Your team should be profitable without your production.
Otherwise, you’re investing in a liability, not a business.
Fast Value: Most teams are not profitable. Most team leaders are lighting their own production dollars on fire to “have a team”. You can make the choice today to run a profitable team. It will require changes, but you’ll be glad you did.
When I started my team in 2020, I had no idea what I was doing.
I didn’t even know what a team was, to be honest. Because we didn’t know what we were doing, we did a lot of things right.
Then… we thought we were getting smart and started changing things.
We made changes based on…
what our agents said they wanted…
what other team leaders were doing…
… but none of the changes we made were made because they were best for the business.
Here is the reality that I see 5 years later.
The agents we were trying to keep happy have almost all left.
The team leaders we were “copying” are almost all out of business, unprofitable, or have shrunk in size.
I made the same mistake that most team leaders make.
Focused on shit that doesn’t matter.
Sales Volume. Units. Agent count.
All total nonsense.
Replace these real estate terms that we all throw around with real business numbers.
GCI = Revenue
Agent Splits = Cost of Sales (Cost of Goods Sold)
Company Dollar = Gross Profit
Income = Net Profit (EBITDA)
Today, I make decisions based on what is best for the business. Some decisions are for the short term. Most decisions are for the long term.
For example, I’ve decided to invest roughly $30k/mo into rebuilding my ISA department. This is a long-term decision. The only reason I can do this is because our team is operating ABOVE our profit margin goal.
The only reason we’re able to do that is because we fixed all (most) of the mistakes we made over the last 5 years.
My point is… it’s not about size, it’s about profit.
We’re not in a venture capitalist-backed tech company. We’re in the service business. There is NO reason to run your company at a loss.
This topic hit me over the weekend when I was listening to a video of a business owner talking about how he sets up his service-based businesses.
The exact numbers don’t matter, but he said, “If I can’t run a service-based business on 80% gross margins, I don’t start it.”
If I had just figured that out before I started, it would have saved me a ton of money. Once you get your financial model right, THEN you can put all your effort on growing.
You probably already know the changes you need to make…
I’m going to bet it’s one or more of the following…
- Agent splits are too high
- Admin costs are too high (more than 10% of revenue)
- Little to no marketing budget (should be 10% of revenue)
- Cannot recruit, train, or retain agents
I could go on and on.
Here are the four you want to get right the first time:
- Choosing Your Financial Model
- Creating your Offer (for Agents)
- Company Standards & Accountability
- Culture of Productivity (retention)
Everything else can be built as you go.