500th Episode Special: The 3 Principles of True Business Freedom

Welcome back, Real estate team builders. Lars Hedinborg, founder of Real Estate B School. And this, my friends, is episode 500 on the podcast. And I have definitely been reflecting and contemplating what I want to go through on this. Really, in so many ways, historic is an overstatement, but it's just really a special episode. And so I want to unpack a little bit, you know, as I look back on my journey, you know, in as a solo agent, small team, running a larger team, and then exiting that business and kind of being the. More from the owner's box in terms of the sports analogy of that business. And then 2013, launch real estate B School. Help hundreds, maybe even over a thousand top agents and team leaders sort of in their journey of, you know, the agent to owner business growth journey. And just reflect on some things that I've noticed in myself that I've done really well. And then at the same time, these same things I've tripped up consistently. And this is coming off of an episode I did with Mike Michalowicz, who wrote the book. Well, like seven or eight books, but most notably Profit first and Clockwork, which are two resources that are just unbelievable. And his mission, and I feel like my mission has become for the real estate industry. His mission is to eradicate entrepreneurial poverty. So eradicate entrepreneurial poverty. And mine has become like, almost similar. And it's not a copycat situation just based on my journey where the, the poverty in terms of time, money, and the overwhelming amount of stress that we endure as we. We sell more homes. Traditional success in this industry, in my opinion, is not worth having now. Had a conversation with a few guys the other day. They're running a top team, right? They're number two in their, in their ReMax 500 transactions. It's like, whoa, 500 transactions. There's three of them. The three of them do 300 of the 500 transactions, and they have 20 agents that do 200 transactions. I didn't dig too much into their business, but that's not sustainable. You can't have 20 lovingly. I call them children that you're minding and tending to. And you're also selling 100 homes per year, right? It's just not possible. It's not sustainable for the long term. And each of the three of them have wives and they have small children. And so there's something's got to give in that equation where I've always been focused on, and it hasn't always been perfect, but I wanted to show up and achieve at a high level in all the areas of life that matter. So husband, dad, with my faith, with my physical body, emotional wellbeing, my financial decisions, and then, of course, in business. So let's get after it. I'm going to unpack three principles today that will hopefully highlight some good things about my journey and then maybe some things that I've missed. And I want to highlight a few of our members and case studies that we've captured as well. So the first thing is consistency. The fact that I'm even with my natural personality of sort of not really wanting to be consistent, the fact that I'm recording a 500th episode of this podcast is. Is quite a feat. And when I talk about consistency, it's doing the things that you don't want to do long enough so that you pick up momentum or you get the results that you're looking for. Most people, you know, I think even if you had the. The stats for podcasting, you know, I don't know what the stats are, but I can't imagine of a million podcasts that start or 100 podcasts that start on average, how many make it to, you know, 10 episodes or 50 episodes or 100 episodes. My guess is that they feel like it's a good idea and then they start it. They don't get the results they want, and then they sort of trail off. Right. And they forget that it was a good idea. I've done this over and over and over again in my business where. Let's take a good example. Let's take a lead source. So you go down the paid lead source, home search lead, realtor.com leads. I've actually done this, and I'm gonna highlight someone that actually stuck with it. I'll go into a lead source like that. And we were never big on paid leads. We actually, years and years ago, we got out of any paid leads because it just became a racket. But let's say you go into realtor.com leads and, you know, you do it for six months and you don't get the results you're looking for, or it's like a one or two times return. You're like, that's not good enough. But you don't really dig into the scripts. You don't really, you know, go deep on every lead source. You don't have the text and email sequences built out. You're not really checking in the CRM to make sure the calls are being. The leads are being followed up with properly. You just don't go really deep on anything. In the business, you're not going to get the results that you're looking for. And that's probably the number one thing that I see. I've done it over and over and over again personally. Let's take the example of our physical bodies, right? I could do a 90 day challenge like nobody else. I could show up and play all out for 90 days. And then after the 90 days where I worked out, you know, seven, eight, nine, 10 times a week, I'll fall to like one or two times a week. I was drinking a gallon of water for 90 days straight and then all of a sudden all I drink is coffee for the next year, right? I ran a marathon back in 2015. The 18 months after that, I