The Good, Bad, & Ugly: The E-Myth: The Best Business Model and What It Takes to Be an Entrepreneur

Hey, welcome back Business Freedom podcast listeners. This is Lars Hedinborg, founder, Real Estate B School, and this is another Good, Bad, ugly edition. So this is the good, the bad, the ugly of building a real estate team. And I'll say this, I'll say not just any real estate team. We're talking about building a real real estate business, a business worth owning, something to show for all the hard work it takes to scale. It's not just about selling more homes. So I want to dig into something today which is really now look back on my business growth journey. You know, we're approaching probably 4,000 families served. Only 200, I think 220 to be exact, of those families were served by me directly. I built this business on a sound economic model, one that's based on true business principles. You know, it's a benefit I had coming into real estate industry. I was able to build a actual business. And I began with the end in mind, so I knew what I wanted to have at the end of it. I think that's where a lot of real estate agents that want to scale fail to scale the right way because they don't actually know what they want to have at the end of their business growth journey. So, so when I look at just what it takes to build a business, and I'm gonna share my screen here, if you're looking at this on video. And there was a foundational book that I got into, and it's called the E. Myth Revisited. So that's kind of gonna be a little bit of our conversation is gonna be on the E. Myth, and really how that applies to building and scaling a business in the real estate industry that doesn't depend on you being in the middle of it. So this isn't a, you know, a genius with a thousand helpers model. That model is flawed. There are coaching companies out there that teach that that's not the model that I followed. So I followed building a legitimate real estate business, one that has a life without the owner. And that's the goal I had in mind when I started building my real estate team. And so if you ever need any more information, any tool I talk about or strategy or tactic, we've got a toolbox that we offer, and it's getbschool.com so there's never a hard sell. My goal here in this podcast is to add a lot of value. And so let's dig into the entrepreneurial myth. And this, to me, is the book that changed, really, really, truly changed everything. And in the book, Michael Gerber talks about three types of sort of personalities that show up in a quote unquote, entrepreneur. So this is a term that is like entrepreneurship or all the crap that you see out there. An entrepreneur sees a problem and builds a solution or systems to fix it. An entrepreneur. Just because you're a real estate agent doesn't make you an entrepreneur. Just because you start a team and you hire an assistant and a buyer agent doesn't make you an entrepreneur. So I'm talking true entrepreneurship. Michael Gerber makes the joke that most business, most small businesses, their owners have this entrepreneurial seizure, right? They were a painter for another painting crew, and then it got the bright idea that I could just do this on my own and it's going to be great. And, you know, that's what happened in real estate. You know, we're a real estate agent and then we say, hey, I'm going to be a real estate business owner. And we have this seizure and all of a sudden we're now a business owner. And there's three personalities that show up. The technician, the manager, and the entrepreneur. So I'm going to go through these and really explain them. Technician, that's the person that performs the work. They make, they sell, they deliver. Focused on effort and how much can be accomplished. How can I produce more so I can earn more? That's the mind of a technician. And that's a real estate agent, right? 99.9% of our industry is like, how can I produce more so I can earn more? Right? Trading time for money. That's not what we're talking about when we're talking about building a business. The manager. So this is another personality that needs to show up if a business is going to be successful, is focused on getting results through others and is concerned with developing systems. And the question they ask themselves, good managers, how can we be more productive? So if all your time is spent in the technician role, you're never thinking about that question, how can we be more productive? So if you're taking notes, these are really good notes to take down. So technician, how can I produce more so I can earn more? Manager, how can we be more productive? And then the entrepreneur is visionary and strategic, focusing on the future and building equity and getting a good ROI oriented around the performance of the business. So I don't have it written here, although I would say, how can the business achieve its vision without me being in the middle of it? That's what I would say is the question the entrepreneur would ask themselves. And here's the thing. How you think about your business is how you do business. Most business owners spend little time doing the work of the manager and the entrepreneur, and all their time is spent doing the technical work of a real estate agent. And as a result, they never fail to scale and they never benefit of the opportunity to build a business that gives them time, money, relationship, impact, freedom. Right, so that's what we're after. That's why this podcast exists, right? It's the Business Freedom podcast. Okay, so let's talk about the franchise prototype. And this is a huge mindset shift. And so Michael Gerber defines this concept and basically puts you in a position or forces you to imagine that your business is going to be the model for 10,000 just like it. And here's something to write down. How would I have to think about my business to replicate it 10,000 times? Right. How would I have to think about my business to replicate it 10,000 times? You may never. Here's the thing, you may never have a second location. That's not the point. If you're going to get out of doing the technical work of a business and ultimately most likely provide a better service to buyers and sellers, you have to start asking yourself that question. How do I need to start