I’ve spoken with thousands of agents in the last several years and the goal for almost all of them is to become true CEO of their business.
As the true CEO, they have the luxury of working if they want to and not working if they don’t.
And if they want to step out of the business and let it run without them, that’s an option too.
In my experience, however, what I’ve found is that most agents step out production and get out of actively participating in their business way too soon.
Who can blame them?
Building a real estate business takes a lot of time, energy and money and it can really wear you down to the point where you want to enjoy the fruits of your businesses labor without it all being carried on your back.
The key in being able to do that successfully rests in setting your business up properly and doing the right things in the right order so you can step out of your business at the right time.
With some solid planning and strong execution on the right strategy, you can put yourself in position to step out of your business at the right time.
Here’s what I recommend:
Build Your Core Capital
Running your business successfully on a month-over-month basis requires a certain amount of operating budget to be met.
If you’re conducting your business properly and crushing your sales goals, you should be able to make enough money to keep your working capital strong, pay yourself a salary and put money away to build up your core capital...all at the same time.
Loosely defined, core capital is the reserve of cash you have to cover your business expenses (and to help grow your business) for a specific period of time whether or not sales are made.
The ideal amount of core capital you’ll want to have in the bank while remaining active in your business is a minimum of 90 days. You need this amount because it covers one full sales cycle for selling homes in the event of an emergency.
In order for you to be able to step out of your business at the right time - and in good conscience - you’ll want to have at least twice that much in core capital in the bank.
With six-month’s reserves, you give yourself the cushion you need to handle just about ANY potential catastrophe, like the loss of a key individual or the sudden change in market conditions, that could impact your business.
Having six-month’s core capital gives you time, if necessary, to get back into your business and start producing without feeling like you have a gun to your head as you make it happen.
If you really want to give yourself the buffer you need to step out of your business comfortably, you’ll also want six months of core capital set aside for your personal expenses, too. That way, if things go to hell in the proverbial handbasket, your family’s quality of life and style of living won’t be impacted negatively.
Stepping out of your business at the right time requires the discipline to put enough money away run your life and business without any of your efforts.
Systematize Your Business
You need to set your business up so that it comes with instructions included. In addition to having an employee manual, you need to have an employee manual or what the folks at Harvard B School call a Standard Operating Procedures (SOPs). These are a set of rules, systems, programs and strategies employees can follow for repetitive tasks in your company.
This will ensure employees have a rulebook/operations manual they can follow when you’re not around, and, when one employee leaves, you can quickly swap them out with a replacement to take on duties of the job.
The goal of any good business is to never have systems problems.
You must be able to plug the right person into your systems and have them be able do their job efficiently, without having to figure things out for themselves.
Yes, we want people who can think for themselves, we just don’t need them reinventing the wheel every day they come into work.
Here are some of the areas where you must have the systems dialed in and easy to follow and implement:
Listing and buyer lead generation and conversion
Listing and buyer presentations
Marketing and advertising
Budgeting and payroll
Hiring, onboarding and training
Tracking and improvement for EVERYTHING
Past client and sphere management
Ideally, you must be able to provide a robust enough infrastructure that allow your business to run whether or not you choose to show up on any given day.
If people have to wait to work until you come in or if deals won’t get created and closed without you, then you can’t step out of your business.
Create Leaders Within Your Organization
If you’re looking to put your business on autopilot, there’s a strong possibility that you’re what the folks at Predictable Success call a Visionary:
“Visionaries…[are] big-thinkers turned on by ideas, they’re easily bored with minutia and are consumed by the need to create and to achieve. [They] are often (although not always) charismatic. Engaging communicators, able to motivate people to bring their best in every endeavor, they inspire deep loyalty in others, and frequently a small, tight team or ‘posse’ will develop around them, a group of committed individuals who share the Visionary’s…well, vision – and who want to help see it realized….[T]hey’re the passionate, ever-hyperlinking, ‘30,000-feet’ big-picture types who arrive back from most weekends and vacations with yet another bright idea, the ‘glass-half-full’ optimists who believe (and frequently demonstrate) that there’s always a way through every problem.”
As a visionary, the good news is that you can take your team as far as they are willing to follow you.
The challenge is that once you step out of your business, you need people who can continue to 1) keep the team bought into your vision and 2) grow production so that the business thrives in your absence.
To make this happen, you need to groom people and create leaders out of the people who will carry on your legacy once you are gone.
The structure of this type of team looks like this:
Operations manager: Runs the day-to-day operation of the business. Represents your interests and makes sure that the right people are in the right seats “on the bus” and that they follow the systems, strategies and programs you’ve created to provide clients with a consistently excellent experience in working with your business.
Sales manager: Likely a producing manager that takes over the job of listing homes from you and provides sales and training support to the agents on your team.
Administrative staff: Team of experts that handle listing, transaction, and past client management. These folks are checklist “maestro’s” and they make up the backbone of a business that runs smoothly every day.
Sales team: This team brings revenue in the door that make the machine run. They are highly trained experts that set and exceed their sales goals by being self starters who are responsive, as necessary, to the guidance of your leadership team.
Marketing department: The person/people who work here are responsible for lead generation and management and continuing to grow your brand/influence in your marketplace. Their goal is to make sure your name continues to strengthen with buyers and sellers in your market on a day-over-day basis.
Granted, this is a 10,000 foot view of what it will take for you to be able to step out of your business at the right time.
That said, it’s crucial that you nail the areas that I covered in this post today so that you can move forward comfortably with your strategy to exit your business.
The more sound the core of your business is, the easier it will be for you to step away when you are ready to do so.
Market Maker Leads.