didn't run at all. There's a really good book for those of you that struggle with consistency called Atomic Habits by James Clear where he. It's, it's just full of really good stuff. We have habits good and bad, right? And they're these little small atomic habits lead to, you know, results good or bad in our life. And one thing in the book that he says, you know, don't. What do you say the goal isn't to run a marathon. The goal is to become a runner, right? So the habit of running is the thing that we want. We don't necessarily need the big grand gesture of the marathon. And so just think of like in your business or in your life, what grand gestures are you making that it's replacing the consistent habit that you need to develop in your business? So that's number one. A couple examples here. And if you go to realestatebschool.com and you click on results, you can see we put together like six. I think there's like 15 or 18 on the page. But the first six, there's two in particular, Dave Hook and Dave Friedman, that when I think of the consistency and the comment doing the things you don't want to do long enough so that you get to do the next thing. So working with buyers long enough so that you could hire buyer agents, right? And build momentum in your business. So then you only work on listings. Working with listings long enough where you can build enough momentum in the business, where you don't have to work with listings, you can ultimately exit that part of the business. Dave Hook was really, really good at this. Started with me at about 100 transactions, you know, probably doing over 300 transactions now. Spent five years with real estate B school where he knew exactly the next right thing to work on in the business. So that he can, you know, sort of build a foundation to take that next step on. Same thing with Dave Friedman. First year I started working with Dave, he did, I think, 65 transactions. Fast forward five or six years later, he was doing 450 transactions and he was willing to do inside sales and lead conversion at a very high level next to his agents long enough so that his agents knew, or he can graduate one of the agents to an inside sales manager so that he could do the next thing. So no matter where you are in your business growth journey, even if you're doing, you know, 100k of GCI, where are you? This is the challenge. Where are you lacking consistency? I'm not preaching, so I'm not preaching at all. This happens to all of us, but we have to constantly check ourselves. Where are we lacking consistency? So that's number one. Number two, distractions. And if you're watching the YouTube, you've heard me talk about this guy all the time. I've had this squirrel on my desk or around my desk for ever. It's a squirrel. If you can't figure it out, if you're just listening to the podcast, it's a reminder that I think it's from the movie. I forget the movie. It's a cartoon. Animated. Animated movie. Ah, man. Every time I mention it. Anyway, so this dog in the movie is like, you know, talking or doing something, and all of a sudden the squirrel shows up like, squirrel, you know, and then another squirrel, squirrel. And as entrepreneurs of business builders in the real estate space, we're constantly distracted by whatever an email that comes over with a webinar or a Facebook post that has a thing or somebody that's selling a thousand homes a year tells you that billboards are the best thing. And so you reach out to like, all of this stuff that we get distracted with on a continuous basis allows us or enables us not to sort of stack the wins and get the momentum that we need to move our business forward. And so the key here, and this is what I found because I am susceptible to this a hundred percent, which is why I need the scroll on my desk to remind myself that that's just a distraction. That's not actually something that we're working on. That's not the next right thing for me in my business at this point of my journey for this season of my life, right? The comparison trap is real. And we want to focus and get distracted on things that don't have that aren't the next right thing for us. One of my Members Dan Jones who actually became an agent to join my team in Charlotte, North Carolina. He moved from Hilton Head to Charlotte, became an inside sales agent, then an outside sales agent. Then he left to do his own thing for a couple years. I finally convinced him to join me and let me guide him and mentor him. At real Estate B school went from 60. He was stuck at 65 transactions with an assistant him I think his brother part time and an assistant. And you know they did over 300 transactions, you know, five, six years later. And the key was doing less, you know. So when I started working with Dan he actually had four paid lead sources doing 65 transactions with two licensed agents and assistant. We cut out three of the four paid lead sources going to the to the first point being consistent on the one lead source which was in fact realtor.com now he gets a 13 times return on realtor.com we went from 65 transactions to 105 to 175 by eliminating three paid lead sources. And then from 175 to 225 to 275 we added back one of those leads three out of the four that we cut out originally. So it's all about distractions. And the other thing that allows us to avoid getting distracted is if we have a clear vision for our business, for our life. You know, so in the business if we have a three