Running a real estate agency can be quite overwhelming. With so many things to do and look after it can be a challenge to maintain focus on the factors that will help you efficiently achieve your targets.
We talked with top real estate and property management coach, John Knight who shared with us his tips on the best ways for you to realise your goals. As the founding CEO of Business Depot, Knight has built a highly successful business imparting his considerable knowledge, strategic planning, organisational skills and compliance know-how to help clients replicate his success.
Here are his tips for those in the real estate business – whether you’re a franchisor, franchisee, independent, aspiring principal and even if you’re at the other end of your career thinking more about succession.
- Know the difference between property sales and property management
Remember that property sales and property management are very different types of businesses, with vastly different cost and profit structures.
On the sales side you have top line coming in and you don’t have a lot of fixed costs, because you only pay out a percentage of everything you earn.
This is vastly different to the property management division where wages need to be paid regularly and you’ve only got very small, incremental income amounts coming in every time, he says.
- Be Realistic
If you're seeking to branch out on your own, it is critical to effectively manage your transition from agent to business owner, as well as being realistic about how much cash you will need to get your new operation up and running.
Knight says that those who underestimate the required amounts usually do so because they don’t realise the timing difference between when a sale is first made and when the cash comes in.
“That’s why often principals will do some sales themselves, because it’ll be high margin-type sales that will bring in the cash quicker to pay those bills on the way through. Cashflow is always a challenge.”
- Get your legal structure right
Another issue new business owners have is failing to get their legal structure right from the get-go.
Knight says many agents and managers attempt to do the right thing by seeking advice from their accountant, but often this is a finance specialist who does not know the ins and outs of the property sector and will offer the same advice to the real estate agent as they do to their hairdresser client.
- Draft your business plan
Aside from remembering the bigger purpose, committing your long-term goals to paper is also a good way for you to get ahead.
Admitting he’s not a fan of multiple-page business plans, Knight argues the real value of a business plan lies in the exercise of preparing them because “the exploring exercise gets people thinking about what’s going to be important for future success”.
- Track results by division
Work hard to get a clear view of the performance of your business, focusing less on what your competitors are doing and more on tracking results by division.
“It may be the bean counter in me, but you have got to get the numbers right,” Knight stresses. “I always insist my [clients do it this way] because their property sales business is very different to their property management business. Where possible, I even separate it into a further two divisions – the principals division (what is the principal selling or taking out?) and then the admin division, which is really just those shared services or costs.
“If you’re splitting all your income and expenses between those divisions then you can sit down and have meaningful discussions on what you are going to do differently and what the impact of doing that is.”
- Don't forget yourself
Lastly, Knight says that looking after yourself is also of critical importance as burnout is particularly common for business owners in the real estate industry.
“Real estate is a people business which means that you need to worry about the people first. If you don’t let ego get in the way, you have great opportunities to make a good income and create an awesome asset – so long as you don’t spend it all on the way through!”