The Good, Bad, & Ugly: How Scaleable is Your Business?

Hey there, everyone. Lars Hedenberg, founder of Real Estate B School. Welcome back to another Good, Bad, Ugly edition of the Business Freedom Podcast. This is just my time to share just the brutal truth of the mistakes.

I made in my business growth journey in an effort to make the journey easier for you. Today I want to chat about, you.

Know, and I want you to think.

About the question, how scalable your business.

So when you look at your business.

Where it is today, you know, conventional success. If you've listened to the podcast, you've.

Kind of heard me, you know, talk.

About conventional success in our industry and what that looks like, and I just.

Believe it's not a life worth living.

You know, a top agent in my market will sell a couple homes a month, you know, make probably less than 60 grand year. That's top 10% in my market.

And I know the numbers.

I've studied the numbers. So that's actual. That's real.

And the trade off, the time, money.

Stress trade off, we've talked about that before as well. But I want to challenge you to think about your business today.

In a way, you know, how scalable is your business? That's what I want to talk about, how scalable is your real estate business? And.

I want to take the angle.

On this that, you know, most agents have get caught up and never give.

Themselves the opportunity to dream about what's possible in their real estate business. And so I want to go through kind of just some things that I've seen with agents that are like traditional agents, or they have a limiting belief around what's possible, or they just don't seem to get where our industry is going.

I have a firmly held belief around the future of real estate, and the.

Pie is going to change. So right now, the pie is pretty much open to mostly traditional agents. It's shifting rapidly. So solo agents can get a good piece of the pie right now. Independent brokerages can do fine. Mom pop shops can do fine. The big box brokerages can do fine. Zillow just moved into Charlotte. The physical office space, it's a big deal. They've got like a quadrillion dollars of cash that they can deploy and do anything. They have 500 inside sales agents on.

Their payroll right now, calling buyers and.

Sellers around the country.

Right. It's no joke, right? You think about open door, right? And what's the other one?

There are two big ones in Charlotte right now. We looked their stats up the other day. One of them was 100. They own 182 homes.

And I forget if it was open door, may have an open door. Only one of them was under contract. So they bought all of these homes, and none of them are selling because our market's shifting. And so the world is changing. And the first thing I want to sort of pick on a little bit here is the fear of the unknown. Fear, especially with a few things going on right now. The market is shifting.

Just an economic shift. Interest rates are rising. All of that's going on. There's a technology shift that we really haven't quite seen yet, but it's driven by consumers. So it's a consumer technology shift and how they want to do business. And then you just have a business model shift.

Right.

It's the fact that Zillow is opening up a physical office space here. There's billions of dollars pouring into our industry, and fear will get the best of most of our industry. The opportunity, if you're looking to build a real business, is that a lot of really good agents will look to do their business within a team environment. And that is the thing I'm most excited for. The next thing that I see hindering your ability to scale your business is the constant distraction. Not only just the normal distraction of.

Like binging on Netflix or watching the.

News or consuming, you know, Facebook or.

Instagram or spending time on any of those platforms. That's distracting enough. I'm talking about the distraction of thinking that there's an easy button in real estate and building a real real estate business. And we're marketed to so heavily. Like, heavily. This is the next, next best thing. You've got to do this, you've got to do that. That's the kind of distraction I'm talking about. And it's really. In real estate B school, we call it chasing squirrels. Right. Squirrel. What's that? Squirrel. Squirrel. Like, you're always chasing these squirrels. And as a result, you can never go deep enough into. Maybe it's a marketing pillar. You know, a good example of this is I've got a member here locally who I've been working with for over three years now, Dan Jones. And he has two paid lead sources, yard signs and his database. He'll do almost 300 transactions this year. He did about 60 in 2014. So I'm working with him since early 2000. So I guess it's over three years now, early 2014. And his commitment. We actually cut lead sources out as he was growing. And by going super deep on just a few things in his business, he. Including recruiting, including training his agents. He only has like eight agents. Actually, I think seven. I think he had to release one agent. So seven or eight agents he has on his team. And he wants to scale next year to about 450 sides. A lot of agents you see spread themselves so thin, they're spending money on 12 different lead sources and they're not even getting 10 transactions from each lead source. I won't even go into a lead source unless I really think I can get about 50 transactions in a couple years out of that lead source. Right. So you don't want to go too wide in your business. The next thing I see that hinders agents from scaling their businesses beyond themselves is just a poor mindset and limiting beliefs. And I see this a lot. There's nothing special about any of take real estate B school members that have scaled their businesses. We have some members that have 10x the size of their business and cut their hours by a third. And it came down to the mindset that they believed they could actually do, had nothing to do with the tactics. The tactics are known at this point, right. You could even. You can go to getbschool.com and see what you have access to, all of the tactics that you could possibly need to scale your real estate business. But if you don't have the mindset, you don't have the belief that it's possible, you won't scale. So you really got to check your mindset. You've got to guard yourself from watching the news or getting caught up in Facebook and there's a shooting in some random city on the west coast and somehow that's affecting you. And that's not me being like, you know, a mean person by saying, I don't watch the news and I don't let that stuff impact me. There's really nothing I can do about it. And it's going to affect my psychology if I get wrapped up in it. And so really guard what you're letting into your, into your brain. And then the fact that systems, most agents just hear the word systems and they cringe, right? Because it's something they're not really good at. And so systems, though, are the answer. There's no way around it. Every little thing that you do in your business that you do more than some things are multiple times a day, some are multiple times a week, some.

