First You Need a Plan

WHAT’S IN THIS INSTALLMENT?

1. WHAT DO ALL MEGA-PRODUCERS HAVE IN COMMON?
2. STEP ONE: IT ALL STARTS WITH VISION
4. STEP TWO: REVERSE ENGINEER YOUR SUCCESS

WHAT DO ALL MEGA-PRODUCERS HAVE IN COMMON?

Okay, so you want to become a mega-producer. That is the most important step — just making up your mind! But how are you going to do it? You have to have a plan. In fact, I don’t know of a single mega-producer who doesn’t have a well thought out business plan. Without a plan, you will never achieve greatness. It’s time to start thinking about the future. How are you going to do this next year? How much money are you going to make? How many transactions will you do? Will you take some time off? Purchase any large assets? Build a team? Start your own company?

Let’s face it: now is the time when we need to begin thinking about those things. But for many of us, thinking is all we’ll ever do. Most agents feel as if they’re at the mercy of whatever business happens along their way. Their “planning” is more like dreaming. And because they lack a sense of control over their circumstances, they don’t spend a lot of time building a business plan.

But what if you really could plan your business? What if you could map out a specific plan? And what if you could then hold yourself accountable to that blueprint and, at the end of the year, look back and see that you accomplished most of what you had planned? What if you could decide that you would build your business a certain way and then actually be able to do it just as you intended?

Sound too good to be true? Well, it’s not! That’s exactly how I do it, and it should be exactly how you build your business as well. Let me explain. I don’t rely on good fortune to build my business. I’m not a passenger, so to speak. Instead, I’m the driver, and as such, I decide where I’m going, how fast I’m going to drive, how soon I’ll arrive there, who’ll be going with me, and where I’ll stop along the way. And although you may not be able to foresee such a possibility for yourself, if you’ll follow along with me, you’ll learn that you can be the driver of your own business. You will no longer depend upon luck, or the market, or the broker, or your circle of influence, or any other external factors. You can actually take control of your business and make your own success.

But I know that talk is cheap, so allow me to give you some specifics. About the same time every year, I sit down and create my plan for the next year. A couple of years ago, I planned to become the largest company in our market. I planned to build our team to 46 REALTORS®. I planned to have the largest market share in our market. I planned to start a training center for agents.

So how did we do by the end of that year? Pretty well, I think. First the good news: we did become the largest company in town, we built our team to 60 agents, and we opened a training center for agents. The bad news is that we weren’t able to become the largest in market share. Oh, well. But during this first full year in business, we rose from number 386 to the top 20. And for the last quarter, we were in the top 10 and gaining ground rapidly.

Last year I sat down to do my planning and set some new objectives. I planned to expand our agent base to 100. We did it. I planned to continue to grow and become number one in market share. Still didn’t happen, but this year we are the only company that has maintained our production volume, while nearly every other company in the market has experienced a pullback, as much as 50% for some. Maybe next year we’ll become number one in market share.

I planned to write another book. I wrote two. We planned to release our contact management software (Pipeline) and get 20,000 agents to try it. Currently we have just over 12,000 agents using Pipeline and it looks like we won’t quite hit 13,000 agents by the end of the year. We planned to open several offices, and guess what? We did it. You get the idea. First the plan, then the accomplishment (or sometimes the falling short).

My purpose here is not to brag about our accomplishments. We’ve done well, but then we’ve been blessed with some really great people. No, the fact is that, when I entered the real estate industry five years ago, I immediately began using the same type of planning to build from a single-agent practice to where I am now. And the planning is what I’ll share with you in this installment. Before we dive in, though, I want to make sure you understand that this success story can easily be yours. You really can control your real estate destiny. You can take your business as far as you want! All you need is a good plan and a willingness to stick to it in the face of numerous distractions.