year vision of growing from 20 transactions to 100 transactions where you're doing 40 to 50 listings working 40 hours a week, Monday through Friday, no evenings and weekends and you have two agents doing 25 transactions each and every a really good local admin licensed and maybe one VA. Let's say that's your three year vision. You break that down into a one year plan then 90 days and then every week and every day and decisions you make with your time to have a process that you're running, we call it the 3190 at Real Estate B School allows you to avoid getting tempted by the distractions because the distractions and us being distractible. It's a real. They call it entrepreneurial ADD where we are Attention deficit disorder. There are a lot of entrepreneurs that actually have add. So it's a real thing. But any entrepreneur is distracted because they think the thing that is in my email or the thing I saw in that Facebook group is better than the thing that I'm doing right now that I know it's the thing I should be doing. But I think there's just an easy button. It's just human nature. So that's number two. Number three is leverage. And leverage is just a concept that you will have a tough time growing your business, growing your life, growing your wealth, growing your relationships if you don't understand the concept of leverage. So at its core and I'll give you an example of mine and then I'll talk about Stacy Peterson, which was our first paid coaching client back in 2013 for real estate B school. A good example of leverage for for my journey was my first administrative hire. Got into real estate in 2007. In 10 months March through December 2007 I sold 27 homes. 40 for that next full year just as a solo agent. And I hired a part time administrator in February, March timeframe who quickly went full time. And then that next year, the end of 2009 I hired my first buyer agent. We did 58 transactions. I did 55, then 118, 178. The year 2012, we did 248. I sold one one transaction. And it was because I understood leverage. And here's the exercise I want you to go through. There's two parts to this. I want you to figure out the amount of money you're making for the unit of time, the hours that you're working. The calculation that I did back in early 2008 once I got my tax returns from 2007, the 10 months that I worked I netted on 250 gross. I gave my broker 75 grand. I remember was 176 from the broker on like 249 of GCI total GCI. So I quickly left that situation that was not, not going to work long term. On the 176 though, I netted 37,000. I wasted money on everything. Didn't know anything about return on investment. I didn't have an economic model in place. All the things I learned painfully over the years, trial and error I didn't have back then. But I did work 2000 hours in 10 months. $37,000 take home divided by 2000 hours worked in 2007 in those 10 months is $18.50 an hour. I left a multiple six figure corporate job working about 2000 hours. So I was making about $100 an hour to make $18.50 an hour. But I had all this freedom, right? I was working seven days a week. So it didn't exactly translate the way that I wanted it to. Over time I figured it out. Here's what I did though. I drew a line in the sand that I was going to make 500,000 in real estate working 2,000 hours a year, which is a 40 hour workweek, 50 weeks, two weeks vacation. Very simple math. Do that math. It's $250 an hour. It allowed me to view everything I touched with an eye toward, like, I can't do that. I can't run a yard sign. I can't design a brochure. I can't print brochures. I can't enter a listing into mls. I can't drop off a lockbox. I can't show homes. I can't. If I want to make $250 an hour and still deliver an experience to my client that is, you know, world class, I can't be doing all these things. First of all, I'm not good at all these things. You know, there's the passion versus pay. I'm not passionate about showing homes. I'm not passionate about, you know, God made me in such a way where I, I don't want to like, ooh and ah over, you know, I don't know, a home and, and, and take a whole Saturday and, and show homes to a buyer that may or may not, you know, even buy those homes. Right. And so I just, I was wired in such a way where I was wired more for the business building aspect. But I knew it was important for someone that loved helping buyers. And so I just understood leverage at a very high level. And I knew that I could pay licensed agents maybe 40 to $50 per hour. So about, you know, 80, well, probably, probably less than that. But 80 to $100,000 a year is what I figured. I could pay a good buyer agent on a split basis. So I didn't take them on a salary. But the, and the economic model worked really well. But I would get buyer agents to come in, make 125 to $150,000 a year, which is two to three times more than they were making on their own. But it was on the right economic model. So that's, that's the concept of leverage, is that you cannot do everything in your business yourself if you want to make more money in less time with less stress, which is the B school promise I mentioned. Passion versus pay. There's an exercise that we do in B school where every 90 days we look at where we're spending our time and we just, we grid it out, we talk about what are you making, the things that you're doing that make you a lot of money versus not so much money. So high pay versus low pay, and then high passion versus