- Profitability by Mike Ferry
Profitability
By MIKE FERRY
If you look at all the “Buzz” words in and around the Real Estate Industry, “profit” is definitely not the one you hear being used in most offices. You’ll hear all about how this person made this, and that person made that, but rarely, if ever, will you hear about how much an agent profited.
So what is “Profitability?” To define the word profit, we simply take the gross revenue of the business … or the total amount of commissions the agent receives after the house split, then total all the applicable business expenses (remember, the IRS is watching) and you subtract your total expenses from your income, and what’s left is your pre-tax income or profit. As you can see, it’s really not that complicated.
PROFIT … IT’S AN ISSUE
In all businesses, one of the ways they measure success is to look at their profits. In most cases, whether it is an individual or a company, “the higher the profit, the better.” The Real Estate Industry has numerous ways of measuring an individual’s success. Some of the most common are gross sales volume, gross income … and if you believe what we teach, we measure by the “number of deals you close annually.” You’ll notice the word “profit” is not mentioned in any of these definitions or descriptions of success in Real Estate.
During most of the 1980’s and early 1990’s, I was banned from speaking to a majority of all Real Estate organizations because I put a lot of focus on the words, “business,” and “profits.” In observing the industry daily, I realized that most agents did not understand these words, and I left them feeling more confused than enlightened by saying things like, “We must run our business like any other business,” or, “It really doesn’t matter how much you earn, it’s only what you keep!”
These statements left many agents totally perplexed because they had not been taught what business or profits were. The question I asked, of course, was “Why is this so difficult to understand? Where do these agents come from?” The same situation occurring back then is still the same today, and that is a majority of the people entering Real Estate sales have little to no background in business, running a business, or in the field of sales! Real Estate agents come into the business from everywhere, and everyone is a “former something,” but we know that since a majority have no business background, the words “business” and “profits” don’t mean a lot to them, yet Real Estate sales is a business just like any other business and must be run in exactly the same fashion.
In a normal business, any and all of the following are prescribed to, or followed I detail, depending on the leadership of the organization. As a Real Estate agent, you are the Chairman of the Board, the CEO, President, CFO, Administrator, Marketing Director, Sales Manager, and last, if not least, the salesperson whose job it is to create income and profits. Therefore, you must consider these 5 business principles and incorporate them into your business:
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Implement a sound business strategy or Business Plan. This is the guide that we use to measure our progress towards the goals we’ve set.
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Make good, sound business decisions daily. Reality based thinking is a critical factor in making good decisions. Learn to deal with the reality of where you business is versus where you want it to be.
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Learning and applying the methods required to build a business. Non-business Real Estate agents hate to hear the word “prospecting,” but the bottom-line (profitability) is that without a plan on how you are going to go out and find new business, you’ll have to wait for it to find you, or buy it, which is extremely unprofitable.
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Handling the administrative side of the business. If you do not have a staff member dedicated to this function, you must become an expert at delegation and scheduling so you have the time to maintain and build your business. If you have staff, you need to develop your leadership skills so you don’t get in the staff’s way.
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Generating substantial profit that you can either reinvest in your business, or take for your personal use. Profits allow the agent to reinvest in themselves and their business, whereas a lack of profits keeps growth at a minimum.
YOUR EGO IS NOT YOUR AMIGO …
Without question, one of the biggest problems agents face in building their business and maximizing their profits is an uncontrolled ego. Why? Because an uncontrolled ego is not only expensive to maintain, it also kills your business from the inside out. It is the most destructive and unprofitable trait that you can have. It will stop you from learning and growing, in-turn eliminating new information from moving into your business and sales process.
An uncontrolled ego will stop good communication between yourself, your staff, your prospects, and customers. Why? Because the focus is on you and your problems rather than the people you are associating with. The uninhibited ego will dramatically reduce your referral and repeat business, create staff turnover, which is time consuming and expensive, and will get in the way of quantum leaps in production because if you already know everything and refuse to learn new skills and techniques, your business becomes complacent, and therefore is not as profitable as it could be.
