The end of your financial year is a good time to re-evaluate your budget, think about your numbers and decide how to pursue growth in the next year.
There are three areas where increasing your performance will make a tremendous difference in your profits. Those key initiatives are:
Increasing your fees
Increasing your average sale price
Increasing your volume
Competition has a way of influencing you to lower your fees in order to secure clients, but this may also cause you to charge less than you are worth. An interesting effect is that newer agents often command higher fees simply because they don’t “know” they can’t. They are not familiar with their marketplace yet and don’t know they are asking more than the average percentage. They are also eager, optimistic and enthusiastic. The result is that their positive drive and energy gets them the fees they ask. That same approach can work for you as well. Also, if your agency offers a performance based fee incentive you can negotiate to receive bonus payments when your sales rise above a certain percentage. Especially in a growing market even a 10% bonus can add significant profits to your bottom line.
Increasing your average sale price is another way to achieve growth. First you must determine whether that is possible in your area of the marketplace. Study properties currently on the market, asking prices and completed sales, to get an idea of profits that are possible in the areas you work. You do need to be in an average to high-end marketplace to realize this advantage because that is where you will meet the clients who have properties with the values you need.
Increasing your volume will also drive your profit margin upward. This level of work requires a team, or at the least an assistant, to help you with your expanded levels of prospecting and buyer work. Start by reviewing your numbers, then determine how many properties are active in your market and what percentage of those properties you need to book in order to realize your target growth. Study your market for average sale prices and volume of available properties. You then have to make sure your market generates enough active properties to provide the volume you require for growth.
Plan your active year based on a 10-month calendar. You want to make sure you have 2 months off each year to rest and recharge for the level of energy and consistency you need in order to maintain a successful level of work the rest of the year. Make sure that you download a copy of our financial spreadsheet and use it to structure a clear plan for your upcoming financial year of business. Then you can decide where to focus your efforts for your most successful approach to growth within your market through increasing your fees, your average sale price, or your volume.
I hope you enjoyed today’s Coaching Tip, and I look forward to seeing you here again next week.