Adam Hergenrother is the founder and CEO of Livian. He believes business is nothing more than a channel for personal growth and embraces the company’s vision, Love How You Live. When he’s not leading and growing his organizations, Adam can be found with his wife and three children either in the mountains or in the great outdoors.
It’s no secret that the real estate industry has seen some really interesting activity over the past two years (bidding wars, low inventories, homes selling for more than $100,000 over asking price, rising interest rates). Real estate was fast and furious.
We flipped two years ago when we didn’t know how the pandemic would affect the real estate industry. Real estate professionals gathered. You have adapted. you thrived. They are entrepreneurs at heart, and that’s exactly what they do!
And now it’s time to do it again. The real estate wind of change is blowing. The beauty of the industry we work in is that it’s really simple. But we often complicate it by looking for distractions that keep us from just doing our job, which is making connections, growing relationships, and negotiating the best deals for our customers and clients.
Remember, simple but not easy. Now is the time to close the hatches, refine your daily routine and systems, and ensure you have a strong foundation for the next real estate market to start making profits and keep growing.
Well, for those of you who got into the real estate market after 2010, the changing market can feel very different than what you’ve experienced in recent years during a rising market. It’s good. Don’t let your mind wander to things you cannot control.
This new market will likely require you to work harder than before. Make peace with it. Understand the market and then act. In this way, you will emerge from the change even stronger, more successful and more profitable than before.
Here are three ways you can maintain your profit throughout a shift.
Cut spending by 10% every month
Building profit and wealth isn’t just about how much you make, it’s about how much you make to keep. This is where extreme cost management comes into play. And during a shift it becomes even more important.
Not to mention that the inflation rate is currently around 9 percent (while a generally acceptable inflation rate is 2 percent). In order to maintain profit, you need to ruthlessly review your expenses and make some cuts.
Start by creating a simple sheet of all the expenses you have for running your business. Evaluate everyone. Does it offer an ROI? If not then delete it. Discard anything that is not screwed to the floor.
I’m not necessarily talking about salaries and staff. Team members will most likely be your most valuable asset during a changing market. But everything else is fair game. Many of your expenses you may not even be aware that you are paying for and may not even realize when they are gone.
Measure everything and reduce contracts, renegotiate them or scrap them all.
Make it a game! How can you get creative and reduce your spending by 10 percent month-over-month over the next 12 months? If, like our company, you are experiencing strong growth, you should choose a profit margin that you are comfortable with.
And after you’ve gone through the cost-cutting exercise, anything above that percentage of profit margin should be reinvested in the business. This forces you to maintain growth and profit.
Focus on production
Everything counts. But not everything is equally important. During a changing market, production (putting deals together) takes an unequal amount of time and energy. If you don’t already have a production playbook, I would recommend creating a clear and actionable plan for you and your team to follow.
We keep it simple for our agents:
- Did you show up and join the team huddle?
- Did you have two appointments this week?
- Did you sign something today, sell something or make an appointment?
- Did you add five contacts to your database this week?
If not, nothing else matters.
That’s it. Refocus on those activities until they are hit. It comes down to knowing how to unequally distribute the time spent putting together deals. And when the whole team takes care of this playbook, you can keep your win.
Work with professional full-time real estate agents
During a shift, you need to ensure you have exceptional team members by your side who are willing to go the extra mile to maintain and grow profits over the next few years.
Some will make it, some won’t. This applies to vicarious agents and employees. It will be your job to focus your time and energy on the agents who understand what is required of them to be successful.
These are full-time professional agents who treat their business like a business. They show up. You do the work. And they see results.
Our agents have agreed to show up Monday through Friday and attend a morning briefing, as well as attend team events (e.g., call nights or team meetings). They have agreed to report their numbers five out of seven days a week.
They have agreed to keep two appointments a week. And they have agreed to add five contacts to their database every week.
In return, our company provides them with the operational leverage and support (transaction management, listing management, marketing), coaching and training, systems and software, playbooks, community and culture, and more so they can focus on what they do best.
To maintain profits throughout the shift, you need real estate professionals who take ownership of a real estate career. It’s an incredible career and the ones who will prevail are the ones who show up consistently, follow a playbook and devote as much time as necessary to the activities that matter most.
Remember that the best way to combat insecurity is to be confident in your habits and daily activities. What expenses can you save? What is your morning routine like? What part of lead generation are you really good at? We all have a natural way of connecting with customers. Double that. Who do you surround yourself with on your team? How do you end your day?
Get clear. Get purposeful. Be consistent. When markets change, opportunities increase.
Adam Hergenrother is the founder and CEO of Livianthe author of The Founder and the Power Multiplierand the host of the podcast, Business meets spirituality. Learn more about Adam’s company and culture here.