The dictionary defines ego as “an exaggerated sense of self-importance, behaving in a manner that evolves only around oneself.” Just reading the definition should be enough for anyone who suffers from it to look at it carefully and set-up a plan to change their behavior and increase their profits.
CHANGE IS NECESSARY …
Change can be very difficult for most people, whether it be changing our business practices, changing our skills, our expenses, or our behaviors, change is necessary. There are only three ways to increase profits … increase gross revenue, control and cut expenses, or do both at the same time, which will build a stronger and more profitable business.
If your goal is to move away from being a traditional Real Estate agent and move toward being a service-oriented, highly-productive and profitable business person whose job it is to list and sell Real Estate, the tips in this article can move you in the right direction quickly. Start studying the business of selling, hire and surround yourself with quality people, and demand more of yourself and the business you’re involved in. These thoughts and actions will ring you the profits you deserve!
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- Mike Ferry’s Thoughts on Communicating with People
It’s interesting that the Real Estate world is convinced that the web … the internet … social media … are the answers to all the problems that we deal with. As most of you know, I get criticized on a daily, weekly, and monthly basis on the fact that I don’t support this type of thinking. If you really do spend any time on the internet today (which I hope you don’t) you’ll see that the amount of information that is being put out is so extraordinary that it makes getting to good solid information more difficult every day. For those of you that question this, even the experts are saying it’s becoming a useless tool because anybody can put anything on the internet and it immediately becomes … “law.”
I keep saying the same thing … if you learn how to communicate with people and you improve your communication skills, you’re going to win the game, whether it is sales, or management leadership. I can’t imagine that you’re going to blog, text, or twitter one of your children when they’re doing something wrong … and if you are, there’s something wrong with you.
We use social media … the internet, etc. as an excuse for communicating and most people that are “thinking” understand exactly what I’m saying, and all those people, whether they be in Real Estate or other professions, who aren’t “thinking” will continue to use any device they can use to avoid human contact. Take a look at the following series of numbers …
We have 77,000 customer names in our database. We have 55,000 with email addresses, we have 30,000 of what we call “good emails” … 25,000 of those addresses are changed so often we can’t keep up, so therefore they are no good.
We sent an email invitation to the 2011 Superstar Retreat to 20,000 of the 77,000 … we scrubbed all MFO clients, and those already registered for the Retreat … an invitation to come to the Retreat.
16,000 actually received it … 4,000 disappeared into space.
949 actually opened the email … 671 went to the website … and 3 actually bought a ticket.
So here’s what’s interesting … we at The Mike Ferry Organization have access to all the latest technology, and we’ve sold 4000+ tickets by talking to people and 3 through technology … well, that isn’t going to shut up the technology people but it sure keeps my mind clear on the fact that if we’re not talking to people, we’re not going to make sales.
Mike Ferry
CEO – The Mike Ferry Organization - Mike Ferry on the Importance of Thinking BIG!
There are 3 types of people that we deal with every day, whether it be me dealing with you, you dealing with your prospects, or either one of us dealing with life, here are the 3 types …
People that think big … they know they can conquer the world … they work at conquering the world … and they conquer the world.
Then we have small thinkers … people that believe getting by is more than enough… people that think that complacency is the name of the game.
Then we have the 3rd group … PEOPLE THAT DO NOT THINK AT ALL.
Unfortunately, a lot of people fall into category number 3. Our job as great salespeople is to prequalify every prospect quickly, to find out which category they’re in. Big thinkers make decisions fast, and make them well. Small thinkers make their decisions very slowly and it takes you forever. Non-thinkers, which constitute a major portion of the world, take forever to make a decision. By prequalifying you can stay away from them.
Mike Ferry
CEO – The Mike Ferry OrganizationP.S. – The Executive Club for the Superstar Retreat recently went on sale. As many of you know, the Executive Club includes private restrooms to avoid the long lines, a private lounge for you to relax during the breaks Tuesday through Friday, breakfast and lunch is included Wednesday – Friday so you don’t need to worry about rushing to eat … all for $295. Click Here to buy your ticket to enhance your experience at this year’s Superstar Retreat.