thinking about my business in order to replicate it 10,000 times? So when I go back to 2008, 9 and 10, when I was working with buyers and sellers, and I think in 2010, I actually stopped working with buyers. I was able to stop working with buyers because when I was working with buyers, I was building a. I was building a system that somebody else could take over. When I was working with sellers, I was building a system that someone could take over. Right? When I was building an expired direct response system, I was building it in a way where expireds would raise their hand, call me, or email me and seek my counsel, right? So I built my business in such a way where it didn't depend on me. That's the first goal, right. Is to create this business operating system that is self sufficient, that can run profitably and deliver a consistent experience to clients. And that's every aspect of your business, right? If you've been around real estate, B school, you know that there are six drivers. The first driver is having this clear plan. It's the roadmap, right? But then there's marketing, sales, operations. Marketing, marketing, sales and operations. So getting people to want to do business with you, raising their hands, being able to sell them on why the fact that they should do business with you, and then servicing those buyers and sellers to get them to closing and beyond so you can have a long lasting client for life sort of relationship with them. So you've got to create this self sufficient business and it's not that challenging, right? If you think about this way. So this new way of thinking is critical if you want to eliminate current frustrations, right? Even if you love selling homes. And Michael Gerber, have you ever heard him talk, he always says doing it, doing it, doing it, right? Even if you love doing it, doing it, doing it. You've got to think about your business differently because it will eat you up through frustration and stress and anxiety and worry. And you need to distance yourself from the technical work to build your proprietary way of doing business and the world class company of your dreams. So you envision this company, right? I had a vision early on that we deliver our services in such a way that it trumped any other option in our market and I didn't have to be involved in any of it. It's not an easy path by any means, right? There's lots of risk, lots of reward, lots of challenging, lots of heartache, lots of long hours building these systems. But you build it out in such a way that it's your way of doing business and your clients aren't that concerned with doing business with you personally. As long as you build something that has a standard that is as high, it's the highest level of standard or a high level of customer service is what they're looking for. And when you talk about, you'll hear me talk about sustainability, self managed team, scalability, all those things. There's four key drivers to building this thing in a way where it has a life outside of you. Number one is your life, right? That's the number one key driver of why you would want to go through this new way of thinking and building systems. Right? We must orient work to serve our lives rather than something we do in order to have a life. Your purpose in life must fuel your work, not vice versa. Number two, it's leadership. Our businesses are an expression of us and they will never be better than we are improve. So to improve our businesses, we must improve ourselves first. That one is so true, right? Most of us never take the step even to hiring a first assistant, but to take that step beyond the first assistant and to bring buyer agents into the fold and, and to serve them and give them the tools and resources to be more successful they could without you. All of that is predicated on the fact that you need to be willing to put yourself out there and get out of your comfort zone and put yourself into that uncomfortable growth. Part of our professional lives, number three is ownership. We all must take full responsibility for the business that we've created so we can create the future that we're looking for, right? So it's taking extreme ownership of the professional and personal life you have currently. Sometimes that's hard to do, really. Being honest with yourself and doing a self inventory of where you are at in multiple areas of your life. In your relationships, right? With your kids, your spouse, with your creator, your financial situation, your fitness, your health, you know, where you are in your business. Do you even have a business? You know, would it last a week without you? And then number four is excellence. It's an important driver, is, you know, as leaders and managers, we must be committed to ask ourselves, how can we do it better? The best businesses in the world are constantly asking themselves that question. And if we don't, especially in our industry. There's three things going on in our industry right now. Three disruptive, I call them shifts. It's this perfect storm of shifts, right? Most markets are going through just the real estate cycle shift, the economic shift, the slowdown in sales, which is good. If you're running a team, you'll be able to pick up a ton of talent and market share. So it's a good thing. That's number one. Number two is a technology shift. Artificial intelligence is not going away, just like the Internet's not going away. There's lots of technology disruption that's going on in our industry. That's number two. And then number three is just a disruption in the way real estate's gonna be done. So I call that a business model shift. The ibuyer model, right? Companies that are willing to come in and buy the home that you're looking to move to, buy the home that you currently live in, do the repairs on all of them, make it a seamless transition. And they're going hot and heavy right now. And so you gotta be aware, right? If you're not asking yourself the question, how can we do it better? And challenge your team to do it the same, you're going to be out of business. And so my final sort of thought for our time together today is that it's hard either way. Being an agent that sells, let's say you're even a top agent, you're doing two to three sales a month, 24 to 36 units a year, that's