The primary focus of much of the coaching I conduct with real estate agents is how to set-up, operate and ultimately exit from their successful real estate business. In this multi-part series I want to discuss some of the key points and strategies for making that happen. In my experience as a broker-manager and coach for the last 16 years, it amazes me how many top-producing agents are unbelievable rainmakers and not always the best at managing their finances or their team, setting up and utilizing effective systems and running the business like a business.
As an industry, training is primarily focused on basic sales skills, prospecting and how to generate and convert those leads or build referral business. Of course, all these skills are critical to a successful real estate career. In my opinion, what's missing is effective training and coaching on the basic and advanced business and financial structure and systems that any successful business uses on a daily basis.
Here are the main areas of consideration for designing your exit strategy:
- Determining the value of your real estate business
- The Essential Real Estate Business Systems
- Real Estate Team Building Systems - an overview
- Establishing metrics to measure your business health
- Exit Strategy - from training your replacement to buyout considerations
In this article, let's cover the factors in determining the value of your real estate business.
Without a strategic action plan and clear exit strategy, an agent desiring to leave the real estate business generally has this as an option: Find another agent to takeover their client database and give them a referral on any business generated. Some agents have negotiated a "purchase price" for their database. But here's the issue - how do you determine the value of your database? Does the agent who's "taking over your business" have the rapport and relationship with your database? Later in this series I'll share some ideas for finding and training your replacement as an exit strategy which if leveraged with other strategies can result in a much higher purchase price or residual income agreement.
Here are some considerations to help determine the value of your real estate business:
- The quality and size of your database.
What kind of historical data do you have on your clients? Is it more than just their names, addresses, phone numbers and email?
Do you know....
- Favorite Restaurants?
- Favorite free time activities?
- Children's favorite activities?
- Children's schools/grade levels/ages?
- Where did they move from?
- Do they have plans to relocate to another city in the future?
- Place of worship?
- Favorite charities?
- Investment wants?
- On-going information requests?
- Where they like to shop for clothes and food?
- Their passions? Hobbies?
- Where they vacation?
- Marital status?
- Place of employment?
- What software program do you use to maintain your database?
A better question may be...Do you use a system to maintain your database? And if the answer is no, then this is a critical first step to handle ASAP. Stop procrastinating already! Make a decision on the software and/or system and hire someone to get all the contact data loaded.
Read my post: 7 Action Steps to Creating Your SOI/Past Client Referral System for some guidance and suggestions on software programs and implementing your SOI system.
- Have you categorized and sorted your client database?
I recommend the Brian Buffini system for maintaining and building referrals. This is the category description from Buffini:
A+ Have given you multiple referrals and you love working with them
A Have given you a referral and you want to receive more referrals from them
B People who would refer you, if they were asked and shown how
C People who might refer to you in the future
D People to be deleted from your database
- Do you have lead generation systems in place that can easily be transferred and taught to a replacement?
Have you implemented effective and duplicatable real estate systems? Listings, Buyers, Escrows, Lead Generation & tracking, Business Plan, Personal Branding & Promotion, Advertising & Marketing, Referrals
Do you know your numbers? Can you clearly show your track record for production currently and in the past to include income, expenses, sources of transactions, return on various marketing venues and target markets?
Do you have a real estate team in place? Do you know what the team members contribute to your bottom line?Do you have accountability systems and production tracking set-up?