If the “Click Here” link doesn’t work, simply copy/paste the following link into your internet browser window:
http://www.mikeferry.com/main/events/2011-superstar-retreat-executive-club - Mike Ferry – “We are Involved in the People and Communication Business”
You’ve probably heard me say time and time again that we are involved in the people and communication business.
Below are two interesting examples of how communication can backfire …
Yesterday afternoon my wife and I were sitting with two people involved in very interesting conversations. I’m not exaggerating this one iota … one of the two people we were talking to virtually spent the entire 30 minutes texting while the 4 of us were supposed to be conversing about a particular topic. Every once in a while he would look up and kind of nod as if he was involved, and when I glanced over he would be smiling or chuckling about a text he was receiving and then immediately texting back. The best part about it was … when the meeting was done; he smiled and said “Gee, great conversation!” He actually had no idea what we were talking about because he was too busy in his own little world.
Then today at lunch between seminars we were doing, my wife and I sat in a very nice restaurant and two couples sat down at the table next to us. While the two wives were conversing, both of the men spent 75% of the time on their cell phones, receiving and answering text messages.
Here’s the good news … people think that they’re communicating. Here’s a thought … how many people have you actually had a real-life conversation with so far this week? You don’t have to send me the answer … just make sure you’re in human conversations.
Mike Ferry
CEO – The Mike Ferry OrganizationP.S. – The Executive Club for the Superstar Retreat recently went on sale. As many of you know, the Executive Club includes private restrooms to avoid the long lines, a private lounge for you to relax during the breaks Tuesday through Friday, breakfast and lunch is included Wednesday – Friday so you don’t need to worry about rushing to eat … all for $295. Click Here to buy your ticket to enhance your experience at this year’s Superstar Retreat.
If the “Click Here” link doesn’t work, simply copy/paste the following link into your internet browser window:
http://www.mikeferry.com/main/events/2011-superstar-retreat-executive-club - Mike Ferry’s Thoughts on Always Having a Strong Positive Mindset
One of the fun parts of the exciting and crazy schedule I’ve been on, and will continue to be on over the next couple of weeks … is seeing and talking to not only a huge number of great people … but also being involved in some very interesting conversations regarding selling Real Estate.
One of the points that I’m bringing up each day is that we have to, at some point, quit telling the crazy stories that we tell ourselves as to why we can’t succeed. It’s interesting how through time we can tell ourselves a story about something somebody said to us, or something somebody did to us, that was out of the ordinary or, in some cases, a little traumatic, and we repeat it over and over again in our own heads.
This of course is one of the biggest reasons why people don’t grow and succeed. When you tell yourself the same story, which in most cases is not a positive, inspiring story, we start to believe it and it becomes part of us … the result being a lack of motivation and a lack of productivity.
What I’m telling the audiences I speak to each day is … “Be careful of the story that you’re telling yourself because whatever you’re telling yourself will become your personal reality.”
“Prospecting doesn’t work for me” … “Sellers always want to cut the commissions” … When we tell ourselves these stories repetitively, these stories will always become the truth, and in most cases, are not going to inspire us to take actions.
From now until the Superstar Retreat on July 19-22, 2011, let’s be more careful as to what stories we tell ourselves. Here is a story that can become a reality if you tell yourself often enough … “I am a great salesperson.”
Mike Ferry
CEO – The Mike Ferry Organization - Mike Ferry’s Thoughts on the Importance of Properly Balancing Skills and Technology
Twenty years ago we were told that computers would replace people in almost every aspect of business. Fifteen years ago, the dot com craze was going to end this business as we know it today. Ten to twelve years ago, the web was going to put all Real Estate agents out of business because we were told that all buyers and sellers would just go through the internet and we wouldn’t be needed.We recently received a letter at the office from a company telling us that we were not allowed to play any music of any type at our Superstar Retreat without paying them a $500 fee.
The one thing we know about the human race … is that somebody is always selling something to somebody, and there are people that are either smart enough to buy everything being sold, or dumb enough to buy everything being sold. In case you’re wondering … I’m not dumb enough to send this company $500 so I can turn my radio on, put a cd in my cd player, or play music through my iPad. I guess they think I am that dumb … I know I’m not.