a hard life. That most weeks, that's seven days a week. And you can't unplug and the income's not that great. Right. So my challenge to you is take a step toward building a real real estate business. One that you can scale and you can build out real systems where you can bring people on and you can make real estate easier for them. Right. I call this High Performance Real Estate team H P R E T. You know the business. I'm co founder of High Performance Real Estate Advisors. Right. I've been talking about this high performance real estate team for probably three or four years now. And in January 2017 I co founded High Performance Real Estate Advisors. And that's why we're calling it that. It's a different way of doing real estate. This is not a pitch. We're not expanding hprea. So there's no. We're not looking. This is not a pitch for expansion. Right. We're not going down that path. We're looking to sell a billion just in Greater Charlotte. So that's not what I'm talking about. It's this concept of building a real estate team out in such a way where it does it better than its less premium counterpart, the economy model. So the analogy is like a high performance car, right? It needs constant tuning, but it's worth the trouble because they accomplish their purpose better than anything else in their class. And if you're not thinking about that Greater Charlotte we went from about 5,000 realtors to about 12 to 13,000 in the last five years. That sucks. There's 6, 7, 8, 9, 10,000 realtors that don't need to be licensed in our market. Right. So we're thinking about putting them out of business because we provide a service that they can't possibly provide. Right. And here's the thing. Change is a constant in business and we need as leaders and owners. And even if you're just sort of taking the first step to building real estate team, we need to expect the unexpected. Your success depends on your ability to anticipate, manage and respond to change. So when I talk about the three shifts going on right now, I spend a lot of my time thinking about that, how it's going to impact our members, right. Real estate, B school members and obviously also HPREA and how that business needs to navigate these changes. So here's the thing. Our industry is notorious for not loving change. And if you're going to crush this next sort of future, this next phase of our industry, we've got to look at change, change as an opportunity rather than an obstacle and prepare our people. If we have teams to Recognize change and to capture its advantages. So even an economic shift, a market shift, right, Is a great example of change that most agents are just going to whine that business isn't easy and we can't wait for it because we're going to pick up market share and tons of talent in the process. And so what makes a high performance real estate team is a dedication to strategic purpose and a commitment to giving your team the tools they need to achieve expected results. And when I talk about Toolbox and all of those things, it's about giving your team what they need to succeed consistently. And so a lot of agents, and even team leaders and brokerages, for sure, they're the economy model, right? They're not thinking about how to move toward this premium service provider. And here's the thing, not everyone needs a high performance car. So you may be asking yourself, why not go with the economy model, right? There's lots of Toyota sold, Kias are great cars. There's lots of Kia sold in real estate, I believe, and we're betting everything on it, that it's extremely risky to not push toward this high performance model, right? So not everyone needs a high performance car. And you can save the same for high performance real estate teams. Here's the thing though. Do you want to be the business that settled for an economy model when you could spend the next three to five years building something amazing versus just going about business the way you're going about it now? Do you really want to make that decision and not challenge yourself and your business to be the best version possible? Building an organization that relishes change requires thought, planning and the willingness to stay with it until you get it right. But your efforts will pay off, right? High performance real estate teams, they draw in clients. They're attractive because they're different. They draw in clients, they motivate team members. And the best thing is they attract new recruits. We had a team advanced yesterday and it was awesome. We did. We ended the day with, you know, what's the high from this year? And so we're about 10 months into the year, we asked every team member what the high. And we have probably about eight of the team members started this year. And the high of their year was joining our team and getting to be a part of a culture that is different. And we are getting after something big. And this was genuine, you know, tears coming from these team members because we put them on a path that they never thought was possible. And that's just awesome to be able to build something like that. And here's the thing. No two businesses will design their high performance real estate team in the same way, which is awesome. So even though our members have access to some tools that we use in our real estate team through the toolbox and through our coaching, they're never going to build it the same way because we're not them. The object is to encourage a culture and build a structure that supports your vision, whatever that vision might be. So that's all I wanted to cover with you today. It's this sort of view of your business as a franchise prototype. And you know what, if you had to build it 10,000 times, the point being, you can't be in 10,000 places at the same time. So it forces you to think about your business differently. And that's what I want for you, is to think about your business differently. If you have any interest in taking a next step with us, go to getbschool.com there's an offer for the toolbox there and we do a love it or leave it 30 days. If you hate it unconditionally, we'll give your money back. So as I always say to our members, much love, much respect for taking this path. It's not the easy one by any means. And we'll talk to you soon. Thanks for joining us.