STEP ONE: IT ALL STARTS WITH VISION

Before you can begin any journey, it’s important to know where you’re going. Simple as that. Someone once said that, if you don’t know where you’re going, any direction will do. Well, I prefer to choose my destination. And having chosen where I’m going, I can then set out to build a systematic, step-by-step plan of how to get there. Without a destination, how will you know when you arrive? You won’t. If you don’t have a plan, any result will do. If you don’t have an objective, any outcome will do. You must have a destination — a finish line — a finite, measurable, clearly defined objective. Why? Because, without one, you’re only cheating yourself. Don’t be afraid of failing! This past year I failed to reach some of my objectives. But did I really fail? You be the judge.

I believe in the principle of vision. In order to achieve something, you have to see it first — in the sense, not of seeing a physical reality, but of seeing the end result in your mind’s eye. And I’m not talking about some mind-over-matter scheme of somehow psyching yourself into super-achievement. What I’m referring to is the simple principle that anything you create (in this case, your business) will be given life once you can see it clearly in your mind. The more clearly you see it, the likelier you are to achieve it. Steven Covey, author of Seven Habits of Highly Effective People, discusses the vision principle when he says, “Begin with the end in mind.” Napoleon Hill, in his famous book Think and Grow Rich, notes that, around the turn of the last century, dozens of industrialists used this same principle to become some of the richest and most powerful men of their day. To begin with vision is crucial if you expect to have
any real success.

In Psycho-Cybernetics, a classic from the 1960s, Dr. Maxwell Maltz explains the vision principle from a psychological perspective. First, he says, there’s the importance of seeing a thing. Whereas the rational mind has filters of logic and reason, the subconscious mind accepts the messages it receives without question. So learn to speak directly to your subconscious mind. It’ll believe you! Have you ever known a pathological liar? Have you noticed how he or she could say something once or twice and then, having said it, actually believe it to be the absolute truth? This is the vision principle at work, albeit a misguided application. Since the subconscious mind believes whatever you tell it, it’s important to develop a clear picture of your “success vision” and then to speak that vision to those around you. Your subconscious mind is listening and wants to help you build your business.

While we’re on the subject, I’d like to mention one more thing: it’s important to have as much detail as possible in your vision. Take the time to imagine the perfect real estate practice — your real estate practice. Picture the individuals working with you. Picture the perfect office. Picture the details. See the transactions being closed. Watch your staff execute flawlessly. You’re writing and starring in your own movie. Now watch it clearly, again and again, until you’ve memorized it. The more clearly you can picture your vision, the more help you’ll get from your subconscious mind. But let me give you some practical examples of vision-driven performance. When I began in real estate, I set several objectives for my first year. I decided that I would list a property a week, and I told the agents in my office what I intended to do. Initially I was struggling, but soon I was ahead of my plan, so I adjusted it to list 100
properties during my first twelve months. You know what? I failed at that new goal. I listed only 74. But in my first calendar year I listed 114 properties. Could I have done it without “seeing” it first? I don’t know. I doubt it. Vision drives us to succeed.

Here’s another example. I was determined to become the top listing agent in our market during my first year. I first saw this vision clearly in my mind, and I used it to drive me until I accomplished my objective in less than six months. Could I have become the top listing agent in our market without having that vision? Maybe. I doubt it. But I know one thing for sure: I did accomplish my objective after I’d first seen it in my mind’s eye.

I could go on and on, but what’s important is that, if you can see it, you can achieve it. And if you can “see” it before anyone else does, that’s even better. For years, Roger Bannister held in his mind a vision of himself running a four-minute mile. Not surprisingly, everyone in his day considered such a goal to be unreachable — everyone except Roger! He continued to train and to pursue that vision — and then one day he broke the four-minute barrier. So you know what happened next? That same year, several other people broke the same barrier. Roger had broken it first because he “saw” it first. But as soon as other runners could see it, they could then achieve it.

And there’s no reason that you can’t do the same thing. Any of us can accomplish greatness if we address the challenge properly. Take some time alone to get a clear picture of the “perfect” real estate practice. Your perfect real estate practice. In the next part I’ll give you the practical steps toward accomplishing your vision, but before I can do that, you’ll have to have a clear picture of what’s ahead for you. Just print out this installment, and then set it aside. Go take a few hours to get a realistic concept of where you’d like to see your business in a year. Dream big! Imagine that your goal is already a reality. And take the time to see the details. When you see everything clearly, write it down so that you can refer to it and use it to refresh your mind. I promise you that, if you do this, you’re on your way to becoming a mega-producer.