Have you noticed that if you don’t have the latest software … the newest phase of an iPhone … the latest computer hardware …or if you’re not heavily involved in some form of social media, whether it is tweeting or blogging … you’re going to be left behind?
Last week we had an internet breakdown at the office. I think it proved again that we’re a little too dependent upon computers and not dependent enough upon talking to each other. Listen to me carefully … Barnes & Noble did not go out of business because you can now buy a book from Amazon. In fact, they expanded their business dramatically and are doing better than ever. It appears that none of you that are good at what you do are out of business because of the internet … because you’re good at what you do!
THERE WILL ALWAYS BE A DEMAND for people that know what they’re doing. Computers and the internet should be a support to what we do, not a replacement of what we do. It’s interesting how that great support system that we have malfunctions as often as it does.
Let’s make sure we’re not malfunctioning when talking to a buyer or seller. You have the right scripts and dialogues … you have the right technique … let’s go use them on human beings today, instead of relying on a software package to make a sale for us.
Oh by the way … because of the internet breakdown at our office (again) … there still is UPFRONT SEATING available for the Superstar Retreat 2011. Go online (ha ha ha) and buy your ticket by Clicking Here.
Mike Ferry
CEO – The Mike Ferry Organization - Mike Ferry on the Importance of Having a Coach
Yes … I’ll never stop talking to you about the importance of coaching. The only part of the conversation that concerns me at times is when an individual fails to grasp how important coaching can be in their day-to-day business life. As you’ve heard me say time and time again … “Professional athletes in all sports have coaches. Professional singers and dancers always have coaches. Professional actors will have a variety of coaches working with them.”
If you are very unique in the fact that you have a coach make sure that you always take advantage of it, because it’s such a critical part of the entire process of being a professional.
I received the following comment from one of our clients … I wanted to share it with you.
“I heard this on sports talk radio yesterday in Chicago from Charles Tillman, All Pro defensive back on the Chicago Bears … ‘We are professional athletes, (but) we still need to be coached.’ The guy on the radio was talking about the lockout.”
Isn’t it interesting that the people that are at the top of their profession not only need a coach, but can’t get along without them? Let’s make sure you’re recognized as being in the top of your profession.
Mike Ferry
CEO – The Mike Ferry Organization - Mike Ferry on the Importance of Pre-Qualifying a Listing Presentation
I received a great email from one of our clients several months ago. He told me that he had decided not to use all the pre-qualifying questions before a listing presentation and as a result lost a listing and lost over $10,000 in commission. He then said he was “committed” to never making that mistake again. I received an email from him this past Friday and I wanted to share it with you today.
“Thought I’d give you a quick update on the good news that came from my not following the pre-qual script and losing a listing because of it. Since then I’ve printed out the scripts on a piece of paper and for every appointment I answer every question and then send the sheet to an accountability partner. All questions must be answered or I don’t go on the appointment. Since then my closing percentage has gone from 66% last year to over 90%. I’ve listed 30 homes in the last 3 months and have had 27 sales … Will you hit me upside the head if I “forget” to use your system in the future? Thanks”
It is interesting … when people follow the Mike Ferry system … results improve. Have you thought about following the Mike Ferry system yourself?
Mike Ferry
CEO – The Mike Ferry Organization - Mike Ferry – “Let’s make last night your New Year’s Eve.”
I recently had a very interesting conversation with one of our clients. He told me that he’s had a very, very bad start to the year, and he asked me what he should do.
I asked him … “Do you like New Year’s Eve?” He said “I love New Year’s Eve!” and I said to him “Let’s make last night your New Year’s Eve.”
It’s a fresh day, a new week, a great time to start, so let’s go get ‘em … effective immediately!
The best part of our business is we get to start over fresh and new every single day.
If by chance any of you have not had the kind of start you wanted … tomorrow morning is a new day, so let’s begin again.
And if you’ve already had a great couple of months, let’s do it again.
Mike Ferry
CEO – The Mike Ferry Organization
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