The Blueprint for Business Freedom: How to Grow Your Business While Cutting Your Hours in Half

Welcome back to Real Estate Team Builders. This is Lars Hedenborg. I'm the founder of Real Estate B School, and I've been at this game of team building for quite a while. And I'm going to give you a quick bio because I want to go through and go a little deeper into a conversation we started on Monday with Justin Woodall. He described his journey from, you know, getting started in the business to this year. He'll do 60 million or so, and he's completely out of production. And the thing I want to go deeper on today is like, the key steps to not only grow your business, but to scale it and to do it in such a way where you can get out of big chunks of the business and what that actually looks like. Justin took us through an awesome example on the listing side and went like, step by step what happens and how most of that process, from getting the call, like, hey, I want to list my home to the closing and like, 90% of everything he said was administrative in nature. And yet if you're running and gunning and your head is down and just charging in your business all day long, you're probably not realizing that most of what you do as an agent is administrative in nature. This podcast, as you know, we are like the sworn enemy of teams that are built out in a way where they don't give the owner more freedom. And there's not a great value proposition for the team members. There are most of the teams, I would say probably 80% of the teams out there are a loose collection of agents. And the, and the, the team itself as a business is not profitable when you take the owner's production out of the team. Think of it in your market, just identify five top teams that you sort of, maybe you put them on a pedestal and look at how many homes that team owner sells themselves. That is the clearest indication that they've likely set it up the wrong way where it's not an actual business that will allow any freedom whatsoever. So now in that scenario where the team owner, let's say they're doing 250 transactions, but they're doing 50 personally. They're selling 50 homes and they're managing probably eight to 10 agents that are selling 200 homes. So they're like the broker on all those deals. So their evenings and weekends and vacations are, are not their own. And they're not, they haven't built anything sustainable or likely even profitable when they take out their 50 transactions. All right, so let's break this down. I'M going to, I'm going to do this in the context of my journey. So there's like four or five key decisions that turn into ultimately systems that you need to install in your business to allow going from stage one in the business, which is, we call it the start stage, which is 0 to 100. So if you're at that point in the journey and I'm actually going to pull this up here so I can kind of use it as a, as a backdrop. If you're at that point in the journey, 0 to 100. That's where the whole industry lives, honestly. So you're, you're definitely not alone. The industry does not really teach us how to build out systems, how to, you know, go from 10 homes to 20 homes to 40 to 80 to 160, but working less selling 160 than you were at 20. And that is the mission of real estate team builders. Not only this podcast, but real estate B school. I have obsessed with about that one thing for the last eight years. I've started real estate business school in 2013 and I only had, I got into real estate in March 2007 and I hired my first administrator. I think March, I think it was February or March of 2008. So I only had one year where I was like, this is crazy. Most of what I'm doing is administrative. It's either marketing coordination, listing coordination or closing coordination or running, being a runner, being running around town and dropping checks off, putting signs in or whatever. And so once I realized that it was game on, it was this game of like, how can I get off of my plate the things that are administrative or the things I don't like to do and build systems accordingly. So that first decision for you to make is how can I get busy enough where I can afford to hire someone to do the non sales related work. So anything besides new business development lead, follow up, meeting with buyers and sellers for the first time and negotiating, getting properties under contract, anything outside of that. The fifth thing I would add is building systems. So anything outside of those five things, it's administrative in nature and you think it's the job of real estate agent, but it really isn't the job of real estate agent. So how do you get busy enough where you can afford to put 10% of your gross commission toward hiring an administrator? That's the rule of thumb is that 10% of GCI will go toward having administrative help in your team. So if you're doing 250,000 GCI, maybe let's say that's 25 deals. You have enough money likely for a part time administrator to take 20 to 25 hours off of your plate so that you can double down on the tasks that got you to that point.

Right.

Honoring your morning time blocks where you're actually having conversations with buyers and sellers about buying a home or selling a home. Calling your database and seeing if there are referrals to be generated.

Right.

So and that one hire will get you from. Yeah, you'll have to spend $25,000 for that hire, 10% of the 250, but you'll go from 250 to 500 and then it allows you to bring that part time administrator on in a full time, in a full time position. So you're still with the one hire, nothing changes. You'll go from 250 less 25, which is 225 and over time, month after month, week after week, you're going to get more and more off of your plate and your business is going to double. And then you're at 500 less the 50 because you've scaled this administrator up to full time. Now you're at 450. So it's 225 versus 450. And you're likely working less hours than you were at the two at the pre admin hire. So at the 250 before you brought the administrator on and all agents think about and even that one decision is like I can't afford to give up, you know, 25, $30,000 a year hiring an administrator. They don't look at the opportunity to double the amount of production you do and get everything off of your plate that's administrative in nature. Where you know, go back and listen to Justin talk about the listing side. It's like you get the call, you have to prep for the appointment, you have to show up at the appointment, you have to get paperwork signed. There's usually paperwork after to get signed. You have to get pictures scheduled, get the inspection scheduled, you know, get it listed in mls, put the brochure together, hold open house, get it under contract and then all the contracted closing details.

Right.

80% of all of those tasks are administrative in nature. So you're not even in the game of leverage and maximizing your income potential. If you don't do that one thing, that's the first thing after that, the next big decision. So when you get that leverage is putting those hours back in the front stage activities, those sales related activities which are the highest dollar productive activities. After that you're in the ramp phase. So ramp as we describe it in real estate b school is 100 to 500k. So at 500k you're now in the build phase, which is or stage 500 to 1 million. And this is all about getting leverage on the buyer side. So it's likely that about half of your business, let's call it 50 transactions, are buyers. And buyers are not looking at homes on a Wednesday from 12 to 2, right. They're looking at homes on a Wednesday from 6 to 8pm or Saturday for six hours or Sunday. You have to hustle out of church and you have to go show homes to buyers.

