It’s a great supplement to your regular marketing so long as it’s free. As a stand-alone marketing technique, it is destined to fail, and if executed perfectly will yield you maybe a deal a month. Statistically, it can never make you a top producing agent, and here’s why. Continue Reading…
Because our company has grown to over 20,000 agents worldwide in only five short years, I’m often asked questions about our company’s growth strategy. One question that seems to come up again and again is, “Why are you so focused on recruiting agents?” Because we get that same question so often, I’d like to take a few minutes and share our company’s growth strategy with you, and then once you’ve had a chance to understand it, I think you’ll agree that there is a “method” to what you may initially see as our “madness”.
Get the Flash Player to see this player.
First, we see our growth strategy in two separate phases: Phase One is QUANTITY. Phase Two is QUALITY. Here’s what I mean by that. You have to have the agents (in other words, QUANTITY), before you can set out to improve them (or QUALITY). Don’t get me wrong. Both are important, but they have to be done in the proper sequence. First comes QUANTITY. Then comes QUALITY.
So first, let’s talk about QUANTITY. The fastest-growing national real estate companies all have one thing in common — their national emphasis is on recruiting agents. Now why is that? I’m going to let you in on a secret. It’s because COMPANIES don’t produce transaction volume. Neither do BROKERS. It’s the AGENTS who produce the volume. Now as a company, our goal is to increase our market share to 5%, so that means that we have to increase our number of agents.
Let me explain it this way. The S&P 500 has consistently out performed all of the other major indexes and even most mutual funds, year after year. Why? Because it’s built on a large number of companies — 500 to be specific. Sure, some mutual funds, or other indexes may have better one-year results, but for consistent, year-after-year results, nothing else comes close. Of those 500 companies, some are top producers, while others under-perform. But at the end of the day, the average of all 500 yields consistent, steady growth.
Well, our growth is based on this very same principle — the principle of diversification. We don’t recruit only super stars. We want all types of agents. Full-time and part-time. Top-producers as well as lower and average producers. Here’s why we’re able to take them all: Our Team Leaders don’t have to provide brick and mortar office space to house the agents, so they’re able to hire as many as they want. Sure, our corporate office makes a huge technology investment for each new agent, but we’re willing to make that investment because we see the big picture.
Now, let’s talk actual numbers and I’ll show you exactly what I mean. Last year the average agent in America closed 7 transactions. The typical office had 23 agents. The average sale price was $206,500. That means the average company production volume was $33.25 million dollars.
If your goal was to double that volume, you could use two different strategies: First, you could recruit twice as many agents. No big deal. Hire one agent every other week. Even skip a few weeks. That’s by focusing on QUANTITY. On the other hand, you could double your volume by focusing on QUALITY. But for that to happen, you would have to bring every single agent’s production from 7 deals a year to 14! Now I ask you: which is easier to do? To recruit 23 average agents or to double the production of every single agent in your company? Exactly.
And that’s why we focus on QUANTITY first. So, our Phase One growth strategy is to rapidly recruit agents until we have 5% of the agents in any local market. But why 5%? Because, historically, it’s been proven that a company can grow to that size in a very short period, without any real market resistance. Sure, we’d love to have more, and some offices have well over 20%, but we have a very conservative one-year target of only 5% market share. That means if there are 1000 agents in a market, we expect to recruit at least 50 of them, and the production volume will take care of itself.
OK. Why so fast? Why only one-year? Because of another principle: momentum. The faster you grow, the easier it is to grow. Growth begets growth. Our strategy is to create a “buzz” among the agents in any given market, making the recruiting that much easier. It’s as simple as that. Think of a popular restaurant. Everybody wants to go there. Meanwhile, people will drive right by another restaurant with an empty parking lot, so they can go to the newest hot spot and stand in line.
That’s our strategy. So how do we intend to implement it? Very simple. Like all the fastest growing companies in the world, we require performance from our key people. Our Regional Vice Presidents are required to obtain no less than 5% market share in their first year. In order to meet that 5% milestone, they, in turn, require their Team Leaders to recruit 10 agents per month for the first 90 days, and then another 20 agents over the next 90 days. That’s a total of only 50 agents in six full months.
If a Regional Vice President fails to hit his recruiting targets, he will very likely lose his position. It’s nothing personal, but his job depends on his fulfilling the company’s growth objectives, and everyone knows what’s required when he accepts the position. Now, in the exact same way, any Team Leader who fails to hit HIS recruiting targets, will likely lose his position. He or she might be a great agent and even a great person, but just not the right person for the job.
