You’ve likely heard of Japanese organizing expert Marie Kondo, thanks to her best-selling book and Netflix series detailing the KonMari Method of de-cluttering your home and only keeping items that ‘spark joy’. But have you ever thought of applying those same principles to your real estate business?
For the last five years, we’ve made an audit and brand review one of our core December activities. Last year, we altered our approach to fit the KonMarie method. Today, we’re sharing with you how we do it – so you too can benefit from a clutter-free business that brings you joy (and profitability).
The KonMari method, when applied to your real estate business, involves three steps:
- Commit to a different approach to your business. What do you want your business to look like? What would your life be like if you weren’t wasting time and money on tools and activities that don’t bring you joy?
- Clean the clutter. You’ll need to look at five areas of your business and be brutally honest with yourself. What’s working? What’s not working?
- Decide what brings you joy – and make a plan to deal with what doesn’t.
Step 1: Commit to a Different Approach to Your Real Estate Business
Being successful in real estate means thinking of what you do as a business – not as a job. That means applying the basic business principles of forecasting, planning and measuring to each area of your business: marketing, financial management, lead generation, client service, operations and if you run a team, human resources. Running a real estate business means setting standards for yourself and holding yourself accountable. It means having a plan – and not flying by the seat of your pants and making it up as you go. It means being disciplined with both your time and your money.
You know what they say: if you keep doing the same things the same way, you can expect the same results. If you’re looking for different results – more money, more control of your time or more joy in the work you do – then you need to be open to doing things differently.
Step 2: Clean the Clutter
Next up: it’s time to perform an audit and de-cluttering of each area of your business, in the following order:
- Lead Generation
- Systems and Processes
- Client Experience
1 – Financials
If you’re like most REALTORS, you probably only think of your finances at tax time. It’s time to change that. This involves getting real about your numbers – and then decluttering.
What’s your REAL revenue? Your REAL expenses?
Unfortunately, our industry is well-known for inflating sales stats and misrepresenting the financials. So let’s get real.
GCI: In real estate, we often talk about GCI – Gross Commission Income.
GCI = Sales price x Commission %
Revenue: Your revenue is not equal to your GCI. It’s equal to the amount of money that gets paid to you – which means AFTER the brokerage split. That money was never yours. (Bonus: it’s always good to be reminded about the total amount of $$ you gave your brokerage.)
Revenue = GCI – brokerage split
Expenses: Your expenses include all of the things you spend money on to run your business: printing, postage, marketing costs, technology costs, additional brokerage fees over-and-above your splits, virtual assistants, staging, office expenses, car, internet and phone costs.
Taxes: Don’t forget about taxes! It’s easy to feel good about how much money you make if you don’t think about taxes, but that money isn’t yours. If you’re in Ontario, remember: you’re just collecting HST on behalf of the government – it’s not yours. While it may be nice to have your GCI appear 13% higher, it’s not your money.
Profit: Revenue (GCI-brokerage split) – Expenses – Taxes
Note: Use closing dates to track your sales annually. If you sold something in 2018 and it closed in 2019, it should be considered in your 2019 financials; similarly, pending sales at the end of 2019 should be considered 2020 income. Avoid the temptation to double count your sales to feel more successful.
What are your stats?
No, not the stats that you use to win awards with and the ones tell your clients about – the stats that signal the overall health and growth of your business.
- Sales volume – the total dollar value of all the properties you sold
- Average sale price – the $ value of all your sales divided by the number of sales (closed in the calendar year)
- Average commission – in dollars and percentage
- Client satisfaction – whether you measure this by the number of reviews, repeat or referral business or something else, it’s a critical measure of how your business is doing.
Now It’s Time to Declutter
- Expense tracking: Put away the plastic bag of receipts – it’s time to invest in a proper system to help you keep track of your expenses and your profitability. We use Receipt Bank and Xero for all our accounting needs.
- Auto-billing: Check your credit card statements: what are you billed for every month via auto-billing that you don’t use? Most agents can find a few hundred dollars a month in savings by reviewing their auto-billings.
- Expense savings: What expense savings opportunities do you have? Are you paying for things you don’t use? Investing in things that don’t give you any return?
- Brokerage splits: Are you getting value for the $$ you’re giving your brokerage? Does your broker’s model still make sense for your business? Switching brokerages is a big decision and shouldn’t be made solely on splits…but that doesn’t mean you shouldn’t pay attention to them.
- Tax planning: Are there any tax planning strategies you should be doing to save taxes? Whether that’s contributing to your RSP, pre-paying expenses in December or incorporating, there are lots of strategies to help you reduce how much you give to the government. Talk to your accountant.
- Your stats:
- Has your sales volume increased more than the market? If the prices in your market increased by 10% in the last year and your business increased by 8%, your business is actually declining.
- Is your average sale price increasing or decreasing and how does that compare to the market? Because REALTORS get paid based on a commission % of the sales price, we can increase our revenue by increasing our price point. If you do the same number of sales but your average price increases from $500,000 to $750,000, that’s a 50% increase in your revenue.
- How is your average commission changing? Have you been increasing your expenses while discounting how much you charge?
- Your data on client satisfaction is a huge indicator of the health of your business and where you’re headed in the future. Are there opportunities for improvement?
2 – Marketing
Now it’s time to take a look at all your marketing efforts and materials. We are all marketed to thousands of times a day…does your marketing stand out?
