In my last post I told a delightful story about John Q. Agent and Suzie D. Pro, and surviving change. And it occurred to me not everyone understands what I mean by sticking to a business model. When you know what you are spending VS. what you are earning, it is very easy to figure out what parts of your business need to change, and what parts you need to hold on to with an iron fist. But in order to do that, you need to have a business model.
The easy solution is to steal one... Talk to a top producer in your office, find out what they spend their earnings on. Don't worry too much about the dollar amounts- if you are not at their level, you can't spend the same amount that they do. But that doesn't mean you can't duplicate what they do. Find out what they do that doesn't cost much or is free, and focus first on integrating that into your business (I should say here that if you try to squeeze in everything all at once, your head will probably pop). And look at the percentage breakdown of what they spend.
I'll wager that in most cases you'll find that they are keeping three fifths to two thirds of each commission as "Take-home", and rolling the remainder back into making business (yes, Mr. Experienced Agent, you do it different... you keep more, spend more, whatever. But can what you do be duplicated by a newbie?).
The lions share of that should be directed toward things that GENERATE LEADS. Without 'em, ya got nothin'. Budget out all of your available funds, and include savings for your overhead in lean months. What you budget exactly for each aspect of your business will depend on several things- for example, unless you've hired a assistant, you don't need to budget payroll. However, if you do direct mail, you may want to pad that budget with the funds you are not spending on payroll. Do you cold call? Make sure that you account for the phone bill at the end of the month. Each individual is going to have their own budget needs and categories.
Once you've modeled out your budget, STICK TO IT. Don't overspend if you can avoid it. Now, there are going to be times where a piece of equipment or the set up on a new system is going to exceed the budget for that category for that month, but make sure it's a justified overage. The next step is to HOLD YOUR EXPENSES ACCOUNTABLE. Don't throw your money away on stuff that doesn't bring a return. What that "Stuff" is will depend on your market place to a degree, but if your new, you can't afford it yet.
And finally, every business model is subject to change, and the rigid ones do not last. McDonald's provides food services around the globe, and you can count on the same quality in Seattle as you'll get in London. The prices and product are consistent and reliable (not necessarily good, but you can count on it being the same). I was in Leavenworth over the week end and found that in the tourist town the prices tended to be an average of $.30 higher than most any of the other McDonald's stores I've ever been to, because the market locally would bear it. Further, I'll bet McDonald's does not sell very many hamburgers in India, yet they have stores there. The business model changes depending on economic conditions and demand.
If you don't hold your funds accountable, you will end up like John Q. Agent. A highly skilled, highly educated real estate fry cook.
Here's to your continued success!
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