Owning a business can be stressful, especially for real estate brokers. However, knowing your numbers – the ones that drive your business and the ones that you can drive to create more business – can bring you closer to achieving peace of mind. Get your head around your business by focusing on the following categories of numbers every month. These numbers can help inform your goals and strategy for the next month, quarter and year.
Here are a few numbers you can act on to help drive profitability. With the right plan, focus and execution, these are numbers that you can change. Find these numbers by working with your accountant or bookkeeper to analyze your business.
- Overall Company Dollar (%)
- Sales Rate
- Expiration Rate
- Percent of Asking Price Received
- Average Sales Price
- Per Person Productivity
- Recruiting (desk occupancy)
Knowing these ABC’s of financial analysis will help you keep your finger on the pulse of your business and help you track success against your plans.
- Analyze the financial statements monthly
- Be focused on business plan drivers
- Compare benchmarks (i.e. what was your average profit per sales associate this time last year?)
- Dissect listing inventory
While you’re planning and focusing on the above, these are often areas where you can implement cost cutting should you be hit with an unplanned setback in the coming year.
- Sales Promotion
- General Administration (phones, copier expenses, etc.)
- Staff hours
In each area, plan possible places where you could cut expenses without negatively impacting productivity. Think of each as a lever to be pulled if something happens to threaten your profitability in the coming year. This way you have a pre-meditated plan-of-action in place rather than making last minute decisions.
These and many more essential business tips came out of the 2013 ERA Broker Business Forum’s profitability workshop, “Numbers Nerds” with ERA Real Estate’s own Jeff Riber. Designed to help brokers maximize profitability, the course points participants in the direction of developing financial and production management skills.
ERA Real Estate brokers: For more information on managing your numbers for productivity and profitability, be sure to join us in March for the 2014 ERA Real Estate International Business Conference in Los Angeles. You’ll be able to participate in workshops and network with fellow brokers and numbers experts, such as Jeff Riber, to learn how to better manage your finances to boost your bottom line, and your agents’ bottom line.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net