in the spring. Again, that’s the world we live in.
Are we scared? Mad? Disappointed? Is the sky falling? Did we drop the ball in the fourth quarter? No. Not at all.
This is nothing more than an important reminder to us that sometimes you go through seasons where you emphasize sowing seeds and others where you celebrate the harvest. We are abundantly confident that the harvest is coming, but for now, we will just keep sowing faithfully.
We can’t always control the output, but you better believe we are going to obsess over the input. The timelines of your clients can vary dramatically at any given time. These people want to close tomorrow while those want to close in six months. You can’t control that, and you shouldn’t be trying to manipulate it either. You put in the work to convert them (input), and then you lead them according to their needs to get to the closing table having achieved their desired outcome (output). Control what you can control.
When gauging the health of our business, we classify our data into two different groups: lead indicators and lag indicators. This helps us to understand the full picture and grasp where we may have inefficiencies.
Lead indicators are measurements that can predict and point towards a future outcome. It’s a measure of our input that will impact our output. A few key lead indicators we are attentive to our calls, contacts, appointments set, appointments held and signed clients. If we know these numbers, we can understand conversion rates and predict how many closings we will have over a certain time period. Outside of your business, you may monitor your diet and caloric intake as a lead indicator to understand where your weight is likely to be in the future.
Lag indicators quantify the outcome. They are the result. They can’t change the output, but they can help us better understand how we got to a given output. They show our progress, but they don’t ultimately affect the future.
The most valuable contribution that a lag indicator can make is to force us to examine our lead indicators if we miss the mark. They can’t change the outcome, but they can help us learn what we need to do to change course in the future.
And this is why flipping out about closing numbers in January when we are signing clients left and right is completely pointless. We want to focus on the lead indicators. Are we making the calls we committed to make right now? Are we executing the campaigns we need to right now? Are we getting in front of the prospects we need to get in front of right now?
Now, if you completely wet the bed in January, your lag indicators are making that clear now. So what do we do with those lag indicators? They should point you to your lead indicators from the previous quarter to find the hole. Did you fail to fulfill your prospecting commitments? Did you make the calls but convert at a lower level? What was the problem, and what needs to be different this quarter? As you dig in, the lag indicators should inform your decision about future lead indicators.
If you, like our team, are happy with your current lead indicators, I invite you to forget the past result. It’s over and done with. Instead, attack your day with a clear focus on doing the things that predict success. Hit your call number, improve your conversion rate and pile up the clients. The lag indicators will come when you nail over the lead indicators.
There is nothing sexy or exciting about tracking. We want the closings and commission checks without getting our hands dirty, but there is just no way around it. Agents who obsess over the minutiae of their business every single day will be the ones who win.
Athletes spend hours on end in the film room, wake up before the sun and torture their bodies in hopes of raising a trophy. No one is paying to watch them do any of that because it’s boring. But it is necessary. They don’t get to raise the trophy if they don’t put in the work. Approach your business with the same diligence and commitment. Lean into the boring and monotonous, and you will get to the exciting outcome you desire.
The age-old question, rent or buy? I give my insight into the broader debate and more specific information regarding moving to Dallas, Texas that could help you figure out what is right for you, your family, and your finances. Let me know in the comments if this is helpful. I truly want to hear what people think so I can make better content for you.
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