STEP TWO: REVERSE ENGINEER YOUR SUCCESS

All right, by now I trust that you’ve done your homework and taken the time to get a clear picture of your dream practice. I’m also confident that you have all the details clearly in your mind’s eye and have written them all down to refer to later. Good. Now we’re going to get into the practical steps toward making it all happen. You’ll need a pencil and a piece of paper for this part. And go ahead and get a calculator while you’re at it — we’ll be crunching some numbers. Don’t worry, though! I promise that the math will be easy. But first let’s discuss reverse engineering.

Reverse engineering is the process by which a company disassembles a finished product in a laboratory, carefully documenting all the details so that it can determine how to build a similar product. Maybe you’ve seen the movie Paycheck. (It was about reverse engineering.) Well, the reason I want to start here is that this is the single best way to build a business plan for your real estate practice. We’ll begin with the end in mind.

Now, because this process will be highly personal, you’ll have to supply your own finished model (i.e. your perfect real estate practice). In order for us to work on this together, however, I’ll show you the steps in an example. Remember — this isn’t meant to be a substitute for your own vision. It’s just an example so that you’ll be able to follow along and know what to do when you do build your own business plan.

Okay, for the purpose of this sample business plan, we’ll map out our assumptions.

• Assumptions for Sample Plan:
• Desired net income: $100,000
• Your brokerage split: 70% (the amount of each commission you get to keep)
• Average sale in your market: $200,000 (your market may vary)
• Average transaction side: 2.75% (your market may vary)
• Average GCI (gross commission income) per side: $5500

This is where we want to start. In order to begin our own business plan, we need to disassemble the sample plan. Here’s what I mean. We need to see what these goals mean in terms of specific details. Let’s start with the financial goal. To make $100,000, you must first determine what you need to produce in order to get there. To do that, take $100,000 and divide it by your agency split of 70%, and you have $142,857. But that’s not your target yet. Don’t forget that you should be investing 20% of GCI in customer acquisition or advertising, so what that means is that you need to take $142,857 and divide it by 80% (the amount left of GCI after you invest in your advertising). That number gives you a gross revenue target of $178,571 — the total amount of gross commission income that you must actually generate in order to make your desired net income.

But this is just a nebulous income amount unless we reverse-engineer it. Let’s talk about specifics here. Next you need to calculate how many transactions you need to close. Divide the gross commission income by the average commission, and you have 33 transactions ($178,571 divided by $5500). That’s how many average transactions you need to close. Now let’s take it a little further. What exactly goes into closing those 33 transactions? Let’s now look at the raw ingredients needed to produce all this business. First and most importantly, you need leads. Lots of leads. In fact, on average you need 24 leads per transaction. Thirty-three transactions times 24 leads equals 792, the total number of leads you need to generate for the year. Divide that number by 12, and you can see that you need to produce 66 leads per month (or roughly 3 new leads every business day).

Assuming that you’ve put a lead capture system in place so as to generate all those inbound leads, the next thing you have to do is convert those leads into deals. The best data says that you should count on ultimately making substantial contact with only about half the leads (after a maximum of six attempts). What that information suggests is that many leads will already be working with other agents, have friends in the business, be referred to someone else, or (for one reason or another) not want to talk with you. The good news is that the other half do want to talk with you!

And here are some more sixes. Of those six leads you contact, you’ll ultimately set up an appointment with one. And you’ll contact that one lead an average of six times as you build that relationship. Ultimately you’ll set up appointments with about one-sixth of all your leads. And half of your appointments should ultimately progress to closings. So let’s do the math together.