Well, the good news is, that as a Regional Vice President or as a Team Leader, you are “vested” once you reach your 5% milestone. Then you can relax and enjoy your income, and focus on Phase Two — QUALITY. But before you focus on QUALITY, we expect you to build your required QUANTITY. If you’ll do that, you’ll make a lot of money. But more importantly, you’ll have the respect of your team and they’ll trust you when you begin to start focusing on improving their QUALITY.
And here’s some more good news: we at the corporate office are committed to helping you achieve your recruiting milestones. We continue to develop new recruiting tools and we continue to advertise for agents that we can then refer to you. We want you to hit your milestones. We want you to earn a ton of money. And we want you to enjoy being part of this real estate revolution! Real estate the NEW way! The FavoriteAgent.com way! So focus on building your QUANTITY first, and the rest will take care of itself.
Let’s face it — we all know that much of what we spend our marketing dollars on is a complete waste of money. And what’s worse is our advertising amounts to the single biggest expense we have as agents — as much as 20% of GCI or gross commission income! That means if you gross $100,000 a year in commissions, you are likely spending up to $20,000 a year in advertising. Continue Reading…
It’s the 4th of July!
“For what avail the plough or sail, or land or life, if freedom fail?” ~Ralph Waldo Emerson
“America is much more than a geographical fact. It is a political and moral fact - the first community in which men set out in principle to institutionalize freedom, responsible government, and human equality.” ~Adlai Stevenson Continue Reading…
As I’m sure you know, it is difficult to operate a business in today’s economic climate. It is more difficult to operate a start-up business, particularly a restaurant. That’s why I bought a going concern. During the course of my due diligence, I was given P&Ls for the previous six years of operation, all certified by a CPA. The most recent six months’ financials, however, were not available. I did, however, have numbers from the previous owner that showed consistent sales for those last two quarters, as well the owner’s certification of his full regulatory compliance at the time of the sale. Not being able to futher verify the information, I decided to purchase the restaurant anyway. I know what you’re thinking… and you’re right! Continue Reading…
Ok. I closed the restaurant… well, it’s more like I am in the seemingly eternal process of closing the restaurant. I can tell you one lesson: It’s a lot easier to start something than it is to stop it. Buying a point of sale system takes a morning. Selling one takes weeks. Buying inventory is a quick and steady process involving a few minutes a day. Disposing of inventory takes forever. The same with everything, from leases, to advertising, to accounting, to tax returns. So what’s the lesson? Continue Reading…
In the last installment, I compared the restaurant manufacturing operation with real estate. In this installment, we’ll look at a restaurant as a sales organization. While the back of the house (the kitchen) is all about manufacturing, the front of the house (the dining room) is all about sales. Meeting customers, setting expectations and exceeding them, and attention to detail are crucial elements in any sales organization. A restaurant is no exception. Everything is important — from the elegant music, to the dress code of the staff, to the words in your script, to the carefully choreographed service. That’s why our company has carefully selected background music, decor, and office location to help create the right environment to facilitate transactions. Continue Reading…
So I closed the restaurant after a year. We had grown sales about 20% over the year and were continuing to grow in sales and margin every month, while controlling costs and growing margin, but we were still another year from turning a profit. Because of the down turn in real estate, the pressures from my core business (real estate and real estate related technology) I felt I needed to really focus my attention on them. Continuing to subsidize a restaurant during the housing downturn would have brought our company’s cash reserves to dangerously low levels. So, I sucked it up, and made the tough decision to close. It was bittersweet. I enjoyed the restaurant. I enjoyed meeting the people. I enjoyed the staff. And I enjoyed the food and the wine. What did I learn? One thing I learned is that restaurants are really two businesses rolled into one. In other words, you can operate one part perfectly and still have a problem with the other. It’s a balancing act, but it’s a business. So what are these two parts or businesses? Continue Reading…
Well, I finally did it. I decided to close my restaurant after a year of hard work, a lot of struggles, and even more soul searching. Over a hundred thousand dollars invested in trying to “turn around” a failed upscale eatery. And as I unwind the affairs of the restaurant, I must confess, it is a very bitter-sweet experience for me. I had to lay off nearly 20 good employees, walk away from a large capital investment, and more importantly, admit to myself that I am very capable of making bad decisions. Continue Reading…
Powered by eShop v.4