low passion. So let's say you love showing homes to buyers. High passion, you could hire in my market, major metro market, you can hire a world class best in the business at showing homes for 25 bucks an hour. So if you did that exercise that I just mentioned and you want to make $250 per hour but you keep insisting on the fact that showing homes is a high pay activity that only you can do, you'll never bridge the gap between the $25, maybe 30 in some markets, maybe 50 in some markets. You'll never bridge the gap between the 25 to $50 an hour activity as a showing agent to the $250. So it's just a fundamental disconnect. Last story I will tell is about Stacy Peterson who came into our world in 2013 from first coaching client ever. Got her out of production in 6 months, tripled the size of her business to over 300 transactions. She was able to sell that business for a seven figure valuation. Ended up coming into real estate B school coaching and building that business, running the company for a certain period of time. And it's all because she truly understood leverage. She is now running our business coaching calls. So twice a week we have live business coaching calls for our members. And she one year with one administrator because she understood systems and leverage at a high level. They did 222 transactions with a single administrator and she was out of production. So she was helping out on the operations side of the business. But one administrator, 222 transactions. I think that among other things that's like one of her biggest claim to fames in my opinion. All right, so I want you to go to real estate bschool.com, click on results and hear these stories, right? And then you know, as I look back on my journey and I'm still in the midst of it, I'm still, you know, as, as I'm recording this, you know we're getting ready to enter a period of time where I think real estate's going to be okay because I think there's still a supply demand issue. I think there's not enough homes for the amount of buyers that we'll see in the next two, three, four years. And I think there are some like major challenges with the, with the US economy, with global economy, with just social issues and unres that we're seeing with just division in the world and in our country that it could be a very choppy time. I see a lot of what I refer to as FUD F u D fear, uncertainty and doubt. And when there's a lot of fear, uncertainty and doubt, agents freak out. So I think it's going to be a good thing in certain respect if you can guard your heart and mind against the FUD and realize that you are in control of your business and your, your business growth journey does not depend on what happens in the market. You will be 100% okay, you will thrive while other agents don't even survive what's coming. You know, I got into the business right before the Great Recession. So I grew, you know, to 178, 248 transactions in all the Great recession years. You know, so, so that's where everyone was retracting. We went from 15,000 agents in our market to 5,000 agents. I think we're getting probably not as dramatic, but I think we're getting ready to see that again. Where I think rosters in most markets will be cut in half and all the part time agents will be out of the business because they can't afford their dues. They're freaking themselves out. They're getting in their heads about the shift and the end of the world and all of that. So I think it's a massive opportunity. So here is what I am looking to do. I mentioned the case studies, right? I'm looking to partner with 100 agents in a new program that we just launched called Business Foundations. I'm looking to take 100 agents in the next two to three years while everything goes to crap. I say that, you know, I call it the shift storm is coming, right? Take out one letter of shift and that is what I think is coming. But I designed this program specifically to help folks that are well under a million GCI. So if you're at 50 or 100 or 200,000 GCI, anything under 500,000 GCI, I want to work with you over the next two to three years to help you blow through a million GCI. All you got to do is go to getbusinessfoundations.com. there's no long term contract, nothing like that. It's purely getting you the tools, systems training and coaching that you need. The quarterly cadence, the annual cadence, the annual planning quarterly cadence. Twice a year we get together for digital summits where we're bringing all of our best resources. What's working, what's not working. Weekly we do a training. Once a month we do a market update and how people agents are succeeding and what's working, what's not working in real time as the shift is happening. So it is like the value proposition is ridiculous. But more important than that, I really want to have, at the end of this two to three year period, 100 case studies. So I'm calling it our case study program because I want to partner with folks that can 10x their business, 5x their business, 2x their business in the next two to three years. So if that is you and you have a business mindset and you're sort of an entrepreneur kind of stuck, not in a bad way, but you're an entrepreneur that's in the real estate industry, go to getgetbusinessfoundations.com and I want to make sure you crush this shift versus getting crushed by it. So we'll see you over at getbusinessfoundations.com Happy 500th episode to the podcast and we'll talk to you guys soon. Be good.