Leads per month: 66

Calls to those you never engage: 198 (33 leads times 6 attempts)
Average time spent on a call: 2 minutes
Total calling time: 396 minutes

Calls to those you engage: 198 (33 leads times 6 calls on average)
Average time spent on a call: 20 minutes
Total calling time: 3960 minutes

Total calling time (all calls): 4356 minutes (396 minutes plus 3960 minutes)

Now, if you do the math (4356 minutes divided by 60 is 73 hours per month; divide that by 4.33 weeks in a month), you can see that you’ll be on the phone about 17 hours a week. That’s a lot of phone work. But that’s 17 hours in a perfect world. In my world, I get interrupted, my computer quits, my call is dropped, etc. If you divide that 17 hours per week by .75 (allowing for a 75% efficiency) you need to plan on 23 hours every week for making your prospecting calls alone. In other words, it should now be obvious to you that high-volume real estate is extremely telephone-intensive. And then you have to factor in your time actually practicing real estate (listing, selling, and closing), add to your administrative time, and now you have a pretty full schedule. This is what business planning is all about. First you must plan your work, then you must work your plan.

When I was a brand new agent, I built this same kind of business plan. Because of the focus it gave me, I was able to spend a lot of time in my office with my door closed, talking on the phone. Well, many of my fellow agents spoke disparagingly about how I couldn’t (and shouldn’t) do real estate in my office. I told them that I couldn’t do real estate away from my office. I told them that, if I weren’t with a client, showing or listing a home, I would be in the office and on the phone. There’s too much to do! Real estate has changed. The age of going out all over town to hustle up business is over. Lead generation should be on auto-pilot, allowing you to spend your time actually working those leads you produce.

Now let me ask you a question: wasn’t that easy? Building your own business plan should be easy! First you need to take the time to build your dream — your vision. Then you need to begin to share that vision with those around you. Realize that many of your fellow agents will pooh-pooh your plan, but that’s because it’s easier to find fault with your plan than it is to build plans of their own. So don’t let those around you tell you what to do. Follow your own business plan. And then get a comfortable chair and phone headset. You’re going to need them! High-volume real estate is done on the phone. Finally, consider building a team. To the degree that you can duplicate yourself by adding team members, do it. Having your own team will allow you more freedom and give you the ability to take your business beyond your personal production capacity.

I’ll leave you with a single thought. Many agents talk about building a business plan, but talk is cheap. What would happen if you actually did it? If you actually came up with a plan? Would it increase your production next year? Would it give you more freedom and a better quality of life? Would it take away the stress of racing from deal to deal? If you answered “yes” to any of those questions, I challenge you to break away from the crowd and actually do it. Design your game plan.

So how well are you tapping the largest of all markets — the Internet? Do you have efficient lead capture on your website? If you don’t, the first step to becoming a dominant real estate agent is having “too many” customers. The best of plans won’t work if you can’t produce the leads to power your business plan. You really have to start there. Everything else is second to that. Today, the lead vendors are spending lots of money tapping the Internet. If you’re going to compete with them, you’re going to have to have technology that puts you on the same level. Otherwise, you’ll find yourself buying leads to make your goals. Call us today at (800) 708-7705 extension 7200, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing advertising. Where should you be spending your marketing dollars if you plan to become the top buyer agent in your market? What strategies will get you the most bang for your hard-earned buck? Is it possible to be effective in advertising without breaking the bank? How can you know for certain which ads are working and which ones aren’t? All these questions will be answered in the next installment, so you won’t want to miss it. I’ll also be telling you my secret for finding hundreds of new buyer leads without ever cold calling or working my circle of influence! In the meantime, if you don’t have efficient lead capture in place, you need to start there. Call us and let’s talk about your lead capture. My number is (800) 708-7705 extension 7200, and I’m happy to discuss it with you. There’s never going to be a better time to start than right now.

Finally, let me renew my commitment to you. If you invest your time in reading this seminar and then — more importantly — in applying what I show you, your business will never be the same again. This is my sincere promise. It’s my greatest honor to be able to play a small part in your success. Thanks again for reading.

For more information about FavoriteAgent.com, call us toll free at (800) 708-7705 extension 7100 or visit our website at http://FavoriteAgent.com.

Matt Jones
REALTOR®, BROKER
President/CEO
FavoriteAgent.com