A short instructional monologue explaining how to allocate operating expenses in a real estate business. The speaker recommends dividing gross commission revenue into three broad operating buckets—people (non-sales staff), marketing/lead generation, and other overhead (rent, phone systems, etc.)—and suggests roughly one-third of top-line gross commissions should be spent across these categories.
I decided I was going to build a $3 million business and the third of it was going to go to pay for inside sales, outside sales, showing agents, we call that cost of sales. And then a third of it was going to go to pay for overhead. And overhead is three parts. And this is all worth writing down and going back and pausing and writing this down. Three parts is your overhead, what you pay people, administrators, your staff, not your salespeople. That's, that's in, in cost of sales. So what you pay your staff, what you pay for lead gen or marketing, right? If you're buying leads or if you're spending money on radio or your client events, your database marketing, that sort of thing. And then the third is pretty much everything else, and we call that overhead. So your operating expenses is the bigger category. And roughly a third of gross commission, top line should be spent on those three buckets. And I may have misspoke there. The, the, the, the broad category is operating expenses, and it's people. It is marketing or legion, and then all other overhead and overhead is like rent and phone systems and, and, and that sort of thing.
