What Never to do When Expanding Your Business or Growing a Real Estate Team
It’s exciting when the time comes to grow your business – either as a team or to expand to another location.
What accompanies this excitement, however, are a number of decisions to be made and actions to be taken so that things turn out the best possible for you and everyone involved.
And, while you can’t control everything that happens as you expand your enterprise, you can control what you decide to do and how you’re going to handle things.
The most important thing, though, is to do what you can to avoid the pitfalls that can not only stall growth, but also prevent it from happening at all.
The list of things that can inhibit getting the results you want is long: fear of consequences, bad hires, running out of money, making bad choices, etc.
However, there are some “biggies” that could be catastrophic for you if you do them or get them wrong.
Here’s a closer look at the top things to never do when expanding your business or growing a team.
1. Spending money you don’t have
A common philosophy in the real estate industry among agents is this: “decide what kind of life you want to live and then sell enough homes to fund it”.
Under this belief system, every financial decision is predicated on selling a certain number of homes. And, if you want something, you just sell more homes.
In some cases, it even leads some agents to “spend” money before they have it by making purchases assuming a sale is going to close in the near future.
When you’re a single agent and it’s only your butt on the line, you can roll the dice on how you spend your money based upon future real estate sales.
However, when you’re expanding or building a team, you need to only make financial commitments based upon what you have legitimate access to…period.
Unless, of course, you have access to outside funds or a loan.
Even then, you’ll want to make sure that you don’t spend money you don’t have access to in the near term.
For example, If you want to hire an administrative assistant, you should have $8,000 to $10,000 available that you don’t need to run your business. You do this to make sure you can make it through 120 days (at least one complete sales cycle) without needing a sale to pay their salary.
If you want to bring on an Inside Sales Agent ( ISA ), you’ll need to have $10,000 to $12,000 that you don’t need to touch set aside.
Same thing goes for any lead generation you want to add to bring on more leads. If you’re going to plunk down cash for leads, you should have at least enough money to pay for 90- to 120-days in the bank for whatever it will cost to keep the leads flowing in.
As you expand your team or look to build your business in another area, you’ll have less time to sell, which could mean you have less money coming in.
At the same time, your expenses will invariably increase, meaning a bigger drain on your resources to get the new business coming in.
With both of these legitimate scenarios at work, it’s easy to see how you could suffer a serious cash shortfall.
You can add any potential expenses to this list. If you’re going to need to pay for it, make sure you have access to the money ahead of time.
Simply don’t spend what you don’t have.
2. Don’t use hope as a strategy
Whether you’re hiring your first employee or agent or you’re about to explode into a new market in your area, you must have a detailed plan laid out as to what you’re going to do.
Making decisions and implementing a plan is kind of like dropping a pebble into a pool of water; you can’t just look at where the pebble lands, you need to look 5 and 6 ripples out to see the impact of the first action you took.
Seems like common sense, but you’d be shocked at how many agents out there “wing it” or just try to figure things out as they come along.
You need to start with the end in mind and then reverse engineer back to current day what you need to do in order to end up with the result you want.
As you consider expansion of any kind, ask yourself these questions:
- By when do I want to accomplish my goal?
- Who will I need to have involved to accomplish my goal?
- How much time will it take for the final result to happen?
- How much money will I need to ensure that I achieve my goal?
- What will it look like when I’ve accomplished my goal?
- What, if any, is my plan B if I’m unable to achieve this goal in the established time frame?
Strategic planning, which you’ll need to do on any changes you make in your business, will require that you look at all of your resources of time, energy, money and human capital and then determine how, if at all possible, you’re going to invest these resources to achieve a specific result.
Taking the time to go through this exercise, versus guessing or “winging it”, will get you far better results in the near and long term.
3. Don’t just rely on assumptions
Assumptions have their place in every business environment. The key thing to remember, though, is that assume many assumptions are based on a history of actual data.
There’s no need to guess when you can know for sure.
As you plan your attack and decide what steps you’ll take, be sure to look at the facts to put yourself in the best position to succeed.
For instance, if you’re expanding to another market, be sure that the neighborhoods in the area actually support moving there: Do they have the average sales price you seek? Do they sell at a fast enough clip? Do they sell in a large enough volume?
These are all important things to know, in detail, if you’re going to spend thousands of dollars to set up shop in a new market place.
Same thing goes for hiring people. You need to do your research to ensure that you’re bringing the right person on board every time: Do they have the requisite experience? Is their personality on point for the job? Did you call references to get other’s input on them? Did you test them via role playing or in actual scenarios doing the job they would do?
Failing to vet candidates thoroughly can cost you thousands of dollars.
Take the time and get the facts straight before you make any decisions or take any actions to give yourself the best chance at succeeding.
Your overriding thought process when it comes to making changes in your business should be to measure twice, cut once.
The best way to do this is to know everything you can before you actually take action. Doing so is going to save you hours of your time, thousands of dollar and some serious headaches.