Self Analysis Questionnaire

I put this self analysis questionnaire together to allow you to review your real estate operation and determine for yourself whether or not adjustments are needed. Just click on this link and print it www.profitpowersystem.com/download/questionnaire.pdf.

Older Technology Is Costing You More Than You Think

In changing times, especially when the market slows down, it is always easy to just stay the course, don't change anything and wait for better times ahead. However staying the course could be costing you more than you think. Sure, spending moneyin tight times can be a difficult decision but are you really ahead of the game. Is it possible that existing systems are actually costing more than replacing them?

Number 1 – Remove older technology that does not provide the ‘return’ your firm demands

Maintaining older technology is often a costly proposition. Work-a-rounds to fix deficient technology solutions are fraught with human error, wasted time, redundant activities and expensive maintenance costs. Many times the older technology forces your organization to maintain older hardware. Older hardware that requires ‘rare’ parts and service can greatly increase your costs of maintaining that antiquated solution.

Modern solutions take advantage of the latest technology breakthroughs. Today’s hardware costs are low and maintaining the latest systems is far less demanding than decade old solutions. All of this leads to lower costs and more profit staying in the company.

Finding a solution that is a fully integrated and offers the ‘next generation’ of technology can have a huge positive impact on your real estate firm. Now is a great time to evaluate existing systems, and if appropriate implement the right tool for the job and reap the ‘return’ you expect on all of your investments.

Sure, “the times are a changing” and smart businesses know that they must change with the times to stay competitive and continue to grow and prosper in any market condition. You will discover what many other sophisticated business have already discovered, that is that the old ways usual cost more in the long run than the investment required to update to more profitable methods.

As the summary chart below illustrates (using the ten strategies posted over the past few months), it would take almost 1400 additional transaction sides to be generated to earn an additional $140,000.00 in PROFIT (if we assume a $100.00 per side profit as per the NAR published estimates). These examples are based on a single office with just 25 agents. Even if you divide the results in half, or a quarter the benefits are still fantastic. Play with the assumptions on your own, but no matter how you slice it, newer technology that can modify business operations is a smart investment that has real measurable returns for your technology investment.

So waiting for better times to make a change to newer technology could be costing your firm a lot more than you think.

Lower Costs and Keep Your Agents Happy

Sales associates are independent contractors that need a host of reports for their own record keeping. Keeping track of their own activity is often left to the 'end' when tax time arrives. As the broker owner you must keep a complete and accurate account of all transactions. This process has a cost! Why not solve you sales associates record keeping challenges and lower your cost of administration at the same time.

Number 2 – Increase revenues by improving sales associate services

Sales associates are independent contractors that need 24/7 access to their data. Technology can improve sales associate services and provide revenue making opportunities.

Solutions that offer an on-line access for your sales associate not only provides your associates with all of their data (right up-to-the-second) but if your company decides to, can increase profits.

Providing accounting and client management solutions for your agents is a snap with the latest technology solutions available today. Your firm already enters all of the data for each and every transaction. Your administrative staff must record the listing, the seller, the buyer, commissions earned and paid, deductions, dates and so much more.

To each and every sales associate in your company this data is vital, even if only at the end of each taxation year. Entering and managing this data has a cost. Why not consider charging a nominal fee to pay for work that your firm has no choice in doing and provide a real service that your sales associates can find immediate benefit from.

Assumptions (multiply by your actual numbers):
1 branch office
25 agents
$10.00 per agent per month service fee ($120.00 per year)
$3,000.00 additional annual revenue
Using NAR $100.00 average profit per side the $3,000.00 would be like adding 30 more sides to your transaction total for this branch office

Changing Compensation Plans

When it comes to changing compensation plans for sales associates, it is all too often that the broker owner or his branch managers will think that this is a 'kiss of death' leading to a mass exit of their sales force. Although care and planning is the only way to make changes to your compensation plans, it is also something that senior management should review on a regular basis to stay in step with the ever changing market.

Number 3 – Fine tune sales associate compensation plans to make profitability a reality

Even small adjustments to your associate compensation plans can have a positive bottom-line result. Older systems are usually ridged and incapable of tweaking. Newer technology on the other hand is so flexible that even the slightest adjustment is quick and easy with potential upside results.

Compensation plans are not just about commission rates. Off-the-top and off-the-bottom deductions can play an important role in a compensation plan. Accounts receivable balances can have interest and late charges applied. Rolling back compensation plans to reflect a previous year of activity is another great way to make minor adjustments to reflect actual production and reward. Modern solutions fully automates this process to eliminate administrative effort and reduce human error.

Full service brokerage operations are often in a fight with ‘discount’ brokers and your sales associates are the foot soldiers in this war. When one of your sales associates discounts a sales commission, they are not just giving up a part of their commission, but a part of the company’s too! It usually means the company actually lost money on the deal. State-of-the-art technology can provide an automated solution that would see more of the ‘discount’ come from the agent’s portion of the transaction and ensure the company’s profitability on the sale was maintained.

Profit opportunities are everywhere when the right technology is properly used and making small adjustments to your compensation plans is quick and easy when you have the right tool in hand.

Assumptions (multiply by your actual numbers):

1 branch office
25 agents
25 transactions per month (300 sides per year)
$200,000.00 sale price
3% gross commission per side ($1,800,000.00)
2.5% recovery on gross commission income ($45,000.00)
Using NAR $100.00 average profit per side the $45,000.00 would be like adding 450 more sides to your transaction total for this branch office

Analyze Everything For Success

If there is one thing I hear over and over again is that too many real estate broker owners are NOT running their businesses as a 'business'. What does that really mean?