Are multiple times a month.

They're all systems that you need to set up in a way that they could be run by folks that are going to get paid a whole lot less than you are. I did a calculation early on in my real estate career, I decided I was worth $250 an hour. Decided I wanted to work 2000 hours, which is roughly 40 hours a week for 50 weeks. And I wanted to make $500,000 pre tax. Simple math, 500,000 divided by 2000 is $250 an hour. That gave me the ability to build a system and have folks making a whole lot less than $250 an hour run those systems, including anything administrative, including anything related to buyers, included anything related to sellers, everything in between, marketing, operations, all my financial paying bills, all of that stuff. So systems are the answer and then hope is not a strategy, right? I challenge you to think about what your life looked like three years ago. Just think about your life three years ago. Do it right now. Did you make the kind of money you wanted? Did you have time to spend as you wanted? You know, what was your stress physically in your relationships? We talk a lot about time, money and stress in real estate, B school. Then look at it today. Is your time your own? Are you making enough money where money's not an issue and what does your stress look like? And then ask yourself like, do you have a plan in place to move, move the needle in those areas so that a year or two or three from now it's going to look different. I talked about Dan Jones and I was fortunate enough, he was actually on my real estate team for two years when we first moved to Charlotte. And actually I was fortunate enough to get to his wedding and about a year ago they had their first child and he's been out of production. So he's been fortunate enough to add value in his business in a different way besides working with buyers and sellers. And that's not for everyone. So I won't say that that's a requirement of building, scaling your business, but to be able to really feed into the lives of his team members so that they can serve buyers and sellers and he can impact their lives, his clients lives through his team members has been awesome to watch. So he took eight weeks off when his daughter Charlotte was born, which is unheard of in real estate. And his business was stronger when he came back than when he left. Tight knit culture. They wanted to show Dan that they could run the ship or steer the ship while he was gone. And they, they put more homes under contract in those eight weeks than they had in any other eight week period in the last year. And so you really got to calibrate your mindset around the fact that this thing doesn't need to rely on you and it shouldn't rely on you. And if it does, then you don't have a business. You've got maybe a good paying job with crappy hours and a crappy boss because you're your own boss. And sometimes that's not a good situation. So that's the challenge I have for you. Think about, ask yourself the question, how scalable is my real estate business? If you're unable to even take a week off and the business kind of halts without you there, then you don't even have a business. And that's something that you need to address if you're going to be in this business long term, you know, because the way things are going, the industry is going to change radically. There are, there's so much money coming into our industry and they want to go end to end. They want to do everything from, you know, initial contact with a buyer and seller all the way through maintaining, helping them maintain their property for the next 20 years and everything in between, mortgages, title, you know, there's. What is it? Open door. And I forget the other big one here in Charlotte. Zillow just moved into Charlotte. There's all these things that are happening that are radically transforming our industry. And if you're not thinking that it's going to change for you, your head is just buried in the sand and you're going to end up working for someone else. You know, you're going to end up working for Zillow, you're going to end up working for Redfin. They're going to marginalize your opportunity to make real money in this industry. So you've got to make a decision on which side of the line you want to be on. That's a challenge for you. So ask yourself that question, how scalable is my real estate business? If you don't like the answer, you got to do something different in the future. We will talk to you soon.

Bye bye.