Right.

And it's hard to work with multiple buyers because now there are multiple evenings you're working and multiple buyers you're working with on the weekends. I've been there. I feel your pain. I know what it's like. And so that's the next decision we need to make. How do we get leverage on the buy side part of the business where you can completely exit working with buyers and now double down on listing lead Gen activity systems marketing systems to bring in more listing leads, not paid leads, but more listing leads, so that now you can focus on getting back to 50 transactions. But they're all listings. You're working way less hours and listings should, on a one to one basis generate buyers. So at 50 transactions, you're 25 listings, 25 buyers. As we scale from 50 to 100 transactions, you're going to go from now you have more of your time to put into listings. So you're going to go from 25 to 50 listings and you're going to go from 25 to 50 buyers, which is a couple buyer agents, right? So it's not that complicated. One administrative hire, now you're doubling down on the activities to get more listings and then you're bringing a buyer agent on and you're with the right economic model using value based commission splits, which actually Justin spoke about and also Jonathan Popowicz, if you haven't listened to that episode, he talked about that the economic splits, specifically value based commission splits where you're paying someone based on the value they bring to the deal, not on what splits you think other brokerages offer or whatnot. But you have legitimate systems in place that allow your agents to sell more homes in less times, in less time. So administrative hire is your first decision. Doubling down on sales activities is your second decision. Really, you're not getting out of administrative activities to spend more time like whatever, watching the news or, you know, Playing golf or whatnot. So that's the second decision is to recommit to the business to do front stage activities. The, the third decision is to get leverage on the buyer side. You could work with at least twice, maybe more sellers versus buyers and do it during business hours. It's just more, that's more of a business transaction where working with a buyer, it's more like this warm and fuzzy like, oh, we want to go out on a Saturday afternoon and show up with our coffees and we're going to make a day of it, you know, but it's your Saturday and that's the job of an agent. But you, you can't do it. If you want sustainability and if you want margin in your life and you want to show up, maybe you have other roles that you need to show up as a husband or a dad, like I did in the early stages, which is what motivated me to go down this path. So that's the third decision is getting leverage on the buyer side. Once you get leverage on the buyer side, you're instantly in a position where you're leading other people.

Right.

So there's this manager in us which is building the systems. Justin talked about that, what that looked like and actually how you sit next to your administrator and you actually build these checklists out so somebody else can do those checklist like or those checklist activities. Right. Prepping for appointments or getting ready for buyer consultations or whatnot. The whole contract to closing part, all the marketing coordination activities. So now admin, doubling down on sales, getting out of buyer sides. And now it's really spending time as the manager and becoming a better leader because you're going to. Your next decision is what production are you going to stay in in the business? Are you going to maybe give away listings that aren't your SOI to your lead buyer agent?

Right.

And have a backup buyer agent. So now you can take time away from the business.

Right.

You're only able to create true margin in a business if you get out of the different positions that keep you sort of captive to the business, which is what we don't want. And so you at least you know at this point you can scale using the same example from 25 to 50 to 100. Even though there's, you're working all the listing sides 50 and you're working probably less than 40 hours a week at that point. How do you go from 100 to 150 to 200?

Right.

It's. You're bringing in more buyer agents, but the Cream of the crop there is going to rise and you're going to identify that listing partner, that person to replace you on the listing side or at least take over full listing so you can stay at that 50 mark. I've seen team leaders come in at 200 transactions for their team, but they're doing 100 themselves personally and they're buyers and sellers and they're kind of losing their mind. We do not want that to happen for you. So that's really the last decision to make is that do I see myself in the future being out of production in this business? If so, and even if you don't, we need to build the business in such a way where that, that's how we're building it in all of this. We're looking for more freedom and ultimately more impact.

Right.

Even if it scares you to hire even a part time administrator. Justin mentioned he'll do 225 sides, no personal production. He has multiple administrators and now he's able to coach his agents and have more impact.

Right.

He said the thing that lights him up the most is taking someone from a 40,000 job D$job locally and showing them how to make more than six figures and have more freedom and be like directly like you can actually impact the amount of money you make in a corporate environment. Like there's no way to do that. That's why I left corporate America. I knew I had something more in me where I just wanted to be in a world where I could get rewarded, you know, commensurately for the amount of effort I put in or the amount of growth I was able to achieve in terms of, you know, my business skillset and also personal development. So those are my takeaways from the time I spent with Justin. Definitely go back and listen to this episode. If you're at the point in your journey where you want to have a deeper dive conversation about your business, just go to realestatebschool.com and there's orange buttons everywhere. Book a call or apply now and we'll just have a conversation about your business. It's not a sales call. It's just figuring out where you are today, where you want to be in the future and what's holding you back. And, and if real estate B school is part of the solution, that is awesome. If we're not, that is awesome.

Right?

We're not going to, you know, hard sell you on this call, but just go to realestatebschool.com, book in a call and we'll serve you at the very highest level and tune in next time. One thing I will say we are keeping this podcast no advertising and I want to do that because I listen to some podcasts that have advertisement on it and it's like it is except and you can't fast forward through it. They have this little technology thing that you can't fast forward through it. So my ask of you is to do a couple things. Share the podcast, share it on your Facebook or Instagram or whatever and leave us a five star review. Go to Apple podcast and leave us a five star review. That would help immensely so we can keep this thing ad free and we could still we can get our message of like business freedom is possible with the right roadmap, with the right blueprint in place. And that's what I want to step you guys through constantly. So take action. Go to realestatebschool.com to book in for a business growth strategy session or leave us a review and share the podcast. Much love. We'll talk soon. Be good.