From what I can tell, too many broker owners entered the world of brokerage with a track record of sales success, not necessarily business success. The skills and talents to sell real estate are considerably different from those required to run a real estate brokerage company. One of the best new skills a broker owner can acquire is the skill of analyzing everything!

Number 4 – Analyze everything – Business Intelligence Reports (BI) can shed light on new opportunities and highlight areas for improvement

Study your own data to obtain a better understanding of what is really happening in your real estate operation. Knowledge is power. Analyzing your ‘up-to-the-second’ data is a proven weapon in your arsenal of tools. Older technology is rarely flexible or accessible. Reports are ‘cast-in-stone’ and often reflect a requirement that has changed over the years.

Newer ‘open’ technology that utilizes ‘state-of-the-art’ Microsoft SQL database solutions that provide unlimited options for dissecting data in just about any manner you can think of.

Want to know the percentage of your listings your competitors have sold (and how it relates to your profitability)? How about a list of outside broker sales associates who have sold your listings (with the ability to thank them for their assistance)? Or perhaps what has each listing is really costing your firm, regardless of whether it sold or not (and who is spending the money)?

New technology that provides an ERP solution is a great approach to increasing effectiveness, providing better standards and improving awareness at a higher level. Whenever the term "ERP" (enterprise resource planning) is talked about today, it usually means how resources are to be expended rather than in the context of planning. It refers to high level enterprise view of the entire business. Or put another way, an overview of a company and all its parts as connected whole, rather than small centers of activity.

· ERP relates to the software infrastructure that holds the entire company together internally, on the one hand, and supports the external business processes the company engages in, on the other.
· ERP applications address a business process.
· ERP applications are modular.
· ERP applications are integrated.
· ERP applications include a company's reach beyond its walls—to its suppliers, customers, and partners.
· The entire ERP suite will address all areas (or the great majority) of a company's business functions.

Take hold of your data like never before and discover hidden treasures that can increase your bottom line or the mine fields that could be costing precious profits.

Save Money and Ensure Your Best Staff Stays

It's really tough to reduce staff, especially those that have proven themselves to you and your organization. One way to ensure you keep the people you rely on is to let go of the ones that are not. Technology is a proven strategy for replacing tedious and mundane jobs (often performed by your less than stellar staff members) and using that new found profitability to ensure your valued staff members stay with you for years to come.

Number 5 – Reduce costs by increasing administrative productivity

Remove redundant and repetitive tasks from your administrative operations and streamline your administrative team. Automation is a proven method for reducing administrative costs. Older technology rarely has the new features that can really make a huge impact on day to day operations.

For example, direct pay deposit is a fantastic way to reduce bank processing fees, lower processing costs (administrative salaries, check stock and printer supplies) and provide your sales associates with ‘real-time’ payment. This one simple but powerful feature can save your firm thousands of dollars per year.

Another example is automated bank reconciliations. Manually reconciling bank activity is a long and tedious process that requires a highly paid administrator to perform. Most of the major banks can provide a data file that lists all of your company’s check activity (deposits too). Today’s newer technology can import the bank’s data file and can produce a reconciled report in minutes.

Work-a-round processes are inherent with older technology solutions. They are rarely in ‘sync’ with the main system and often create expensive administrative chores maintaining multiple solutions. Multiple non-integrated work-a-round solutions are usually the cause of costly errors. For example, Associate Accounts Receivables require close monitoring and when possible, immediate repayment. Using a non-integrated solution for agent receivables can be a nightmare for administrators and very expensive for the company.

A fully integrated solution that completely eliminates redundant data re-entry and ensures all data is always in ‘sync’ with every other piece of data in the solution. Listings, sellers, sales contracts, buyers, sales associates, escrow deposits, commissions, referrals, agent receivables, general ledger entries, checks, deposits and more are linked in a chain-like relationship that binds your business data into a cohesive business solution.

Assumptions (multiply by your actual numbers):

0.5 full time administrative position retired
$15,000.00 annual cost saved
Using NAR $100.00 average profit per side the $15,000.00 would be like adding 150 more sides to your transaction total for your company

The Small Stuff Can Add Up

When profits are soaring it's easy to let the small stuff slide. But hey, times are different and profitability at all levels is more money for your your organization. Here is just one example of how technology can help recover those hidden expenses that eat away at your bottom line.

Number 6 – Save time, money and effort on report distribution

Reports are a fact of life in all businesses. They are an important ‘tool’ at all levels of management to track, manage and analyze the firm’s activities. Compiling, printing and distributing the various reports can be an expensive administrative cost to your real estate company with no real return on the investment.

Newer technology can auto-email reports rather than printing them and will greatly reduce the effort and cost when compared to printing. A few simple clicks can complete the process and provide ‘real-time’ reporting with ‘up-to-minute’ data for all levels of management. When the cost of printing is removed, reports can be distributed more often or whenever the need arises.

On-line reporting is another reporting ‘tool’ that provides secure access to operational data whenever the need arises. Technology can greatly increase availability and reduce expensive costs related to this vital aspect of your firm. Saving money is like earning more. It just makes good sense.

Assumptions (multiply by your actual numbers):

1 branch office
25 agents
4 reports – 25 pages each per month
$50.00 cost per report (paper, ink, printer maintenance, administrative staff, distribution, etc.)
$200.00 per month savings ($2,400.00 per year)
Using NAR $100.00 average profit per side the $2,400.00 would be like adding 24 more sides to your transaction total for this branch office