Heroes With Passion
I believe that where our passion for our business intersects with our desire to be heroes to our clients lies our opportunity as entrepreneurs to be rewarded handsomely for our efforts. This is not a magic formula however. If it were, many of us would be very well off indeed. Profitability requires focus, structure, a set of proven processes, and intentional execution.
Value Is the Key
Our business plan is deceptively simple. It is designed to offer our agents and clients superior experiences not regularly obtainable in the market, at a competitive if not premium price. In short, we offer superior value. My goal is to offer our broker owner partners and franchisees superior value as well.
A ROOST Real Estate Co. or Lucky Town Real Estate Co. franchise is not the least expensive in the market nor the most expensive. Our fees are however transparent and straight forward. There are no surprises and no hidden charges. We work with our partners the same way we want you to work with your agents and clients. If you know what to expect, you can plan and budget for it.
Things You Already Know
Profitability is influenced by both revenue and expenses. Profitability is also influenced by how we manage our income and expenses. The difference any given month between our revenue earned and expenses paid is cash flow. Managing cashflow is critical to the success of a real estate brokerage and its ultimate profitability. Make no mistake, the cliché is true, cash flow is king.
I Am Very Good At Managing Cash Flow
I am passionate about teaching our broker owners to manage their cashflow. Some of us are very good at this skill and need no assistance. For most of us however, at least in my experience, budgeting, forecasting, and managing cashflow are not core competencies. A significant portion of our broker owner training program, called The Self-Managing Brokerage, is devoted to just this topic. We also provide ongoing support and access to additional resources as needed.
We Like QuickBooks Online
We suggest that our partners utilize QuickBooks online to manage their accounting. Using the online version allows the owner, Agent Service Manager, an accountant or bookkeeper, and any other team member to have access to the system tailored to their role in the company. We provide our franchisees with a chart of accounts specific to running a ROOST or Lucky Town brokerage. We also offer The Cash Flow Forecaster™, built on an excel spreadsheet, to help project and manage expected income and expenses into the future.
Build Revenue With Direct Response Marketing
We help build revenue with internet marketing strategies designed to grow our three main lines of business. We have The Agent Attraction Strategy™ as well as dedicated programs for attracting property management clients, and of course buyers and sellers. We utilize search engine marketing, blogs, our continuously evolving websites, and various social media platforms to reach our target audiences. It is possible that these techniques were responsible for introducing us to you, a potential future partner.
Agent Income
Your Pay Your Way™ is designed to attract agents who want to build a scalable and sustainable business in a way that rewards the broker owner for their efforts. It directly and indirectly sets standards of service and production for our agents. It names a target and sets the bar high enough to be a challenge. It is a universal program with no room for special deals. It is flexible enough to accommodate high producers without compromising the integrity of the strategy. It is the primary income stream for most franchisees.
Broker Personal Production
An additional revenue stream to the brokerage may include the broker owner’s own production. While it is never a good idea for the broker to be in competition with his or her agents, there is nothing wrong with a broker cultivating their own book of business. The broker owner who walks the walk when it comes to working by referral and making full use of the tools we provide, is a powerful motivating force for the agents in the office.
Property Management Services
Another revenue stream that few brokers take advantage of is property management. Property management as a stand-alone department is not necessarily a great profit generator in and of itself until scale is reached. However, revenue from this service covers a significant amount of general office overhead throughout the year, making ongoing marketing and agent support investments sustainable. And, the relationships we have with our owner clients are some of our best as many continue to buy more properties which generates additional commission income to the brokerage.
The 25% Solution
In my office in Springfield, our average rent per unit is right around $550 per month. Our average sale hovers between $100,000 and $120,000. We are not a high-end market. The revenue we generate managing a little over 700 units for 150 or so owners comes to about 25% of our total revenue. That means 75% of our revenue comes from sales. Other offices may do more and others less. For the Springfield office, it is the perfect mix. That is why I refer to adding property management to a brokerage’s service offerings as the 25% Solution.
The Self-Managing Real Estate Brokerage™
The Self-Managing Brokerage broker training program has a complete section devoted to starting and building a property management department. We have almost 15 years of experience in this area and have developed methods and processes that make the business manageable. We currently look after 1200+ units amongst all our offices and we do it with an internet based system called AppFolio. We also employ a dedicated accounting firm specializing in property management and the AppFolio platform to handle our accounts payable and monthly reconciliations.
Expense Management – Payroll
Expense management is built into our model for operating a profitable brokerage. Just as revenue is tied directly to productivity, so is expense management. One of the biggest expenses for any brokerage, especially one running a stand-alone property management division, is payroll.
We address the payroll / productivity issue by first creating detailed job descriptions for every team member on each team. From there we document the behaviors of previously successful team members and hire accordingly. There are a few more steps to the process that we teach in The Self-Managing Real Estate Brokerage™ training program, but that is the gist of our method.
Vendor Partners
We also influence expenses by building partnerships with vendors that know us and understand our business. For instance, our printing partners have built a website for us designed to facilitate personalizing and ordering printed material such as business cards and brochures. Our sign company does the same.
Our website and internet partners are set up to expand with us and our broker owner partners well into the future at costs we can plan for and count on. We only work with vendors that offer us the greatest value for our money. It becomes obvious very quickly that sustainable profitability is the result of doing many small things right over time.
The ROOST Broker Profitability Partnership™
We invite you to learn more about how we approach our relationships with our broker owners and partners at www.PartnerWithROOST.com. We would love to hear from you so gives us a shout anytime.
