The 4 P’s of Business Ownership
I remember looking up one day in my own coaching business and realizing I now had 35 or 40 clients and no way to get clarity about what was really happening across the board. A simple question prompted me to create an easy to follow system for anyone in the real estate game to follow. “What are the most important parts every business I am a partner in that I have to keep my finger on the pulse of?” That led me to develop the 4 P’s of Business Ownership, a simple approach to gaining a critical perspective about where each of your businesses stands and where they need to be going.
Profit-Freedom, Maximize, Marginalize
The first step to approaching the issue of profitability is to address the 5 Steps to Financial Freedom. Have you established your “enough” number? Do you know your net worth? Do you have the proper amount of reserves? Have you eliminated the proper amount of debt? Are you protected? Are you clear on your definition of wealth?
Next, consider how to maximize your revenue, and not just by increasing your transaction count. Have you considered how much you charge your clients and whether your services warrant a higher rate? Should you consider a transaction fee? Focusing on increasing your conversion rate will also yield greater income simply by optimizing or augmenting processes you already have in place. What would it take to raise your average sales price by 10-20%?
Finally, remarginalizing your business will help keep your operations running leaner by eliminating unnecessary expenses. We recommend following the KRONC method to keep your operating lean and mean so you take as much as possible to the bottom line.
Production-Win the Listing Game
On the production side of the real estate game, listings are king. I’ve found that by focusing on three core principles, you will consistently nail or exceed your production numbers.
- Define your listings-taken goal and establish how many listing leads you to need to hit it .
- Create a listing pipeline and ensure your listing leads are making on it. For more info on this check out our growth tool Build your Pipeline.
- Hit your listings taken goal. In all of my years coaching real estate agents, I have never encountered an agent or team hitting their listings taken goal that did not meet their overall goal.
Enhance your relationships
Regardless of what business model you are executing or the processes you have in place, motivated and effective people are critical to your team. By keeping these three bases covered, you ensure that you’ll be surrounded by individuals who are capable and have the business’s best interests in mind.
- Enhance the relationships you already have. Maximizing your existing connections with key players in your industry, key vendors, and the agents on your team solidifies and expands a resource you already have at your fingertips.
- Engage the talent you need to take your business to the next level.
- End relationships that are unproductive and do not support the goals of your business.
When addressing business projects remember the three I’s that form the fundamental question to focus your efforts: What are the ideas we intend to implement or improve? Often I will ask a mega agent I am coaching how many active projects they have open and many times that answer is upwards of 12 or 15. This is simply an intractable amount to manage. Attempting to run that number of projects means that you are spreading your resources too thin, leading to wasted effort and diminishing returns. Check out this excerpt from the Forbes article titled “The 4 Disciplines of Business Execution” written by Dan Schawbel.
“Do you remember the Law of Diminishing Returns? Basically, the more you try to do, the less you actually accomplish. This is a stark, inescapable principle we all live with. Somewhere along the way, most leaders forget this. Why? Because smart, ambitious leaders don’t want to do less, they want to do more, even when they know better. Isn’t it really difficult for you to say “No” to a good idea, much less a great one? And yet, there will always be more good ideas than you and your teams have the capacity to execute. That’s why your first challenge is “focusing on the wildly important.”
Try to limit yourself to no more than three open projects at a time. Look at your list of projects and prioritize which ones are necessary and achievable. As an organization, identify no more than three of these ideas you’d like to implement or improve on and simply archive the rest to be tackled once one of the current projects is finished.
By utilizing the 4 P’s of Business Ownership I have been able to effectively manage a large amount of work effectively and with greater clarity than ever before. I invite you to begin implementing this approach in your own business and can’t wait to see how it changes your relationship with your work and your coworkers.