Brand marketing is all the marketing you create to help sell yourself: business cards, listing presentations, buyer consultation materials, pamphlets, non-listing postcards, neighbourhood newsletters, open house and for sale signage, etc. Take it all out and lay it down on a table – how does it all look together? Is there a consistent look and feel? Does it represent you and your business? Is the messaging consistent? Does it speak to the kinds of people you want to do business with? Does any of it need updating?
I’m talking about your feature sheets, your postcards, your listing-specific advertising. Take it out and lay it next to your brand marketing – how does it look? Does it convey the right message to the right people? Is it helping sell the property or is it brand marketing disguised as listing marketing? If this was your home that was being advertised, would you be impressed with the materials? Is the listing marketing memorable?
Digital marketing is everything that your potential consumers see online: your social media accounts, your website, your email marketing, your online ads. It usually includes both brand and digital marketing. Is your online marketing consistent with your offline marketing? Would somebody recognize it as yours? How does it look when you put it next to your offline marketing – is it a consistent message and style?
Is it working?
Now is a good time to go and look at all the money you spent on marketing last year. What worked? What didn’t (and why)?
Now it’s Time to Declutter Your Marketing
- If you hate what you see or it isn’t consistent, make a plan to change it. You may have to hire professionals – designers, copywriters and web people. If you’re serious about your brand, you can always consider hiring a brand strategist to help you get clear on your positioning and brand (it’s one of the best things we ever did).
- Update any materials that aren’t current – stats, your photo from 5 years ago, etc. Recycle anything that you shouldn’t be using anymore.
- If you don’t already have templates for feature sheets/postcards/social media posts, consider doing it now. Consistency is key to having your brand recognized.
- Do a digital decluttering: Make sure your name and contact info is consistent everywhere. Get rid of any social media accounts you aren’t actively engaged in. Update your website. Google your name and see what comes up (you’ll probably want to get rid of a least some of it).
#3: Lead Generation
Next up: take an honest look at your lead generation efforts. What’s working? What’s not? What can you declutter?
Start by making a list of all your past clients in the last 3 years and indicating where they came from. Repeat? Referral? Instagram? Postcard? Website? Sign call? Open house? Cold calls? Door knocking? If you don’t know where your clients came from, now’s a good time to put measures in place so you’ll have the data you need next year.
Next, make a list of all the activities that you regularly engage in to generate clients. Take special note of the activities you spend a lot of time or money on that didn’t generate clients. Should you abandon those marketing activities? Change your approach?
Most agents have 2 or 3 sources of business that really work for them…is that where you’re spending your time and money?
Next: make a list of all the things you do to keep in contact with your past clients – the intentional things you do to maintain relationships. Is it working? Should you do more or less of anything?
#4: Systems and Processes
REALTORS are a popular target for tech companies, and it’s easy to get sucked into the next best thing and the latest shiny object. I’m gonna bet that you already pay for a lot of technology that you aren’t using; you probably also have some tech that you aren’t really optimizing. It’s just as easy to not have any systems and processes in place too, and that will limit your growth and could impact the service you give your clients.
To audit your systems and processes, make a list of the tools and systems you have….think of this list as the REALTOR equivalent of a ‘technology stack”. What’s working for you? What’s not working? Are you optimizing the use of your tech or only using 10% of what it’s intended to do? What’s missing in your tech stack?
- File management. Dropbox? Google Drive? Having a file management system that isn’t your email inbox will make you so much more efficient.
- CRM – Your CRM (Customer Relationship Management) software should be at the core of your business. Whether it’s Top Producer, Brivity, iXact or a simple Excel spreadsheet, how are you tracking your interactions with your leads and clients? Do you use it consistently? Are leads falling through the cracks? The perfect CRM is the one you use. Avoid thinking that Mailchimp or another mass email system is your CRM – it isn’t. It’s just a tool to send emails.
- Transaction management – What systems and processes do you have in place to help you manage buyer and seller transactions? Templates? Checklists? Trello boards? Have you taken the time to map out the buyer or seller experience and all the things that need to be communicated and done at each step?
- Electronic Signatures – Which software do you use? Does it satisfy your needs? Do you know how to use it or should you practice?
- Financial Systems – How do you track your receipts and expenses? Quickbooks? Xero? Which system to do you use to produce financial reports?
- Marketing Automation – Which marketing tools do you use? Some of our favourite marketing tools include:
- WordPress for our websites;
- Mailchimp for email marketing;
- Coschedule (for bulk scheduling of social media posts and blogs);
- Later (for pre-scheduling Instagram);
- Canva (for easy one-off design);
- Adespresso (for better Facebook ads)
Now declutter. Get rid of anything you aren’t using. Learn everything you can about the systems you keep. Get rid of any systems or processes that hinder vs help your business. Make a plan to address any tech gaps in your business.
#5 – Client Experience
Do your buyers and sellers have consistent experiences with you? What do you think they tell your friends? Do you have any standards in place for how and how fast you communicate? How do you handle gifting? Do you organize any client events? How do you keep in touch with your clients after their transaction closes?
Take the time to define your client experience…is it working? What can you reduce/declutter or combine?
Step 3: Does it SPARK JOY?
You’ve taken the time to audit the important parts of your business and how you spend your time and your money. But does it spark joy?
If the answer is no, you have a few options:
- Abandon the activity, system or tool;
- Replace it with something else;
- Outsource it to an assistant (virtual or real) or partner with another agent.
As REALTORS, we spend a lot of time running our businesses. Wouldn’t it be nice if we were profitable AND feeling joyful while doing it?
We’ll be going into greater detail about a lot of these activities in this blog, so if you haven’t already, sign up to get Bspoke’s latest insight in your inbox.